There’s one question which has been plaguing information marketers for years…
“What should I charge for my product?”
After all, if you increase the price, surely you’ll make more profit, right?
The answer is… Not always.
It vastly depends on where in your sales funnel your product will be sold from.
Sure – you can make a heck of a lot of money by charging super-high fees for your valuable services, but you’ll have a tough time selling them to people who are scared to spend anything above $97.
This is why (from my experience) high-ticket products usually convert better when presented to existing customers, i.e. in the “back end” of your sales funnel.
But what about near the start of your sales funnel?
Well a few months ago I tested just that.
For one of my earlier sales funnels when I was using a PLR product as my One-Time Offer (i.e. the offer presented to a prospect when they opt-in to your email list), I needed to find out which price made the most money.
So I set up a split test for it.
On one page I listed the product at $7, and on another page I listed it at $17, then split the traffic between the two using Google Content Experiments.
The result was 5 sales of $7, which comes to $35 – which was more than double the total net profit from pricing the product just $10 higher at $17.
Pretty shocking, right?
But if you think of it logically, when people have just joined your email list, they usually have no idea who you are and they haven’t yet built up any trust for you. So offering them a product at a low price is a very low risk situation for them.
(But saying that, I currently do very well when offering our $497 “done for you” solution as my one-time offer, as it’s exactly what most people are looking for. It all depends on the quality of the sales copy – so always test it for yourself.)
Plus, the added benefit to selling products at a lower price is that you gain a lot more customers onto your email list, who can then go on to buy your higher-priced products.
However, when a customer has already shown you they’re comfortable paying a certain dollar amount, the results are the opposite – you should always promote similar or higher-priced products to them, as it’ll increase your lifetime customer value (“LCV”) – i.e. how much money you earn from every customer you gain.
So there are two morals to this story…
1) Always split test everything. I would have previously assumed that the higher price would have made more money, and if I just changed the price without testing it, I’d have left a lot of extra money on the table.
2) When choosing a price for your product, map out your sales funnel and decide where it’ll be placed, then increase the price depending on how deep into your sales funnel it’ll be offered. For example, if you want a product to be your main flagship product which can be marketed to the masses (i.e. the front-end of your sales funnel), split test a few lower prices (i.e. below $50). But if you want to offer an exclusive one-on-one coaching program, you can physically only take on a limited quantity of clients at any one time, so test some higher prices at the back-end of your funnel.
Remember – never assume! Always find out the actual results for yourself, as your online business will be a lot more profitable because of it.
- James Francis