This has been a recurring question that many entrepreneurs keep asking themselves: "What should I charge?"
Choosing the "right" price for an ebook, an online course, a membership, a coaching program or any other digital products or programs is never easy.
What I recommend, when possible, is the go-to solution that always works, testing!
This is what I’ve been doing this month with a client in the classical music niche.
We started a Facebook Lead Ad campaign and quickly got amazing results. Leads have been coming consistently and as of today, they average about $0.82 a lead.
How cool is that?
What’s even better is the testing we’ve been doing with the campaign, more specifically with the backend offer in the form of a tripwire.
If you ever wondered how to price your products or offer, read this!
We initially set up the tripwire offer at $47 for an online course. It converted at 2%.
That means for every 100 leads that came in, 2 people purchased the $47 offer. For $82 spent in ads, that’s $94 in revenue.
Essentially, the ad campaign pays for itself. This is called a SLO funnel (self-liquidating offer).
I know many entrepreneurs would be happy with this result.
We continued testing by raising the price of the tripwire to $67. The conversion dropped to 0%. Nobody was buying.
I suggested we test the offer at $39. After some convincing, the client agreed.
What he was looking at was the price, that’s it.
BUT, within a few hours of changing the price to $39, the first sale came in.
And the second.
By the time we had reached 100 new leads, the tripwire offer was converting at 4%!
So what does it mean to the bottom line?
4 sales at $39 = $156
For $82 spent in ads, the campaign now generates $156 in revenue.
Huge difference, that’s a 65% increase in revenue compared to the initial pricing of $47.
By reducing the price of the product/offer, more people purchased and we raised the revenue by 65%.
Who wouldn’t want that?
The takeaway here is that finding the sweet spot to price a digital product is not always easy.
When time permits, testing is always the best option.
AND, a higher price may not always work to our advantage.
Have you ever struggled pricing a product or an offer? Drop a comment below and let me know!
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Great read, Georges! I’ve wondered what holds entrepreneurs from testing.
Back in the day of brick-and-mortar business before the Internet, the common practice to get customers in the door was called “loss leaders.”
Price something so low people have gotta buy, even when that particular product generates a loss per item.
They cost more than the income they generate.
However, the process brings people in the door and turns passers-by into buyers.
Today, the tripwire mirrors its ancester.
The key is to test, test, and retest.
Just keep watch.
Thank you Donna! Testing takes time, it’s a process and that is what may be holding entrepreneurs back. However, it is key in business, always test to find the sweet spot. Thank you for your insight.