Hi there, it’s Matthew Larsen from Ultra Growth Marketing. Today, we are going to talk about how to price our products. This is a very important aspect of eCommerce, and chances are, you should be charging a lot more than you currently are. Let’s get into the ins and outs of pricing, and go over some important things to consider when determining what you should sell your products for.
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How to Price Your Products
In general, people do not charge enough for their products and should raise prices. A good rule of thumb is that if at least 10% of your customers aren’t complaining about your prices, then they aren’t high enough and you should raise them. There isn’t much more to it than that. Let’s get into some specific things you should think about:
1. If you can’t be the cheapest, there is no strategic benefit to being the second cheapest. However, there is a strategic benefit to being the most expensive. If you aren’t the cheapest, then you might as well be the most expensive, or one of the most expensive. People love to buy cheap things, but they also like to buy expensive things too. It really depends on what they are buying. People buy expensive things all the time. You just need to give them a reason. If you know your products are of good quality, be confident enough to raise the price. This is the easiest way to increase your profit margins and earn more money. That extra profit can be put back into more advertising to get even more customers.
2. Raise prices higher, and then offer a bigger discount code for joining your email list. This is one of my favorite personal techniques and ideas. Instead of pricing a product at $40 and offering a 10% discount, I would much rather price it at $50 and offer a 25% off discount. You will notice that in the first instance, the final price with the discount is $36, and in the second instance, the final price is $37.50, but in the second instance, we are offering a 2.5x bigger discount, which will lead to a higher conversion rate. This massive increase in the discount percentage will be much more appealing to customers and will perform better. We are essentially giving a much larger discount in this scenario, while also getting more revenue per order, for the exact same product. That is the power of pricing.
3. Raise prices higher, and then, offer huge discounts on bundles. If you have three products; one that is $30, one that is $20, and one that is $40, that equals $90. However, if you raise all three by $10, the bundle will be worth $120. Then, give a 25% discount on the entire bundle, which brings the price back to $90, but this will perform much better because customers think they are getting 25% off, which is $30 in value. This is also a great way to use pricing to create bigger discounts and increase your overall conversion rate.
Pricing is very powerful and very important. If you can’t be the cheapest, you might as well be the most expensive. Use pricing increases to be able to offer bigger discounts. There is nothing that is more effective in getting people to buy than a large discount, and if you increase your prices, you can increase the discount. In most cases, you will end up making more revenue per order by offering a much bigger discount than you would with your original pricing.
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