When it comes to pricing your digital products, there are a lot of mistakes you can make. It’s not easy coming up with the best price. Unlike physical products, you need to put a lot of guesswork and estimation into your pricing model.
To help you set the right price, here are some of the most common mistakes to avoid when pricing digital products.
Over- or Underestimating Product Value
By far the most common mistakes made with pricing digital products is over- or underestimating product value.
Pricing digital goods is different to physical goods. You rely more upon perception, making it difficult to accurately price the products. With cost-based pricing, you know how much you need to charge because you work out how much the product costs to make and how much profit you want to earn. However, it’s more difficult to do with value pricing.
If you set your prices too high, you’re going to struggle to make any sales. On the other hand, setting them too low can have the same effect. Customers might wonder why your products are so much cheaper than the competition. They may feel it’s because your products don’t offer the same level of value.
So, you’re going to want to spend a lot of time researching prices for similar products. Then, work out exactly how much value your products are providing. You could also do some market research to see how much people think your products are worth.
Offering One Set Price
Another common mistake is offering one set price for your products. While this can work with some products, generally speaking it’s better to offer a variety of prices.
Tiered pricing works particularly well, giving customers various options. They can choose how much they want to pay, plus having the higher price there makes the more basic packages seem much better value for money.
Not Tailoring Your Approach with Different Customers
Following on from the last point, it’s important to tailor your approach to different customers. Each type of customer has their own unique buying habits. They are willing to spend different amounts and they require different things. So, be sure to offer pricing models and packages that appeal to a range of different customers.
Simply Charging Less Than Your Competitors
It’s logical to think that in order to succeed, you should charge less than your competitors. However, surprisingly this isn’t always effective.
This is because customers today care about so much more than the initial price tag. They want value more than a lower cost. So, avoid just pricing your products lower than the competition. Instead, focus more on the value they’ll be receiving.
These are the most common pricing mistakes you can make. Pricing digital products can be tricky, but the above can help you to increase the chances of getting it right. Sometimes, it’s worth experimenting with different pricing models to see which works best for your business and customers.