digital product

How to price a digital product?

How to price a digital product in a way that does not harm the financial health of your business?

If you are looking for ways to make money on the internet, selling digital products can be an excellent option.

Of course, to get ahead of your competitors, you need to get the ideal price for a digital product that you are interested in selling, be it an online course or an e-book, for example.

It is important to know that pricing a digital product and a physical product is different. And, besides, it is essential to know how much your customer will be able to pay for it.

In this article, you will learn about these differences in detail and learn how to price a digital product!

Important factors for pricing a digital product

Sales

It’s hard to know how many units of a digital product will actually be sold. So what you need to know is: What is the value my product delivers to my customer?

If you know how to say this, you start with a pricing basis. This base will later be analyzed in light of your target audience.

Court hearing

One of the most important steps in pricing a digital product is knowing your audience.

For example, it’s no use having a super complete online finance course and trying to sell to people who don’t even know what savings are.

Having a segmented audience will help you how to price a digital product in a more assertive way.

In addition, it’s interesting to understand how that customer’s journey through your sales funnel is like, in order to offer the best value offers at every step.

Competitors

While your competitors will serve as a basis for which way to go, that won’t actually determine how to price your product. Use it as an example, but don’t get too caught up in what your competition delivers.

Deliver value

It is essential that you first deliver the true value of your product to your customer. Only then will he take stock of the price.

If you start the sales process by delivering the price, it can cause them to lose interest in the product before they even know more about it.

Will this product transform your customer’s life? Focus on it!

Don’t think that putting a price too low will encourage your audience to buy. It’s almost the opposite: if your price is too low, naturally your audience will think your product has no value.

The Brazilian, in particular, considers a product with a low price, a bad product. So, if you deliver a product with very low value, it’s as if you were saying to your customer: “look, this product is cheap, it doesn’t deliver much value”.

Many people are afraid to talk about the price of the product and end up turning the customer away. Is this your case? So it’s time to start overcoming this fear!

Nobody can be ashamed to charge for the value they are delivering on their product. The tip is precise to show the customer how that product will be the solution to his problem. People tend to pay for it.

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5 steps to price your product

So far, we understand that the value of a product cannot be as high as to discourage purchase, nor so low as to not generate profits. But how to reach balance?

In addition to the video content, these five steps will help you price your digital product in practice:

Calculate the cost of production

To produce your infoproduct, did you use a computer, camera or other objects? Yes, you must calculate the cost of these products. Of course, you won’t calculate the total value, but you should average the usage of these products over the usage time.

For example: did it take you 15 days to produce it? Try to come up with an average amount of what you would pay to use this item for that period of time.

Calculate the labour

Now, you need to calculate your company’s expenses, defining fixed and variable expenses.

Variable expenses are those that are sporadic and depend on sales volume. For example expenses with the issuance of a bank slip.

Fixed expenses are those that must be paid, regardless of the amount of your billing. An example is an amount you pay for a platform, domain, etc.

Also, remember to calculate the value of your labour and other people who are involved in developing this product.

Respect the profit margin

If you want your business to grow, you need to have an established margin.

We know as a profit margin that percentage that is added to the costs of a product or service. This sum forms the final price of this product, that is, the value at which the product will be marketed. Its function is to optimize sales, generating profit for the business.

If you have defined a 30% gain on the cost of each item, be aware of this when pricing. Respecting the margin is essential for you to evolve and see your business take off.

But remember: the margin is not your salary. Your salary must already be included in the fixed costs. The profit margin is a value that goes beyond that.

Understand and know the markup and profit margin

Many entrepreneurs don’t know the difference between markup and profit margin.

The profit margin is the percentage that goes back to cash when costs are paid. In other words, it is the value that is “left over”.

The markup is the percentage applied to products. That is, the profit you want to make with each product.

Do thorough research on your market

If you’ve already done a simple Google search, you’ve probably seen a price list for your products, right? But you must go beyond that!

As mentioned above, you must analyze your competitors. And with this research, you may run the risk of discovering that the price you want to sell at is higher than what is offered in the market.

At this point, you should analyze: is it possible to reduce the value in any way, without affecting costs and margin? If the answer is no, maybe this isn’t the best product for income.

But calm down. It’s not time to give up. You can also opt for other ideas, such as: sell your course for the price you want, but add some other advantage that makes the consumer feel that they will win in the end.

You can also decrease the profit margin on product X and increase it on Y and offer both together.

How to sell more and add value?

The more transformation you provide to your customer, the more price your product will be. This is the value proposition of your solution.  If the customer had the power to push the button and automatically learn how to transform their life through your product, they would.

The solution is the first point that the potential customer observes, even before the price. If he believes his life will be transformed, he will make the purchase – of course, considering that the price is not high in relation to other possibilities of market transformation.

If you have questions about how to present this proposal, we have prepared special material to help you be persuasive in sales: an e-book with headlines that convert and are impossible to ignore!

But what about the discount trigger? Yes, it tends to bring more sales for your product as long as it’s not overused.

The truth is, the reason a sale doesn’t always happen isn’t always the price. There may be some problems with your page. The video may not look good, the information may be difficult to understand, etc. So, before thinking about changing the price of your product, evaluate your metrics.

Investment in ads

If you’re not selling, you may need to do more with your ads. Sometimes results may not be coming because you are attracting the wrong people to your campaigns.

Only with a well-designed planning is it possible to understand what you are doing wrong and right in your campaigns.

Then yes, if you’ve tested everything and realize that your product still doesn’t convert, maybe your problem is price.

It doesn’t matter how much it cost you to produce your content. What really matters is how much your audience can and is willing to pay for your product. So, the first thing you need to consider is the purchasing power of the consuming public and the payment methods they prefer.

Search your target audience and prepare your platform and your digital product for this reality.

The price variable in digital product pricing

Price is a strategic aspect of any business and can be the difference between a company’s success and failure. Knowing how to price products is essential to have more competitiveness, profit margin and market differential.

Defining an adequate sales value for a product or service depends on the balance between the market price and the value calculated based on the company’s costs.

Therefore, pricing directly involves identifying which value generates market competitiveness and profitability for the business.

From this calculation, the entrepreneur must consider 2 basic aspects: the external market and the internal financial.

Also, pay attention to the turnover of your product, that is, the time it takes in stock. The smaller, the larger your profit margin tends to be.

Product rotation

The product turnover needs to be enough to cover the fixed expenses of the companies, surpassing the break-even point each month. For this, your profit margin multiplied by turnover must be equal to or greater than your fixed expenses.

Observe the competition’s price and try to differentiate yourself from the competitors, whether in the product presentation, in the sales process or in the sale of kits, which can even reduce your profit margin, but increase the customer’s average ticket.

Depending on your audience’s expectations, the selling price of your products or services can be adjusted. See if what your customer is looking for is agility, as products and services delivered in less time can be something highly valued.

Or is he more interested in exclusivity? In this case, it tends to be less price-sensitive and you can improve your margin with the higher sale price. And if your margin allows it, you can deliver the agility and comfort combo to differentiate yourself.

There are several ways to sell your infoproduct without having your business go through difficulties. Just plan, study and be creative!