What Kind of Pricing is Best for Your Market?

That's an interesting point - one I've often wondered about, and better minds than mine have grappled with for many years. It's critically important. If you under-price your product, you are leaving money on the table. And if you over-price, you'll lose sales.

But despite all the research and data, there still is no surefire way to assess the best price for an information product you are about to launch. Deciding upon your sale price is an equal mix of calculated guesswork, inspired thinking and sheer luck.

Pricing is determined by what the market will bear. If other products and services of a comparable nature to what you offer are selling well at a particular price point, then your product too will very likely fit in at that level.

Pricing is also limited by 'channel'. Ebooks, for example, fetch an upper price limit of $100 even in the hypey Internet marketing field, while the same content presented as an 'audio course' will easily sell at $197, probably a lot higher.

And books sold in physical printed form in an offline bookstore would be hard to sell at $97 or higher - while ebooks are sold on the Internet at this price quite routinely!

Another component is what Dan Kennedy calls "selling cash at a discount". If I have a 2-page report that shows you how to make an extra $500, and price it at $250, I am giving buyers a GREAT deal. That's because they can use the information to double their investment in buying it.

But it is possible to carry this rule too far.

In some online niches, like Internet marketing, this concept has been stretched so thin there are some fluff-laden infoproducts selling at ridiculous multiples of the price of other comparable products. This is fueled by high-pressure salesmanship and powerful copywriting. It is very likely a backlash will soon follow, condemning such practices and forcing vendors to drive pricing down to the level where value is higher.

A unique market segment is the BOP (bottom of pyramid) marketplace. This is a market of 4 BILLION prospects living on less than $1 a day. You could have the world's very best info priced at $5 and they will NOT buy - because they cannot afford it.

At this point, the only formula that works in this market is:

PRICE = PROFIT + COST

You figure out your price first (say, $1 for a book), then decide how much profit you want (say, $0.25) - and then go about creating the product and distributing it at LESS than $0.75

Tough? You bet. Profitable? I wouldn't have believed it, until I heard Dr.Prahalad's lecture and saw some multi-MILLION dollar companies featured that followed the model. For more detail on the BOP model, you can read the BOP manifesto at http://www.bopinternetmarketing.com

If anything is obvious from the discussion above, it is that pricing is guesswork - and testing. Start out by testing a particular price. See how sales take off. Then try different price points. Track response. Analyze results. Stick with the price that performs best in the market.

But always keep in mind the fact that loyal clients will follow you for a long time if you focus on providing greater value than may be reasonably expected for the price you charge!

Internet Infopreneur
How To Be An Information Marketer On The Web