Creating your own information product can be one of the most lucrative and profitable ways to make money online.  Pricing your digital products (i.e. ebooks, videos, information products) is an important factor that can ultimately determine how successful your product will be.  In addition to the value of your product itself, there are perceived values that people place on products when deciding whether or not to buy your digital product – and the pricing model that you choose is one of the most important aspects.

What are digital products?

Some of the things most often associated when mentioning digital products are ebooks, guides, videos, and tutorials which would all fall under the “information products” category.  While these make up a large chunk of the digital items that are being sold online, things like WordPress themes, programming scripts, and website templates also fall into the digital product category.

Price points for digital products

Before we delve into what you should actually charge, you will need to choose a pricing model that will accomplish the goals you are trying to reach.  There are several different models you can use when selling your products:

• Free

  Giving away your product can have tremendous upside potential.  While you are not monetizing your product on the front-end, you can use free products to drive certain goals on your site.  A free product can be used to build RSS readers, gain newsletter subscribers, build links to your site, position yourself as an authority, and gain visibility & exposure.  The downside to free is that you are not directly making money from your product.

• Inexpensive Pricing

  A pricing model that is built around providing an inexpensive product you can gain mass appeal and cater to the highest number of potential buyers.  With a lower price, more people can afford your product.  The downside to inexpensive products is their perceived value and you will need to reach a large number of people to make money.

• Premium Pricing

  If you choose a premium pricing model you can sell much less of a product and still make good money.  You will charge a higher price and the perceived quality of your product will be much higher.  The downside to premium prices is that you limit your potential audience because fewer people will be able to afford your product.
  

Price models for digital products

While we just explored how you are going to compete with your price, the next step is to determine your price model.  Your price model is how you are going to approach selling your product.

• Giving your product away (the free model)

  In addition to being a price point, free is also a price model.  If you are trying to build an audience and gain exposure, the free model can be the most effective for doing so.

• One-time purchase

  In many instances, a one-time purchase will be the best model for your product.  If you are selling a script, ebook, or something along those lines – building your pricing around a one-time purchase will allow you to sell more of your product.

• Recurring payments (subscriptions & memberships)

  One of the most lucrative ways to build your pricing is around a recurring revenue model.  This allows you to generate income that can be more consistent and stable than offering your product for a one-time price.  However, there is typically much more work that goes into creating a recurring revenue stream because you must deliver value each month, year, etc. in order to retain the people paying for your product on a recurring basis and make them feel that you are continually benefiting them.

Exactly how much do I charge?

Now that you have determined a price point and decided on a pricing model, you need to figure out exactly how much you are going to charge.  There are several different factors to consider when choosing the exact price:

• Competition - What are others in your field charging for similar products?
• Quality - How does the quality compare to other products that are similar?

The psychology of numbers

When choosing a price you will probably want to stick with the standard practice of making the cost end in a 5,7 or 9 (i.e. $17, $49.95, $79.99) as studies have shown people interpret these as more inexpensive than rounding up to the nearest dollar.

Testing & Input

Often, you will want to ask some potential buyers what they would be willing to pay.  In addition, passing out a couple review copies will often help you in determining your price.  It is also worth noting that testing your product at various price points (if it’s a long-term product) will help you find the price that is the most profitable.  When testing, you will probably want to try starting cheap and going more expensive to find the perfect price.

Inspiring real-world examples

Sometimes it helps to see how others have succeeded in pricing their products and the results the achieved.  Included here are several examples of digital products and how successful they have been.  Be  sure to note that the results are not solely due to price, however, they will give you a good idea of what people are willing to buy and how much they are willing to pay for different digital products:

Successful Digital Products:

• Getting Real: The Book by 37signals – 30,000+ sold at $19
• 31 Days to Build a Better Blog by ProBlogger - 16,000 sold at $19.95
• Affiliate Theme for WordPress – $90,000 its first month at $97 – $297
• Unleashing the Ideavirus by Seth Godin – 1,000,000 copies distributed for free

Related posts:

1. Use E-Junkie to Easily (and affordably) Sell Digital Products
2. Use Discounts Sparingly When Promoting Products
3. Maintaining Price Integrity With Your Products & Services

A lot of people give up on their site or blog early in the game because they haven’t made any money.  Many people fail to make the connection that you need traffic in order to make money or be successful.  You can have the best content in the world, but if no one knows about it – you won’t make a penny.  You can’t get discouraged with your blog or site that isn’t making any (or much) money… when you only have 50 visitors per day.  Be realistic and understand that in order to make money people need to be visiting your site.

