One of the first things you’ll need to do when you create a product or service is determine the appropriate price point for it. There are a lot of thoughts about pricing and none of them are right or wrong. How you price is up to you, but think about using a method that considers value and not just how much it will cost you. This is one of the best ways to come up with the perfect price point.
Tips for Selecting the Perfect Price Point
Know Your Audience – You have to know everything you can about your audience, including how much money they have to spend on extra items in their budget each month. When you understand your audience, you’ll not only know what type of products they need, but also how much they’re going to be willing to pay for them.
Identify Your Direct Costs – You must always cover your costs in any pricing method, because if you don’t you’ll lose money. So a great place to start is figuring out the direct cost of your product. But, if your product is digital, it’s going to be somewhat relative. For example, it might cost you 500 dollars to have the product created but you’ll not have individual per item costs to consider in your pricing.
Identify Your Indirect Costs – Sometimes there are costs such as marketing, advertising and other indirect costs that you should consider adding. For example, if you’re teaching a course that you had to get a Master’s Degree to understand, then you can add in something for your education.
Identify Your Competitors’ Prices – Take a look at your best competition’s prices. It’s more than likely that this price is something you should consider being around, because if your competitor is successful, it’s a price point that’s working. However, you never want to get into a situation where you’re competing on price. Instead, you want to compete on value.
Consider the Market – The market plays a huge role in pricing for pretty much every product. If you have a digital product, this is especially great for you because you don’t have incremental costs like you do with a physical product.
Understand the Value of Your Offering – Outside of direct and indirect costs there is also value. The value of your item is something that is perceived by your audience. For example, if you have an offering that will help anyone who follows it boost their income to six figures from zero, what is the value of that?
Ensure It’s Worth Your While – If the price you come up with feels too low, then raise it. You want the work that you do to be pleasurable for you, too. If you under-price your offerings, you’re going to end up resentful instead of happy.
Test Different Prices – When you come up with a price point, try testing different prices. You can do this by having different sales pages, or you can do it by offering different levels of service on one page with the various pricing levels.
When you come up with your perfect price point, you’ll be able to work less and make more money. The reason is that your buyers will be focused on the value of your offering, and you don’t have to concern yourself with selling high volumes…if the price is right.