How to Find the Perfect Price for Your Product
While most books are priced in the $5-10 range, mine was pegged at $19 (an absolute fortune, I know!).
And pretty regularly I'd get an email that went something like this:
“You're an idiot for charging so much for your book. You should lower the price, because then you'd sell more and you'd end up making more money overall.”
I call this crowd the More Volume Militants.
Their logic seems sound—and it's tempting to want to “be a nice guy” and drop the price. If you can make more money that way, then you can have your cake and eat it too.
Then there's the Double Your Price Diehards.
This is a contingent of online marketers and entrepreneurs whose answer to every marketing question is, “Double Your Prices.”
No matter what, charging more always makes your products more profitable.
And when you increase your prices, sales go UP!
So double your prices already! What are you waiting for?
Who's right in this debate, anyway?
What's the best price to maximize profits?
Here's an interesting little case study that I'm conducting right now.
At Simple Programmer, we have this low-end product—a workbook that shows software developers how to start their own software development blog.
For a long time it was priced at $5.
Typically we'd sell around 120 per month and bring in $600 in revenue.
A few weeks back, I decided to try raising the price to $9. I figured we'd lose some sales, but by nearly doubling the price we'd still come out ahead.
Instead sales got cut in half, and we ended up losing about $100 a month in revenue.
Then I decided to go the other way, and lower the price to $1.
Sales went through the roof—more than doubling in fact.
But since the price is so low, we'll lose probably $400 a month.
Often with pricing a given product you'll find there's a sweet spot where number of sales and price per sale balance for maximum profits.
For this product, that's probably the $5-7 range.
Above and below that you're leaving money on the table.
The encouraging news here is, it's not going to kill your business to experiment a bit.
And when you're offering a good product to the right people, your price can be “wrong” without murdering your sales in their sleep.
Make an offer, see how the market responds.
Then try something else.
Let your customers actions set your price—NOT the rantings of marketing militants.