What's The Price?

As simple as it appears it should be, it is not always the easiest thing to set the price for your product or service.

Maximize Your Profit By Pricing It Right

What you perceive the value of your product to be can sometimes be much different than what the market reveals.

This is particularly true if you offer a unique product or service that isn't available from many (if any) other online sites.

Too Close Too Tell

Part of the problem with setting a price on your own product is that you are likely too close to it to be objective about it.

It can go both ways for you:

• Your perceived value could be much more than the market is willing to pay.

  If this is the case, it can be difficult to determine this sometimes at first. Your lack of sales might have to do with the site itself and not necessarily as much about the price of the product.

• You may be under valuing your product.

  The result is not gaining the potential profits you could be. Imagine if 5 years from now it finally became apparent that you could have been charging 30% with the same amount of sales. That would be pretty painful!

Setting A Baseline

If you have a site that has been up and running for a while, it is going to make price testing easier for you.

Hopefully you have already determined your conversion to sales ratio for your site. By knowing this, it is much easier to do some price testing.

The important thing to remember is to keep everything the same EXCEPT the price changes that you make. This helps you determine that the price change is what had the effect on your sales.

Keep It In Perspective

Do not just look at the total number of sales. More sales does not necessarily mean more profits.

Which would you rather sell 100 $1 items or 2 $50 items? The answer is usually obvious. Unless you have some other reason to do so, it usually will significant reduce your work load by making few sales at a higher price.

On the other hand...

Why Should I Sell For Less?

Do you want to get maximum profit from each sale you make?

Not necessarily.

At least not with the first sale.

You have to determine what your longer term goals are, if any.

If you simply have a one shot product or service, then the highest one time profit is likely your goal.

The saavy online business may intentionally set a low price (a "loss leader") so that you become a customer. Then they can upsell you with other products and services.

So lesson one is to figure out what your long term goal is for your customers. A one shot deal vs. a longer term relationship. This will help you set your pricing goals for the maximum potential.

I will be taking a look at some of the specifics of pricing psychology coming up. We'll look at not only the basic ($9.95 vs $10?) but the perceived value of "real" vs. online only goods.

You'll also see one how I use one of the best resources available to determine the optimum pricing for one of my recently released products.

The results were pleasantly surprising to me and I'll share with you my results.