I have been trying various pricing strategies, some have worked and some have not. But I have learned one thing that value of a product depends on how it is sold. If you sell a product right, then it doesn’t matter how much you charge for it.
I learned the above by selling my book at the price of $0.99. I was amazed to see that I sold more than 10 times the number of books at $0.99 as compared to $2.99.
What works for me is my basic $10/month plan. But I also have a $25/month plan and a $50/month plan and $99/month plan. These plans are my top of the funnel. I don’t make a massive amount of money from these plans, but what I am doing is building a list. I have found that the $10/month plan works incredibly well for new clients.
My conversion rate on this plan is very high (I’m easily converting 20% of all people who sign up); the downside is that my profit margins are small; but I’m willing to sacrifice profit margin for customer growth. Essentially, I’m using the $10/month plan as a lead generation tool.
I have several pricing strategies that I employ in various situations.
The one I use most often is my “$X/month” package, where $X is a very small number. In fact, I just launched a new product with a payment plan of 19.99/month.
It works great because it’s easy for customers to calculate the total cost of ownership and to divide it by 12. (This is very important when you’re selling recurring products or services on a subscription basis.)
Most of the times, I offer packages to my customers. My packages are priced from $200 and may go all the way up to $2000. So, I’m not worried about underpricing but I’m very worried about overpricing my packages.
You see, if I offer a $200 package to all my potential customers and that package is not impressive, then I may lose the sale. However, I cannot offer a $2000 package to a customer who emailed me asking for a $500 package. What I do is, I offer a $500 package to all my potential customers first.
If they like the package and decide to buy it, then I will send them a proposal for the next package.
I’m extremely careful about overpricing. I just want to make sure that my customers are always happy with the packages I offer.
If you keep raising the prices, at some point people are not going to buy your product. It is better to lower the price than to keep raising it.
This strategy is not working in my case. I have noticed that some of my customers have started switching to the cheaper products in the same category.
When you price something, you are not just looking to cover your costs but also to make money. So you have to increase your price to your perceived value plus some profit.