Traffic = Money

It really comes down to a simple understanding that in order to make money on the internet… you MUST have traffic.  On the internet traffic equals money (or potential) and it’s essential that you have people visiting your site if you want to generate decent income.  The people you see online talking about how they made hundreds of thousands of dollars in a month or sold thousands of units of their product, did so because they have visitors to their site.

Whether you’re trying to make money blogging, build your business, amass a list of newsletter subscribers, or whatever method you are trying to use to make money – it requires that people are seeing your content.

How much traffic do you need?

There is no hard and fast rule regarding how many visitors you need to make a certain amount of money because of the many different factors that come into play.  You just need to think of getting new visitors as an essential part of your process to succeeding online.  Some sites can have a million visitors per month and make under $100, while others can have ten thousand visitors and make $10,000 – but they both rely on people visiting their site/blog/content before they can make money.

Where can I get new visitors?

There are literally thousands of different places to find new visitors to direct to your site.  From guest posting to pay per click, your options are really limitless.  What you want to do is to continually test the different ways you can drive traffic and capitalize on the methods that produce the greatest returns.

Often I have seen people spend weeks or even months on trying to market their site and content using some method and achieved very little in the way of visitors to their site.  It is because they didn’t focus on the strategies that produced the greatest return.  They may have tried article marketing and wrote 200 articles to drive an extra 50 visitors, when they could have tried another form of traffic-generation like pay per click and drove thousands of visitors for a fraction of the effort.  You need to test and be creative and then hone in on the few ways that actually produce results and help grow your site.

It’s a long-term process

When building consistent long-term traffic you need to adapt a long-term outlook and develop some patience.  You need to understand that building traffic is a growing process that takes a lot of time and hard work, but the results can be very rewarding.  Persevere and don’t give up, whatever topic or industry your site is about – with enough traffic you will be successful.

Related posts:

1. Making Money Online is a Marathon – Not a Sprint
2. The Top 3 Reasons Why People Fail at Making Money Online
3. Persistence is the Key to Succeeding & Making Money Online

If you operate a site or business that sells digital products, then you know the headaches and frustration that can come along with the payment process.  From processing payment to the delivery of the product – it can seem almost overwhelming.  However, there is an excellent solution that can handle just about every aspect of selling digital products online known as E-Junkie.  Nearly any type of digital product can be sold using their system: PDFs, audio files, website templates, you can even use them to sell your tangible items as well.

E-Junkie acts as an online shopping cart and delivery system for your digital products that handles everything from start to finish.  In addition, you can even set up an affiliate program, offer discounts, and a whole lot more.

Features of E-Junkie

• Affiliate program – Set up your very own affiliate program
• Digital file delivery – As soon as someone completes a transaction – your digital product is automatically delivered to them
• Discount codes - If you want to run a promotion or special, you can set up discount codes for people to use
• Payment processing – Use your existing PayPal account to process the payments, or choose from one of a number of other payment processors like Authorize.net
• Shopping cart – Simply upload your products then copy and paste some code to put “buy it now” buttons on your site
• Communicate - There are autoresponders, reminders, and more built in so you can keep in touch with your affiliates and customers
• Customizable - You can customize just about every aspect from the emails that are sent to the logo and branding

There are several other features that are included but these are some of the main features and functions that make E-Junkie so powerful.

Extremely Affordable

One of the biggest things that appeals to me about E-Junkie is that you can get started very inexpensively.  To get 10 products up and running will only run you about $5 per month – with the price staying very reasonable even when you add more products.  I have sold many digital products online and find that E-Junkie is one of the best out there in terms of quality and price.  If you’re trying to find an excellent solution for an online shopping cart for your digital (or tangible) products, you may want to check them out.

