Are you charging enough for your products?
Posted by MattE on 06 Feb 2008 at 10:53 am | Tagged as: Marketing, Web
I have just finished reading a very interesting article over at marketingexperiments.com that looks at price point for goods sold via the internet.
I have long advised clients that it it important to charge enough for your products. Turnover is one aspect, but overall profitability is another.
In the article, several experiments are conducted on different industries and pricing mixes.
But lets just look at the first – where an online reference library subscripton had been selling for $69.95
Some new price points were tested:
- $50.00
- $59.95
- $75.00
- $79.95
All other factors stayed the same and each page and the control page were each delivered 20% of the site traffic.
The results show that income earned by increasing the price was higher, yet as only a few less sales than at the control price.
However, if you have value-added items that you can sell to new customers, it may be worth thinking about lowering the price and increasing the number of customers that you can sell other goods/services to.
How can you increase prices and not increase customer resistance? Simply by showing value for money. ‘Talk’ to the customer about the value and quality, the emotive satisfaction of owning/using the product or service.
Do you have experience on the effect of lowering or increasing prices and its affect on sales?
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That’s interesting. One of my mentors actually had similar results when testing this. He said after increasing prices to a couple of his products he had higher sales and less refunds. That goes to show a low price isn’t always better.
remember this………turnover is vanity profit is sanity
I tried changing my prices to sell cheaper and gain more clients or so I thought, what actually happened was nothing…..no sales. This was because the market thought the product wasn’t valuable enough, in other words they thought cheap was rubbish, even though it was the same product. So I returned to my original price and started making sales again. It just shows the market customers can have a big influance on what you set your prices at?
Great post, thanks Matt.