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Top Price?

July 11 2001 at 1:18 PM
Donny Lowy 

If I have a 1.5% sales conversion ratio at $27 an ebook, would the same customers purchase the ebook at $49.95? Is there a higher price that would keep the conversion ratio and would allow me to charge more?

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Ken Silver

Pricing 101.

July 12 2001, 9:03 AM 


Many books have been written about price positioning. While many statisticians would have you believe there is a 'formula' for doing it, I can tell you that in practice throwing a dart at the wall will produce equal results.

There are so many factors in pricing that extrapolating a sales percentage is not going to be a good indicator. To get the best pricing structure you have to factor in all sorts of unknown variables like:
- author reputation
- product longevity
- the product's true information value
- its scarcity on the current market
- uniqueness
- cover design and appeal
- popular culture and timing,
and a heap of other undefinable items that make the whole process unique to you and your book.

Fortunately there's a good way to test pricing for unique products, but it is messy, controversial and relies on a little luck - as most real-world situations do!

First, there are a couple of commonsense rules:
1) It's hard to raise the price of a product (without changing its structure).
2) It's easier to price high and then come down.

So, simply set a price at the highest your conscience/market will allow, double it (because most authors, and especially beginners price far too low anyway, having little confidence in their own abilities), then gradually bring it back down using special offers to the point where sales are maximized.

Example: Believe it or not, one of my first best-sellers, "How To Make $100,000 A Year Part-Time Creating Your Own How-To Manuals At Home" sold at US$97 some years ago. But this was by direct mail with a multitude of add-ons... personal consultation, special offers etc. Gradually, as the net's perception changed price structures (another variable in the pricing mix!) I dropped off many of the extras until it sits, almost alone, at US$29 for digital sales only. This is a good price and it continues to sell well. But I doubt whether conditions today would allow me to sell at the higher price point.

The other, more difficult alternative is to price your book low and make sales on quantity. But here you run into the age-old problem of prospects perceiving the product to be cheap and so they will pass it up. Low price equals cheap, and this equates with poor value for most people. And finding this low price is just as hard as guaging the high one.

I think the first option is the most productive and ultimately more accurate.

Ken Silver

PS. The "Pricing 101" solution hardly touches the surface of pricing products... it is a complex subject and few get it right. An educated guess is the best we can do.

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