What Should You Charge For Your Digital Product?
Starting A Business With A Digital Product
Everyone wants something for nothing, especially in the online space. You are expected to give 10 times the value to a customer than they pay for, otherwise they will question your value. And that’s after you have already given them massive volumes of value free of charge! If you look at the time it takes you to create your digital product, including all the free value, and then look at fee you charge for your digital product. You are probably only earning a few cents an hour! Well below minimum wage anyway. So why bother starting a business with a digital product?
The beauty of the online business space is that you only have to create your digital product once. You only have to make a few sales to get into profit, then apart from some marketing and optimization tweaking, that one product, that one time effort can make you money for years and years. So, you’re not judging your hourly rate by how much you earn from selling that one product, it’s selling 100, 1000, 1M products. All of a sudden things look rosier! That’s what’s so appealing about starting a business online. Creating a business online can make you a lot of money – You just need to get past that first hurdle.
When you are selling your digital product, you are not selling one, you are selling one thousand. Think about how much you want to make from one thousand sales and how much effort you are willing to put in to make that amount of money – ie a thousand times more effort than you would put into one product! If a customer is getting a thousand times more value than they expected, they are not going to feel short-changed and ask for a refund, instead they will be looking for your next product and recommending you to their friends – how much is that worth to you?
This is something to consider when deciding what to charge for your digital product. You want to charge enough so that it is perceived as being of value and not something that is cheap. We think brand name baked beans are better than store’s own baked beans when they’re both just baked beans. The value we attach to them comes from the price and not the quality. We want our customers to be blown away by the value they receive at the price they paid not view our product as disposable, something to tide them over until they can afford the quality product. And we should have the confidence in our product to charge a proper price for it because we know that it’s worth that.
Of course you will want to undercut your main competitor to give yourself an advantage, but you don’t need to go too far. Next time you go to the mall you will see that products are set out in threes. The ‘cheapest basic economy’ product, the middle ‘better than economy does everything you want but is not too expensive’ product and the ‘top of the range does more than you need it to super expensive’ product. The store want you to buy the middle product and that’s why it’s set out this way. They know you are less likely to spend more money than you really have to, but will feel good about buying a product that is better than the basic. You want to price your product in this sweet spot!
Getting the price point right may take a bit of trial and error. Things to bear in mind are in order to make your thousand sale figure, how much would you need to charge a customer? How does that fit into the prices your competitors are charging? Are you underselling or overselling your digital product? Can you adapt your digital product to something more suitable for a higher price point? What would your net profits be? Are you getting the return you deserve for your efforts? Can you give more value? These are all important factors to consider and you must be prepared to test a few different price points until you find the one that works best for you.
You also want to think beyond the first sale. What do you want the customer to do next? After going to all that effort to make the sale are you just going to let them disappear? Or are you going to engage them so you can sell them your next product or an upgrade on the one they’ve already agreed to purchase. Repeat customers are what’s going to make your business turn a massive profit because of the money you will save not having to recapture new leads over and over again. You want to find a way to make a residual income from your customers as that is what is going to give you a stable base and you can build from there.
If you’ve not done so already, take advantage of Residual Revenue Secrets. It’s a free course that goes into these concepts in greater detail with a view to building a sustainable online business. Highly recommended.
The most important thing to do is to just take action. There is no point having a million dollar idea if it never makes it outside your imagination. Over and over again we see people failing online because they do not take enough action to get themselves over the hump and into the promised land. They will tell you they’ve tried everything and if only they had this and that but nothing works. Successful Entrepreneurs instead figure out how to overcome problems. It’s a real shame to see people fail because they don’t create enough momentum behind them, they give up and declare it impossible never knowing how close they were to breaking through.
Remember, success comes from unrelenting hard work and determination. There are two options on the table, succeed or fail? If you choose not to fail then all you can do is succeed! Get your mindset right and the rest is easy.