Related posts:

1. Pricing Digital Products: A Comprehensive Guide
2. Use Discounts Sparingly When Promoting Products
3. Maintaining Price Integrity With Your Products & Services

When promoting products and services you need to be sensitive to the huge impact that discounting can have on your bottom line and customer satisfaction.  Many people view discounts or promotional offers as a quick and easy way to boost revenue.  You need to adapt a more long-term mindset to realize the impact that discounting can have on your business model and ability to generate revenue.  Discounts are an excellent way to increase awareness, drive sales, and create hype for your product… but they must be used sparingly and need to align with your goals.

The drawbacks to running discounts frequently

• Potential to upset former customers

  We all understand (or I hope we do) that businesses run discount pricing promotions for their products.  However, you need to know how your former customers will react to the promotion.  Imagine you bought a product yesterday from a company, only to find out today that they are running a special for half off.  This can leave your past customers with a feeling of resentment and discontent.

• Lowers your perceived value

  Not in all cases, but if you discount your products heavily – it will change how customers perceive your products.  Instead of being a premium product with a premium price, you are knocked into the next bracket because of the way people perceive what you offer.

• Can reduce overall sales

  Running discounts or promotions too early can condition your customers to only buy from you when you run a special.  A great offline example of this is your local grocery store or department store – how many times do you only buy certain products when they’re on sale?  You would be surprised how many of us only visit certain stores when they are running promotions.  This applies equally as well online for your own products.

• Your profit is smaller

  If you have become to selling your product at a certain price, when you lower what someone pays for that product – you are also lowering your profit margins.  So now instead of needing to sell 10 items to make the same amount of money you were before, you must now sell 12 in order to realize the same profit (or whatever your discount might be).

The next time you want to run a special discount or promotion think about these points and make sure that you’re not putting yourself in a hole that will be difficult to dig out of.

Related posts:

1. Maintaining Price Integrity With Your Products & Services
2. Use E-Junkie to Easily (and affordably) Sell Digital Products
3. Pricing Digital Products: A Comprehensive Guide

Pricing can be one of the most confusing, yet most important aspects of any business.  When you provide services or products – they come at a price for you to create them.  Whether it is time, energy, or money, there are costs that you must incur with anything you sell.  I have heard from people on numerous occasions that they are desperate to make money because they either priced their product too low or gave too much away.  Many times in our eagerness to sell we will run huge discounts, specials, giveaways, or offer lucrative affiliate commissions to the detriment of our own profit.  When offering services or products for sale you must be constantly aware of the price erosion pitfall that can sink your profits.

Tips to maintain integrity in your pricing:

• Determine your actual costs

  Including support, time, hard costs, and factor in unexpected roadblocks.  You absolutely must determine how much it costs you to deliver a product and the profit you stand to make from each item sold.

• Use discounts sparingly

  We often think of discounting as the first and easiest way to increase sales.  It will many times increase your revenue, but what impact will it have on your profit?  You will now need to sell “x” more products to compensate for the smaller profit you are making.  Additionally, if you run discounts or promotions too often you will cannibalize yourself and your customers will always be waiting for or looking for the next promotion instead of buying it at your regular price.

• Don’t give away too much

  We have all heard the saying “Don’t give away the farm” and this is particularly applicable when deciding commission rates for affiliates.  Affiliates can be your bread and butter and you want to make sure that your product is priced high enough to take into accommodate the commission you are wanting to pay affiliates while still making money for yourself.

Maintaining integrity in your prices is integral

In order to make money (offline or online) you must maintain your price integrity, otherwise you will face a long and hard journey trying to make money and will constantly be fighting an uphill battle.  The preparation and planning will be well worth it when it comes to selling your products or services.

Related posts:

1. Use Discounts Sparingly When Promoting Products
2. Pricing Digital Products: A Comprehensive Guide
3. Use E-Junkie to Easily (and affordably) Sell Digital Products