Setting a price for a digital product can feel more challenging than setting a price for a tangible product, as it lacks many of the traditional costs and inventory limitations.
For example, the overhead costs of holding and distributing a digital product tend to be far less than managing a supply chain for a physical product. The cost of production exponentially decreases with each item sold.
There are a few ways to price digital products for the greatest possible return.
Here are 6 pricing strategies for your digital product
High Price vs. High Volume
Your pricing strategy should fit in with your overall business strategy and brand.
Your brand comprises of the image you wish to convey to your customers, through your price point, demographics, visual components of your woocommerce website design, etc.
To keep things simple, decide if you’re going to go for a high price or a high volume.
It’s simple economics: the higher your price, the fewer products you will sell while receiving more revenue. With a high volume strategy, you receive less money per digital product sold, but ultimately sell more than you would with a high price strategy.
If you’re positioning yourself as a high-end brand, high pricing will likely fit better with your goals as you don’t want to devalue yourself.
Tiered pricing is the most effective way to target multiple demographics by creating accessibility and value at different price points.
It also provides a comparison point that allows customers to feel as though they’re getting a good deal, no matter what they decide to pay. With tiered pricing, there are usually three different price points that have different offerings with the product.
For tiered pricing to be effective, consider adding a slight discount at each level that encourages customers to take the savings and the extra value.
By doing so, they will give you more money for the product and increase your revenue overall.
Free trials are another way to showcase your digital product’s value to your customer.
Many businesses are circumventing the scammers by requiring that a credit card is entered for auto-renewal at the end of the free trial, creating a better return and focusing on serious inquiries.
The free trial period is an excellent time during which to test some A/B marketing strategies through your email sales funnel, seeing what works for encouraging your customers to commit to the sale.
One of the oft-used psychological pricing tactics is anchoring, which places an expensive product next to one that’s far more affordable.
This can be used in conjunction with other pricing strategies for an extra boost.
During promotion periods, list your product for a reasonable rate next to something that costs substantially more. When customers see this product at a low cost, it gives them a sense of getting a bargain and encourages them to buy.
This strategy also works when trying to target various demographics.
Deep discounting is another strategy that can be used in conjunction with other pricing options for a psychological sales boost.
With deep discounting, you set the regular price at an inflated rate and offer a deep discount on the digital product at regular intervals. By promoting these discounts, customers feel as though they’re getting a deal.
With deep discounting, it’s important to consider how frequently you’ll offer this discount. If it’s too frequent, the sense of urgency is lost.
If it’s not often enough, you could lose customers to the competition.
Enrollment periods create a sense of scarcity with a product and offer the value of repurposing marketing content and generating hype each time an enrollment period opens.
This can also be beneficial from a business management standpoint, as it helps you prepare for the increase in volume to your website and any onboarding tasks you use to create repeat business opportunities.
Start by testing one of these pricing strategies and seeing how it fits into your overall brand strategy.
From there, consider doing some market testing with pricing combinations to discern what has the greatest return.