Pricing physical products is easy. You know how much it cost to produce the product, and you base your price on how much profit you want to make. With digital products, it’s a whole different ballgame.
You can’t price your digital product the same way you sell physical products. They’re different beasts altogether. Many new merchants make this mistake, and it costs them, vital customers.
There’s an undeniable allure of digital products. There are no materials (other than digital applications needed, of course), no shipping costs, no manufacturing, no complex storage, etc. You make it once and you sell an unlimited supply.
With so many benefits, it’s easy to see why digital products are becoming a huge trend in eCommerce. So what are people selling? These are the digital products we’ve been seeing all over the web recently:
- Online Courses
- Graphics and Digital Arts
With so many options, how do you know where to begin when it comes to pricing? The go-to philosophy of pricing physical products doesn’t always translate. Where does that leave your online store?
If you’re trying to break into the world of eCommerce for digital products, you need to get your pricing strategy right. Pricing is one of the famous Four Ps of Marketing, so don’t overlook its role in your business.
Here are six strategies guaranteed to sell your digital product.
1. Price High
When you’re pricing your physical product, you base the number on how much it cost to produce your product from start to finish. When you price your digital product, it’s about value.
Pricing high can be smart pricing. It gives your product value, and that’s something that isn’t always translated in the digital space. Why should your customers choose your eBook over the fancy hardcover at Barnes & Noble, for example?
You don’t have to be an accountant to understand this math. Sure, you’ll probably sell more eBooks if you price them at $1.99. However, you’d rather sell one eBook for $25 than ten for $1.99.
No matter how high you price your product, the cost of acquiring that customer is the same. You should want to make as much as you can per cost of acquisition.
As a merchant, you want your customers to value your product. What will they value more? An online course that’s $200 or one that’s $50? Your price signals to your customer your value, so don’t undersell yourself.
2. Value-Based Pricing
Because you can’t base your price on the cost of creation, you need to base it on your value. While it’s smart to price high if you’re selling a high-value product, there’s another way to think about this: value-based pricing.
What is value-based pricing? Essentially, it’s considering just how much value you’re bringing your customers. If you’re teaching a challenging skill or providing a money-saving solution, your digital product is high-value.
Your product is an investment for your customers. How much is that investment worth? Use this as a starting point for determining your product price.
If you’re offering an eBook that teaches how to launch one’s own freelancing business, you’ll be able to offer a solid return on investment. Price accordingly. And consider watermarking your eBook to protect your hard work.
3. Tiered Pricing
You’ve probably seen tiered pricing in action if you’ve bought anything online recently. Because people value things differently, you sometimes have to create different tiers of products for different needs. This opens you to sell to different customers.
There are customers who will be willing to buy from the highest price tier just as there are customers who are more willing to choose a lower tier because they feel they’re getting a better deal. You’ll most often see tiered pricing with software, but you can use it for any digital product.
Let’s take the eBook example again. Your lowest tier could be the eBook on its own, a solid value in itself that’s perfect for those who don’t need additional resources. Your highest tier might include the eBook, a corresponding workbook, and a printable guide.
As you can see, offering different options for different customers only adds to your profits. While it might be costly to create additional add-ons for physical products, these are very inexpensive in the digital space.
4. Try Before You Buy
Customers need to feel confident in your product before they’ll be willing to make a purchase. Using your store as a way to build trust is key, but sometimes you need an extra push. Offering a try before you buy option is an effective way to do just that.
Heidi Zak, co-founder and CEO of ThirdLove, is a big proponent of try before you buy marketing as a way to overcome any concerns. Zak claims, “letting them try it before they buy it is the best way to get past that hang-up.”
Customers are smarter than ever. They don’t want to throw money away on a digital product that won’t be useful to them. Offering a sample, trial, or another money-back guarantee will help those on-the-fence customers take the plunge.
5. Added Bonus
Who doesn’t love free things? This is one of the few things true for both physical and digital products. Everyone loves to know they’re getting a bargain.
Adding a free gift with purchase is an excellent way to give your digital product even more value. Let’s consider that freelancer eBook again. Consider adding a free downloadable invoice template that helps new freelancers work with clients.
Though small, these freebies show customers that your product is worthwhile. The trick is to really focus on the value component of your added bonus. It can’t just be a worksheet you whipped up in five minutes on Microsoft work—make it count.
Tip: Add free and paid gifts and treats to your WooCommerce products with WooCommerce Checkout Add-ons.
6. Psychological Pricing
Finally, when all else fails, fall back on basic psychology. You see these methods in action in most major retailers across the country, but you can use them yourself in your own store.
If you’ve ever been in a high-end shop, you’ll notice the prices end in zero. Go to your local bargain chain, however, and the products all end in a 9 or a 7. What gives?
Sure, there might only be a few pennies difference in this pricing, but we fill in these gaps with value. It sounds like a much better deal to snag a product for $29.97 rather than $30. Though small, this psychology trick has profound effects on how we understand prices.
Sell More Digital Products
As you can see, pricing your digital products isn’t exactly rocket science. That being said, don’t fall for the mistake of thinking there’s a one-size-fits-all solution to pricing. There’s the success to be found in trial and error.
Dive deep into the value of your digital product. What are you offering your customers? How can you price it accordingly?
The biggest mistake of new merchants is underpricing. When you underprice your digital product, you cheapen it. Don’t send this message to your customers unintentionally. Stay ever mindful of your eCommerce profitability.
Use these pricing methods above as a springboard for your own products and jump on the digital products bandwagon – there’s a huge market out there today waiting for what you have to offer.
Have you used one of these pricing methods above? What worked and what didn’t? Let us know in the comments.
Wendy Dessler is a super-connector who helps businesses find their audience online through outreach, partnerships, and networking. She frequently writes about the latest advancements in digital marketing and focuses her efforts on developing customized blogger outreach plans depending on the industry and competition.