When Making Sales, Pricier Is Not Always Better

You created an e-book, tested various price points, and determined that you can sell it for as much as $100. But wait. Just because you know people will buy it at $100 doesn’t mean that’s the ideal price. You might be better off selling it for a lot less.

This may sound illogical, but it’s true – and it’s based on a direct-marketing principle (“price elasticity”) that says you can sell more of a product at a lower price but still wind up with the same amount of profit as if you sold it at a higher price.

Let’s say you tested your e-book at $100 and got 20 customers. That’s a gross of $2,000. And let’s say you also tested your e-book at $50 and got 40 customers (which, according to the principle of price elasticity, is highly likely). You still grossed $2,000 – but the $50 price point is much better for your business.

Although the gross is the same, the lower price brought in twice the number of customers. Remember, the bulk of direct-marketing profits comes from repeat sales to existing customers. So the more customers you can acquire with your e-book, the more profits you can practically guarantee for your business in the future.

The moral here? Test, test, and test again. Try out your products at different price points. Then go with the price that brings in the most customers.

[Ed. Note: David Cross is Senior Internet Consultant to Agora Inc. in Baltimore.]

Although David hails from Blackpool, England – which is often referred to as the “Las Vegas of England” – he shunned a career in show business and instead followed a meandering career path overflowing with “life’s great experiences,” working or living in over 20 countries along the way. Chef, teacher of Transcendental Meditation, guest presenter on QVC, earthquake relief volunteer, CEO of a web hosting company, marketer at a radio station and all combined with years of direct marketing, PR and sales experience for clients as diverse as health food stores, small charities and right up to multinational public companies. David brought unique talent and experience to his role for six years as Senior Internet Consultant to Agora Publishing Group. Working closely with Agora’s publishers and marketers to test new ideas and marketing campaigns, Agora’s Internet revenues topped $200 million in 2007. David understands and can communicate fluently with creative “right-brain” marketers and analytical “left-brain” IT and software teams, all with equal ease. He has a proven track record for generating results and creative thinking and excels at making trouble to find new ways of making things happen! He lives on a small farm close to Mount Hood in Oregon with his wife Cinda, a veterinarian, and their four children and a menagerie of animals (no more, please!). When not marketing or brainstorming you’ll find David following a dream of self-sufficiency for food, power and water within 10 years, tending the land and caring for the farm and animals. Not surprisingly, David is an engaging and knowledgeable speaker with many amusing anecdotes from his work and travels over the years.