Many people are very scared of raising their prices. In fact, so scared that they try everything they can do to save their declining business and doing every possible kind of promotion and modification to their sales and business procedures, closing in the end without even trying to raise their prices even a little bit.
Raising your prices can be the most efficient way to increase your total earnings in a matter of seconds and you can even split-test it! You can show some of your visitors a page with your normal price and some others your increased price, looking to find how the new increase will affect your conversions. Take a brief look at the following picture.
Let’s say you have an email list of 5,000 people. What you can do is the following: when you are sending a broadcast message with Aweber, you can send one version of your message to half your list and then another version to the rest. This way you will be able to send them to a different page for them to order, and you will be able to measure the results effortlessly.
What you need to do to increase your product’s price
1. Find what you will give to the increased price buyers in order to justify the price.
You can offer them one-on-one consulting, a report, a mini-course, anything that can justify the increase of the price.
2. Create two different packages in your billing system in order for your visitors to be able to pay.
3. Create one more (almost) identical landing page with the same information as the original, but explaining the value added bonuses of the offer.
4. Create two broadcasting messages for your list and send one to the first half and the next to the second.
5. Measure responses and conversions and see if the increase in price will help your business.
Note: When measuring the overall success of your price increase, take into consideration what increased expenses you will have by providing your members with the increased valued package. For example, if you have added one-on-one consulting, you should take that into account to be able to figure out if you’re profitable. As the image we’ve used before explains, examine the difference in sales and see how much more money the additional benefits to your “advanced” members will cost to you. If the additional sales money is more than your expenses, you SHOULD raise your prices immediately.
Thanks for sharing practical tips.
Thanks for the post, great info about pricing and much appreciated!
Thank you for the comment Anne, glad you liked it! :)
Nice idea. It’s just we probably need some cookie programmed to avoid same customer see different price if he visit our site few times in few days. It would be unconvinient if we sell for upper price one days and tomorrow he see lower price on our site.
A cookie would solve that but it’s not an easy implementation.
What we have done in the past is splitting a list in half and send them on a different page with other pricing options and give them higher bonuses too. This way they won’t feel cheated if they see a difference in price but feel they are a part of a special group, because you offer them more specialized options. It’s a great way to do this test much faster and resolve any problems this price change will bring to your product!
Great article Angelos. Something my students would benefit from for sure.
Glad you liked it Teresa, thank you for the comment!
I love your site! You have the best blog topics!
Thank you Kimmi!
Good reminder, more of a lesson, that value is reciprocal to price, and price is a reflection of value. Sometimes value is perceived easily at the price set, other times marketing is needed to inform and inspire the consumer to see the value at the price set. So assuming that price is set at inherent value, then you are ABSOLUTELY right Angelos that traffic will stay relatively fixed, conversion rate slightly elastic, but Monetization will increase!
Juan Lulli
http://linkedin.com/in/juanlulli
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http://slideshare.net/juanlulli
And lets not forget that when someone pays a lot for something, they tend to pay more attention to it. So if our goal is for our buyers to take action and use our material, that’s the way to go!
Amazing points Juan, thank you for the comment :)
Angel,
Raising your price is quite risky but who would know if the market likes it? A little experimentation won’t hurt much. But do you think how many months or weeks this test should take to decide on continually raising the price?
I’ve been popping you a lot of questions every time I comment, hopefully you won’t get tired of these queries. :)
Best,
Spatch Merlin
The more you ask the more I’ll answer, trust me :P
It’s not a matter of time, it’s a matter of visits to conversion / ratio and to be able to tell if the new pricing makes more money.
You need to send quite some visitors to your landing pages in order to tell for sure what offer converts better. The better your normal conversion rates are, the less visitors you’ll need to tell if the new offer outperforms the last one.
For example if your conversion ratio is 10% (a darn high one) then with 1000 visits to your new offer, you are able to know if it performs better or not but if your normal offer converts at 0.1% then you will have to send more than 10000 visits or even more to be able to tell.
Thank you for the comment Spatch :)
Great article and an awesome tip for all businessman. Thanks a lot for sharing!
Glad you liked it and thank you for your comment :)
Nice post – pricing, especially of intangibles like software, is a constant challenge. The same product can be perceived as Budget, Boutique, or Best-of-Breed, so I like the idea of splitting the streams to find out what works best.
Thanks Angelos! Very nice financial article!!
Glad you liked it Daniel and thank you for the comment!