Profitable Pricing Strategies PLR Ebook

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Table of Contents

Table of Contents ……………. 2
Introduction …….. 4
Price Point vs. Pricing Model . 6
Price Point ….. 6
Pricing Model ….. 8
Free Trial ……… 10
Benefits of a Free Trial .. 10
Potential Drawbacks of a Free Trial. 10
Subscription-Based ……….. 12
Benefits of a Subscription Model ….. 12
Drawbacks of a Subscription Model 13
Freemium …….. 14
Benefits of Freemium ….. 15
Drawbacks to Freemium 15
One Time ……… 16
Benefits of One Time ….. 16
Drawbacks of One Time 16
Testing & Tracking ………… 17
Gap Analysis … 18
Conclusion ……. 21
Resources ……. 22

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Price Point vs. Pricing Model

There are two main factors at play with regard to pricing. Both of these factors must work perfectly in unison in order for your conversions and profits to be maximized.

Price Point

When most people think of pricing, they think of the price point of the product. This is the actual price of the product. The price point definitely has a huge bearing on sales.

Believe it or not, it’s just as easy to price yourself out of the market by going too low as it is by going too high.

The reason for this is that many people see “perceived value”. If a product is priced higher, they tend to expect that product to be high quality. Conversely, a very inexpensive product is often expected to be low quality and many people will avoid it, assuming it isn’t worth the money.

Factors to consider when deciding on a price:

• The pricing currently in use by your competitors, if you have any – You don’t want to stray too much from the market standard price unless your product is significantly different.

• The income level of your average customer – Obviously you must price reasonably enough that people who want to purchase your product would be able to do so.

Profitable Pricing Strategies

• The quality of your product – Be objective and compare your product to that of your competitors’ products. If yours is significantly better, you may be able to charge more. If not, you may have to charge less.

• Your reputation vs. the competition – If you have a much better reputation or are much more widely known than the competition, you should be able to price higher. Otherwise, you’ll probably have to charge a bit less unless your product is significantly different.

• The prestige of your product – If your product is a fairly popular brand name, you might have a pricing advantage. People will pay almost $1000 for an iPad even though they could get a similar product from an Apple competitor for half the price because they want the prestige of the Apple brand.

• How desperate the market is – People will pay more if your product is something they are absolutely desperate for, such as a cure for something painful or a way to save their house from foreclosure.

Pricing Model

The pricing model is not the same thing as your price point. Whereas the price point refers to the actual price of your product, the pricing model refers to the method in which you collect payment.

This doesn’t refer to whether you take cash, credit cards, checks, etc. Instead, it refers to the way in which you present your products price to potential customers.

Profitable Pricing Strategies

Some common examples of pricing models include:

• Free Trial – A free trial offer lets buyers try your product for a set period of time before they buy.

• Subscription – A subscription model charges a recurring fee on a regular basis, usually monthly. This could be for access to something like a membership website or a service, or it could be for monthly delivery of additional products.

• Freemium – The freemium pricing model has gained momentum in recent years. This model involves giving a product or service for free with reduced or limited features, and charging money to upgrade.

• One Time – This is a standard payment where the customer simply pays one set price for a product.

There are other pricing models as well, including bundling, tiered pricing, market pricing, donations or buyer set price, and many others.

But we’re going to take a look at the four pricing models above as they have been proven time and time again for a wide variety of product types.

Now we’ll start taking a look at some of the various pricing models, along with their benefits and drawbacks, as well as how to know which model is right for your product.

Profitable Pricing Strategies

Free Trial

The free trial offer can apply not only to digital products like membership sites, but to physical products as well. You may have seen free trial offers for physical products on television or in magazines.

Benefits of a Free Trial

1. If your price is prohibitive for a product that is new or doesn’t have a big reputation yet, a free trial can ease people’s fears and get them to try your product.

2. If your product is so revolutionary that many people may not see a use for it or may not understand it, a free trial will allow them to become familiar with the product with no risk.

3. If your product is a type of product that leaves many people skeptical, such as diet pills, “miracle cures”, “make money products”, etc., such fears can be eliminated or reduced by allowing a trial.

Potential Drawbacks of a Free Trial

There are a few drawbacks, too:

1. You must shoulder the burden of paying to provide the product to the customer with no guarantee of payment. In the case of a physical product, this cost could be considerable and would include the cost of the product itself, shipping costs, and your time spent delivering it.

Profitable Pricing Strategies

2. Unless you require a credit check (which most people would not go for) or ask for a credit card to guarantee payment (which almost defeats the free trial model unless your reputation is already stellar), you have no way to ensure you’ll be paid.

When deciding whether or not to try a free trial offer for your business, consider the following:

• Is it financially feasible for you to do? Remember that if your product is a physical one, you will have to front the cost of production and shipping until payment is made, and you will also have to deal with the potential of customers not paying. There’s little risk on digital products, because you won’t lose much other than perhaps a little download bandwidth If the customer doesn’t pay.

• Will your product sell just as well without a free trial offer? If so, then it doesn’t make sense to shoulder the risk of a free trial.

• What is the likelihood that people won’t pay? You’ll have to analyze a number of factors for this question, such as the quality of your product, the financial capabilities of your market, the age range of your market, and your product’s “passion factor”. Remember, if people are passionate about a product, they’re more likely to pay for it on time.

Subscription-Based

As with a free trial offer, a subscription-based pricing model can work with both digital and physical products, depending on the product. If you have a product that could be delivered (and needed or wanted) on a regular basis, a subscription model might be right for you.

Benefits of a Subscription Model

The subscription model has many benefits, including:

• The price of a subscription may appear much lower (at least initially) to the average person than a larger one-time lump sum.

• The lower initial price point may make it easier for people to take a chance on a product (or person/company) they’ve never heard of.

• It works very well for products that are required regularly such as web hosting, game access, and even physical products that are needed often such as vitamins or other consumables, because it ensures users won’t accidentally forget to reorder in time, thus running out of the product.

Drawbacks of a Subscription Model

Of course, there are a few drawbacks to consider as well:

• If you have a product that could sell for a considerable sum upfront, you must consider that the average person will cancel a subscription after three months.

• Thus, you may need to take that into consideration when pricing the subscription. This could make the subscription price too high if your one-time-payment would be quite high.

• Some people do not like to make the commitment of a monthly fee and will avoid all subscriptions.

• If your product isn’t necessary or addictive, people probably won’t stay members long.

Freemium

The freemium model is great for service based products such as online games, software, web services and other media. This model works because it allows people to get a taste of your product without any kind of financial commitment, and you can even potentially benefit from those who never pay you.

Other Details

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