Finding the right pricing model for digital products is like trying to please Goldilocks. Price an item too low and people think that it is worthless. Price it too high and it scares them away. Maximizing your return requires that the price is just right.
There are plenty of blogs and consultants that provide advice on how to market and price information products. This isn't one of the blogs and I'm not one of the consultants because I don't know what works best. Yet. This post is simply our story of digital product marketing.
Before launching our first ebook in 2008, I had a lot of questions. I read a multitude of blogs, bought a few guides, and talked with everyone who appeared to know anything about digital products. The answers I received were delivered with absolute confidence that they were the magic formula. The problem was that they were different. The differences were so varied it was overwhelming. Some said that I should expect the information products to generate so much income that I could quit consulting. The money was appealing, but I was hopeful that quitting wasn't a requirement as I love my work.
Others said to give the guide away and people would stand in line to hire our firm. They even explained how asking for an email address was equivalent to requiring payment. They promised that if we created good content and posted it online at no charge people will flock to our business. In the end, we opted to follow the advice of the "it should be free" group.
Our first ebook was a twenty-five page how to guide.
Over a three month period we had 1,000 + downloads and zero leads. Yes, you read that right. Zero. Zip. Nada. None. We decided to create a second guide on marketing in a multichannel world. It is 83 pages of ideas, concepts, and working examples. This guide would be sold. It received some good press and generated some income, but nothing like the five and six figure incomes that were promised during my research. Since then, the guide has been updated and continues to sell.
Since then, we've marketed several different guides using the variety of "fail proof" methods promoted by others. Our most successful and challenging ebook by far is "Social Media 4 Direct Marketers." (SM4DM) It is a how to guide for integrating traditional marketing and social media.
The success part comes from the sales and leads that it has generated.
While it hasn't generated the tens of thousands of dollars others claim, it has provided a steady revenue stream. It has also opened doors. The relationship with several of our best clients began when they ordered the guide. The challenge is with the pricing. What is the best price for a guide that helps do-it-yourself people do it better and also attracts new clients? We don't know so we are testing.
The regular price on the guide is $49 and includes membership in our exclusive SM4DM group. Sales are steady at that price. But what happens if we shift the model to micro-pricing? We are testing it at $9 for both the guide and group membership. Will the number of ebooks sold increase enough to generate the same amount of revenue? Or, even more? Or, will the lower price change people's value perception and reduce the volume? What do you think? Is micro-pricing a good strategy? Share your thoughts in the comments below. When the test is finished, we'll add an update so you can see if you are right. And, if you want to take advantage of our micro-pricing test, go to http://sm4dm.com for more information.