So you’ve created your first online course or perhaps maybe an e-book, now the question comes down to how much do we charge for it?
Digital products obviously differ from physical products because after all the time and costs associated with creating it, our future costs are basically non-existent. Which leaves us really in a situation where we need to figure out at what price point do we maximize our profits.
Current “Guru” Theory
If you research pricing on YouTube, you’ll find there is a trend among gurus to push for high ticket items. I’ve heard stuff like “never sell a product under $997” while others say “I don’t sell products under $5k”. And many of these gurus have sold millions of dollars in courses, seminars, coaching etc. so I get where they are coming from.
I think though that’s an oversimplification of things. Sure it’s easy to sell a $5k course if you have 1 million YouTube followers or are an established name in your respective field, but what if you’re just an unknown that created their first digital product?
Now that isn’t to say that if you’re an unknown that you can’t sell a $5k product, because you definitely can. If you create a great product and know your stuff, you can definitely do it. However are you maximizing your profits and reach at that price point?
For example say you created a digital course. Are you better off selling 10 courses at $5k and offering weekly 1-on-1 coaching to these clients, or are you better off selling 500 courses at $200 and maybe managing a Facebook Group?
Obviously the latter earns you twice as much in money, again a hypothetical example, but as you can see it’s something you need to consider.
Things To Consider When Pricing Your Product
So lets run down some things we need to consider when pricing our own digital products.
I have broken them down into 5 factors and they are product value, brand recognition, target audience, buyer relationship, and time commitment.
The first thing we need to consider is product value. What is the quality of your product and how much do you think it’s worth to your buyers?
For example an e-book will generally sell for less than a video course, and a video course will generally sell for less than private coaching or in-person seminars.
Also how big is the problem we solve with our digital product? A course on skincare in general will probably cost less than a course on investing in commercial real estate.
We need to look at this objectively through the eyes of the people we are trying to sell to. Sometimes it’s easy to overprice our product since we all think what we created is the best thing since sliced bread!
How well are you known to your target audience? Are you an established brand or a complete unknown in your field? It should be obvious that the more well known you are in your field generally the higher price you can command.
Now that doesn’t mean if you’re an unknown that you can’t sell a high ticket item. However it is going to be harder, at least initially. You’ll probably have to jump through more hoops to get that high ticket sale than someone who is well known (ie. more phone calls, freebies, sweat equity etc).
Who is your target audience that you are selling to, and what sort of disposable income to they have? Obviously if you’re targeting corporate executives you’ll be able to charge more than a digital product made for college students.
For example $5k may be too much to charge a stay at home mom, but that’s not much to a business owner.
Next what is your current relationship with the people you’re trying to sell your digital product to? Are they people that have already bought from you before, or are you selling to cold traffic on Facebook?
Obviously if you have a previous relationship with the people you are selling to, in general you’ll be able to charge a higher price without as much resistance than someone who has never bought from you before.
Finally what is your time commitment for the product you’re selling? For example if you’re doing 1-on-1 coaching you’re going to need to charge much higher than someone that offers just the product itself.
Basically you need to charge accordingly with regards to how much time you’re going to invest in this offering.
Remember at the end of the day it’s all about maximizing profits. It would be nice to sell a bazillion units of a high ticket item, but often that’s not the reality of the situation.
You need to think about the 5 factors I outlined above, and just not blindly go by what some guru says you need to price your product at. Everyone’s situation is different, and we need to price our products accordingly to maximize the dollars we put into our bank account.