5 Pricing Strategies for Your Digital Product
Pricing is more than just how you sell your products. It’s a marketing strategy in itself that says something about the value of your product. When you’re pricing physical products, it’s much easier to decide on a final number. You have production costs and materials to consider into that sale’s price, so it’s as simple as calculating everything together to ensure you earn a profit.
When your product is digital, things are much less clear. Most likely you only put time and skill into the creation of your digital product. There might not be a clear way to determine just how much money that time is worth. You still want to make a profit, and you know your digital product has value. From software to e-books, you want to make sure customers know your product is worth paying for. These strategies for pricing below place your business ahead of the competition and demonstrate your value.
1. Tiered Pricing
One of the first methods for pricing competitively is to offer tiered pricing. People will often feel compelled to pay a bit more if they know there’s more in it for them. Similarly, those who might have objected to a higher price before will feel more comfortable choosing a lower, more affordable tier. This is an incredibly popular option in the SaaS realm, so customers don’t need much introduction to this model.
Don’t think you need to offer software as a service to use tiered pricing, however. This can work for virtually any digital product or service. For instance, if you’re selling a downloadable e-book, you might include a lower tier with the e-book alone and a more expensive tier for the e-book and a corresponding workbook.
2. Try Before You Buy
A lot of customers object to online purchases because they’re worried they won’t be worth the money. That’s why a “try before you buy” strategy is so effective. By offering customers the opportunity to see for themselves whether they actually find value in the product, they’re more likely to make a purchase. This also builds trust in your customer base.
Most software companies already offer a 7-day or even a 30-day free trial. Having an autoresponder in place will remind customers that their trials are expiring and it’s time to consider a purchase. 44% of SaaS companies offer a free trial of some sort, but this can work for virtually any type of digital product. Using the e-book example, a trial might include offering the first chapter of the book for free so customers can learn more about the content of the document before making a purchase.
3. Added Bonus
Who doesn’t love getting something for free? We see this all the time at in-person shopping establishments. Offering an incentive with purchase can go a long way towards convincing people to either reach a certain price threshold or to make an extra purchase. For instance, a virtual accounting service might let users download free graphic design invoice template with the purchase of a subscription.
This all comes down to perceived value. Customers want to get the most bang for their buck. Having a freebie shows them that this is a high-value purchase that’s worth taking their wallet out for. The key is to make sure your bonus has substantial value to add to your core offering.
4. Price Psychologically
We’ve all seen the prices in the store that read $29.99 instead of just $30. This isn’t just for fun. It’s a psychological method of pricing that makes things appear to be a better bargain than they really are. That’s why you’re more likely to see prices ending in zeros in high-end shopping stores, while discount stores are known for prices ending in “7” or “9.” These numbers have been conditioned to show a bargain.
5. Learn the Market
Finally, it’s up to you to learn your market as much as possible. You need to perform a complete analysis to understand how your competitors are pricing their digital product. If you want to compete against these products, you need to price them accordingly. That doesn’t mean to price your digital product lower, but it means you need to be careful with your strategy.
A product priced slightly higher than your competition can show value. It might lead users to believe your product is of higher quality, thus worth the extra funds. This only works if you can demonstrate your value with a strong sales strategy. On the other hand, pricing slightly below your market competition can also get you an edge over those in-between buyers.
Pricing as Marketing
In many ways, your pricing strategy should depend on how you market your product. Because you don’t have a clear materials list or production cost associated with most digital products, it’s vital you find a way to price your product that works for your business. It’s tempting to match yourself to your competition but think outside of the box.
Untraditional pricing methods are often rewarded. Finally, don’t be afraid to try new things. If you try one strategy only to find it doesn’t work, don’t be afraid to try something new. Your prices don’t have to be set in stone. Leverage your pricing as you would any other aspect of your marketing, and you’ll find success.
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