Choosing the right price for your digital products is one of the most critical, yet difficult, aspects of your business strategy.
Most merchants understand that over-valuing a product kills sales. It is also fairly well understood that under-pricing cuts the unit revenue without any guarantee of a significant gain in sales volume. But few people are aware of a third (but equally important) pricing observation; that compromise pricing can be as harmful as either of the other two blunders.
To understand why this is the case, we need to examine the principles that lie behind effective pricing strategy. In general, merchants adopt one of two key philosophies when they price a product. They either set the price at a low level (which produces a low margin but high sales volume), or they choose a high price level (which trades off volume in order to gain margin).
These two approaches are known respectively as "penetration pricing" and "pricing for profit." The former strategy is typically used by new competitors in a market, or by existing retailers that need to quickly establish a position of dominance after a product launch. The latter technique is favored by established businesses with mature products, where the objective is to earn the maximum profit yield from an existing dominant market position.
It is clear that, whether the strategy is to price low or high, going too far in either direction can be self-defeating. But mid-way pricing is equally ineffective, as it compromises both strategies; it unnecessarily discounts the product without doing so sufficiently to generate a significant improvement in volume.
As a vendor of digital merchandise, you are at a distinct advantage over traditional merchants, since there are no marginal costs associated with your business. Regardless of how low you choose to price your product, you are still guaranteed to show a gross profit on every sale. In contrast, a merchant of physical goods has real fulfillment costs (product manufacturing, damaged and unsold inventory, storage, shipping and handling) that impose a fixed lower price limit below which each sale represents a loss. This advantage affords you great flexibility in your pricing, but even if you use this flexibility to pursue a penetration pricing strategy, you should still be aware of the risk of counter-productive price-cutting.
Some ClickBank merchants use an experimental approach to pricing. Their aim is to establish the most profitable price through trial an error. Although this is understandable, even logical, it can be a customer-relations nightmare. You should think carefully before over-pricing a product and subsequently being forced to reduce the price in order to stimulate demand. Nobody likes to return to a website and see that a product they already purchased is now being offered at a lower price.
The opposite approach is to steadily increase prices from a low level, and is usually less of a cause for concern. Some merchants launch their products with a deliberately low introductory price - a benefit that they emphasize in their sales pitch. The time-limited, or volume-limited, nature of this technique can be a powerful incentive to buy, and it also allows the merchant a trial period in which to observe sales behavior before setting a definitive price to meet his longer-term strategic objectives.
About The Author
Copyright ? Tim Coulter. All rights reserved.
Tim Coulter is a consultant and software developer who helps netpreneurs to harness marketing technologies.
He is also the author of "ClickBank - The Definitive Guide" The Ultimate ClickBank Tutorial & Reference Manual.
http://www.clickbankrevealed.com/
Wood Dale Chicago prom limo .. Lockport Chicago limo O’HareOne of the hottest crazes for online marketers is Adsense... Read More
Pay per click (PPC) advertising continues to gain popularity in... Read More
Google AdSense allows webmasters to dynamically serve... Read More
Have you received your check from Google? If you own... Read More
Examining the failures of the web content design of many... Read More
Despite what you may hear, the Google AdSense program is... Read More
Forbes magazine reported that pay per click ads accounted for... Read More
Despite being online using email since 1995, at the start... Read More
Pay per click marketing is one of the simplest and... Read More
One of the absolute best online marketing processes available to... Read More
We constantly receive phone calls from clients, prospective clients and... Read More
"Pay-for-Performance" or "Pay-per-Click" Internet advertising is making big waves lately,... Read More
The cycle of affiliate programs and money making ventures goes... Read More
We've received many emails from customers over the past several... Read More
Paid Search Advertising (also Pay-Per-Click, PPC) has gained a significant... Read More
I often get asked what the secret is to making... Read More
Google's AdSense program is one of the best, if not... Read More
Google AdSense is a great way for webmasters to monetize... Read More
Google Inc. is suing a Houston-based company for allegedly clicking... Read More
Forbes magazine has reported that pay per click ad sales... Read More
So how do people find my website? This is by... Read More
One of the best kept secrets in today's affiliate marketing... Read More
As you probably know, Google is the world largest search... Read More
As a blog or site owner, you can make some... Read More
Here's a fact for you, 85 to 95% of Websites... Read More
Antigo wedding limo ..4. Write an attractive ad - you have a very... Read More
Google Adsense is a hot topic in the Internet Marketing... Read More
The pay per click (PPC) search engines have created a... Read More
One of the hottest ways to sell affiliate products is... Read More
Why do people search on search engines? Let's confess this... Read More
"Todd" was keen to compete in one of the most... Read More
Click fraud has become a major problem for online marketers.... Read More
Lots of people would like to get their Web site... Read More
So, you've tried all the marketing techniques you have read... Read More
Do you want to get paid for posting ads on... Read More
"Pay-per-click," by far the most popular form of online advertising,... Read More
Not long ago, Forbes magazine has reported that pay per... Read More
Here are three Adsense Tips, together with the required HTML... Read More
Advertising on the Internet has always been a bit of... Read More
Hardly a day goes by without a forum posting in... Read More
During conversations with web business professionals about pay-per-click search engines,... Read More
As the dust settles and the excitement caused by Google's... Read More
Dinner With Mark JoynerAbout 3 Years ago in Los Angeles... Read More
According to Andy Jones, a member of the Best Practices... Read More
Your probably reading this article because you use Google Adwords... Read More
Why, on your web pages of course. Ok, just kidding.... Read More
Here's a feisty trick where you can profit from Adsense... Read More
Google is probably one of the single most important revolutions... Read More
There are many forms of advertising nowadays. There's popups and... Read More
Dear friends,Google, the most populated search engine on the Internet,... Read More
Pay-Per-Click Advertising |