Pricing digital products can be tricky, especially because prices and values of digital content can vary so widely. This is a unique challenge faced by digital product creators compared with physical product creators who have much higher production and overhead costs. Specifically when it comes to digital products versus live events, prospective customers must decide where to spend their money to get the best information and training. Several factors are at play when making this decision
- What is the nature of the content covered?
- Do customers want to connect with others through networking?
- What is the level of expertise of the content creator or speakers?
- Will they receive a positive overall experience with high value information?
The goal when producing and pricing digital products is to predict and meet the customer’s needs. And while digital products can be just as effective as in-person events, customers may choose to attend a live event because of the networking opportunities and caliber of speakers. That said, digital product creators can address these differences by offering life forums for customers to connect with other customers, as well as utilize a variety of experts to create and deliver the digital material.
In fact, there are many benefits to customer in selecting a digital product over a live event:
- No travel or hotel costs
- Customers can watch again and again
- Customers can download and share (if allowed by the product creator)
- Customers often receive better access to the company/expert
- Frequent content updates are possible so customers are getting the latest and greatest information
- Comfort of attending from their own home/device
Benefits to content creators include:
- Fewer overhead costs
- Attendance is not confined to a conference space
- Immediate product feedback in real time
- Consistency in the customer experience
- Produce digital content once and sell it over and over again
How to Price Digital Products
Just as the price live events can range from two digits to five digits, so can digital products. The cost comes down to their value. Demonstrate value to your customers with things like testimonials, portfolios and case studies of your work. This will show proof of concept, trustworthiness and expertise.
Digital product creators have several pricing strategies to consider for their digital products:
- Competitive pricing
- Value-based pricing
- Tiered pricing
- Donation-based pricing (pay what you want pricing)
Bottom line, your price should reflect your industry, customers and the usefulness of your product/service. Other factors that affect digital product pricing include:
As a content creator, do not be afraid to price high. A more expensive product often has a higher perceived value, something that on its own might boost sales. Keep in mind that your customer acquisition cost is the same whether your price is high or low, so it’s a good idea to price higher and nab additional profits. Most importantly, test, test test! Here are some incentive techniques to use when selling a high-priced digital product:
- Installment payments
- Multiple price tiers
When pricing your digital product, remember that you incur virtually no recurring manufacturing costs, shipping costs/issues or inventory storage fees. Your only real cost will be in marketing your product, which provides another layer of flexibility in your pricing approach.