Product Pricing: Online Services
Every entrepreneur faces product pricing on one of the last — but not one of the least — stages of product building. The approach I’m going to tell you about makes it possible to gain high revenue by figuring out the most suitable price for your services.
Five Dollars, Ten Dollars
To set up a price, you will need to find out the average price in your market for your kinds of services. If you are creating an innovative product, then consider that people are used to paying $5-$10 more for online services.
If the price is lower than $5, there is a chance that users won’t pay. They have to enter their credit card info to pay and they think that the risk is high to lose all the money on their card trying to buy a cheap service. When the price is more than $5, users think that the risk is reasonable and the chance that your service will steal their money is low.
Setting Up A Price
Now the time has come to figure out the price for your service:
- Set up the price which is +30% of an average price on your market.
- Have a sale for 60%. Check the percentage (%) of conversion (get the percent of paying users).
- In the next month, have a sale for 50%. Conversion could become lower, but users will still pay and you’ll get more revenue so it’s okay.
- Keep increasing until you see that in one month your conversion lost 50% of paying users.
- Come back to the price before losing conversion and set it up.
Find more info about why you shouldn’t set up low price and why this approach is agile at 111 Minutes Blog!
