How I price products
Of all the decisions a product person makes, this is the most baffling:
What price should I sell my product for?
For example, this enterprising teenager is thinking of selling fake prom tickets. ;)
Jason Fried is the founder of one of the most successful self-funded software companies in the world (Basecamp). His advice is interesting:
You can make up a number and see if it works. You can see what others are charging. People answer when they pay for something. That’s the only answer that really matters. So put a price on it and put it up for sale. If people buy that’s a yes.
He's done millions of dollars in software sales, and his advice is: "just pick a number and see if it works."
I'm going to show you my launch numbers for Marketing for Developers / Product People. I don't think I've shared these publicly before:
Launch list (downloaded a sample chapter): 2,650
Launch sales: 615
Conversion: 23% * that's pretty high
Since then it's sold a total of 2,442 copies, but those were the numbers I had at launch.
There's 3 ingredients to making a sale:
Choose a group of people who pay for things
Build something they want
Earn their trust
some people will buy no matter what
others are more price conscious
and most people won't buy, ever
So if that's true, one way to do pricing is to figure out what your financial goal is, and work backwards:
"I want to earn at least $10,000 from this launch"
If 100 people buy it I could charge $100. ???
If 250 people buy it I could charge $40. ??
If 400 people buy it I could charge $25. ?
You need to choose a sales target that's reasonable, given the size of your audience. If you have 100 engaged people on your mailing list, you shouldn't expect 80 sales. I'd aim for the 5% - 15% range.
When I priced Marketing for Developers, I settled on 3 pricing tiers:
Complete package: $195 (18% of launch sales)
Premium package: $85 (6% of launch sales)
Just the book: $39 (75% of launch sales)
The advantage to pricing higher is you don't need as many sales to reach your goal. However, there's a tipping point. As I mentioned above: some people will buy as long they're getting good value for the price.
I would say: always price based on value. That’s a combination of ‘what it’s worth to you’ to do the work to put it together, and priced based on the amount of value the reader is going to get out of it.
- Nathan Barry
On the other hand, there are lots of folks who can't (or won't) buy if the price is too high. These might be new customers, who don't trust you yet. They're brand new, and they need an entry point. There are also folks living in other countries (where the currency exchange is high).
Now I'm writing a new book, called Jolt (you can get a sample chapter here). It's a book full of creative marketing ideas for software developers, designers, startups, and anyone selling products online.
Here's a sneak peek of a chapter I'm writing now:
This is one thing I'm thinking about in terms of price:
Maybe I should try something I've never tried before: pricing low.
Like many authors writing technical books, I priced my last book at $39.
This time I'd like to price lower: $9 per book and aim for a larger volume of sales.
Here's my thinking:
There's a lot of folks who tell me they want to support my work; a $9 price point allows them to do that easily.
This book is turning out really good, and I'd like a lot of people to read it.
Ebooks can't all be $39. Some topics and form factors should cost less.
I want to try this: I've never tried a price this low!
This might also allow me to sell a book on Amazon, which I've never done.
I haven't made up my mind 100%, but I thought I'd share my "behind the scenes" ruminationa.
What do you think about pricing? Let me know on Twitter or Snapchat.
Cheers,
Justin Jackson