Perfect Pricing for Digital Products

Written By Michael Comeau  |  Pricing  |  0 Comments

What's the perfect price for your product?

It depends...

For front-end products, you want to price as low as possible without creating bad behavior.

What's bad behavior?

People not buying anything else from you.

Your goal is to price your front-end where it generates the maximum number of upsells.

In other words, your pricing should maximize customer lifetime value.

Say you sell a front-end video course and your upsell is an expensive consulting service.

Assume you launch your video course at $100.

You generate 100 course sales at $100 for $10,000 in revenue.

And 10 of those customers take your $5,000 consulting service for an additional $50,000.

That's a total of $60,000:
















So you think "if I price the front-end course lower, I will activate more customers and sell more of those $5,000 consulting packages."


Because here's a scenario you must think about.

Let's say you drop your front-end price to $50.

And you generate 200 sales for $10,000 upfront.

The same $10,000 you got last time.

But you may only get 5 upsells of that $5,000 consulting service for an additional $25,000.

So you generated way more customers (205 instead of 100) but made $25,000 less:
















Why might this happen?

The more money a person pays, the more committed they are.

So a person paying $100 may be 5 or 10 times more likely to take an upsell than the person paying $50.

And this is why 100 customers at $100 can make you way more money than 200 at $50 -- even though you're getting the same dollar amount upfront.

This is the classic principle of Consistency, as outlined by Robert Cialdini in his classic book Influence:

“Once people make a decision, take a stand or perform an action, they will face an interpersonal pressure to behave in a consistent manner with what they have said or done previously”.

-Robert Cialdini

Why do you think it's so easy for Apple to sell $999+ iPhones?

Because people are used to paying a lot of money for Apple products.

It feels normal.

So how can you put this to work yourself in your business?

It's simple.

Monitor customer lifetime value (and your total profits of course) like a hawk.

And see how lifetime value changes at different price levels for your front-end products.

You may be way more profitable with higher prices and fewer customers -- not to mention you have more time because you work with less people.

And of course, the reverse may be true. 

But in all my experience selling subscriptions, online courses, and consulting, when your front-end pricing is rock-bottom, you will sell more units, but you also have:

  • Lower customer lifetime value
  • Lower customer satisfaction
  • Higher refund rates
  • More complaints and customer service problem

So get out there and test.

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