I was thinking today about the way I price products - physical and digital products each have a different criteria. Plus - what's the added value of something unique or my own personal brand. I try not to let emotions get in the way of choosing a price.
When you have a brick & mortar store that sells only brand new retail merchandise - pricing is easy. Usually you will find a MSRP (Manufacturer Suggested Retail Price) or you have a formula for pricing for profit.
And - it's pretty easy to price collectible stuff... just look at what stuff is selling for or has soldl for on eBay or Amazon.
But - what happens when we are pricing our own products? Products that we have slaved for hours, days and even weeks to create? I'm not speaking about handmade - on of a kind - products, but those delicious products we create once and sell over and over.
A few things to remember:
- It's important to know that your pricing is not permanent. Prices can fluctuate up or down.
- It's important to think about the long term when pricing. Is your product "evergreen" (sell for years) OR do you have a short window of time to make sales?
- It's important to sell some products as lead generators instead of profitable products. Some products are priced as "loss leader" often to get eyeballs on your product and then lead those eyeballs over to your other products.
Don't get hung up with how much time a product took to create. Really.
If you plan on selling this product over and over for years to come... and you took the time and effort to create a quality product... then your time shouldn't be a factor.
Treat pricing as a part of doing business - not an emotional reaction.
Pricing Physical Products
Physical products that we might create using public domain material might be:
- CD/DVD products filled with public domain books, images or video/audio
Begin with knowing all the "costs" of creating the product.
Don't forget to add in every little cost. Every bit of paper, label, ink, packing materials - everything.
If you purchase ANYTHING - make sure you account for that cost.
You must also know all the "costs" of selling your products.
Don't forget to add in every single fee. Every sales channel has fees. Some fees are a % + a specific fee. It's very important that you calculate correctly and "know your numbers".
Also - account for the "time" it takes to get the product to the customer. If you are creating CD/DVD or printing image products yourself:
- Burn the CD
- Print the labels
- Label the CD
- Label the case
- Insert promotional material inside the case.
- Shipping Packaging and Postage Labeling
- Getting the product to a shipping facility
If you are doing all the labor yourself... what's your time worth? For instance:
If it takes you an hour to get 4 products from start to shipped... how much are you making an hour? Some of us have equipment that makes the process much faster - make sure you "know" how much time it takes for your product to be produced.
If you "know" what your physical costs and your own labor costs are - it might make sense to have a service like Kunaki do the work for you.
Pricing Digital Products
Digital Products are products that are either sent via email or downloaded right after purchase. These products are often under priced OR over priced.
One of the criteria you should consider when pricing a digital product is "How long with the information be relevant"?
Evergreen - long term products are probably best vs products that have a "shelf life" and will be outdated in months.
If you are creating a product that is "This Years News" (an example would be - Top Selling Halloween Costumes) then you must price accordingly. Your selling window is limited, so you would price to make the most for your labor. Size of the product doesn't matter nearly as much as the quality of the product.
If you are selling a digital product that is the same (or similar) as your own physical products - how do you price?
For instance: You sell a CD of images and you also offer the same product as a download. (Some selling channels will let you offer both... some selling channels are better suited for one or the other) Does the fact that the product is on CD elevate it's value? Or... does the fact that the customer can get the product instantly - make it more valuable?
Have you created a product that is similar to what others are selling? What's your competition selling their product for?
NOTE: It's my personal opinion and the opinion of other successful sellers - that you should never (ever) create a product that is identical to your competition.
You might have expected a "formula" for pricing your product... whoops. I don't think you will find a true solid - one of a kind - formula for pricing the types of products we create with public domain material.
What I do know is that you must "Know Your Numbers". Know what every single little tiny cost and fee is. If fees or costs change - adapt your prices. You have no excuse for not making a profit.
The Emotional Factor
Please - don't get emotional about prices. If you often say to yourself "I'm not going to sell my product for less than X"... think about what you are saying.
Would $5 profit be enough?
Holy Cow! Isn't your product worth more than $5 profit? Shouldn't it be worth $19?
Will you sell 2 or 3 a week at $19?
Will you sell 20 or 30 a week at $5?
Don't get emotional... put a value on your product, and then test the prices. You might like to earn a bunch of fast nickles instead of a few slow dimes.
Let's think about a major PLR seller, Tiffany Dow. She has "everything is $5" sales a few times a year. During her sales - even the $67 product is reduced to $5.
She might bring in anywhere from $4k to $6 (or more) during her sales. Did she "give away" the farm? Nope. She can still sell the same PLR products for years at full price. Over.... over.... over.... over and over.
Are her products worth full price? You bet. Tiff sells some of the best PLR you can find online.
Are her customers grateful when Tiff has a sale? Yep... we all love a bargain.
Most of us are not "Tiffany Dow" and we don't have a "hungry buying - mailing list). If you price your physical products at $5 on eBay - you are going to loose money.
On the other hand.... If you sell your products as digital downloads (via email) on Etsy, you could have an everything is $5 sale, and rake in some nice cash.
NOTE: If you can find a way to get your customers (or anyone who is interested in your products) on your own mailing list... you will have built in customers for every new product you create. This is the best way to sell products - hands down!
Price your products at a "fair" price. Leave yourself some room for a "sale day"... and profit for years with your evergreen products.
I'm just saying....