How To Price Your Information Product

by | Jan 13, 2010 | Creating Products

Ah, here’s the part that throws so many entrepreneurs and small business owners off … myself included. How do you put a price on the product you just created?

One rule of thumb: the more specialized your product is (the fewer potential customers you’ll have for it) the higher the price can be.

This is why so many experts advise creating your products for a specific niche. An information product about marketing can’t ask as high a price as an information product about marketing for basket weavers, which, in turn, can’t ask as high a price as an information product about marketing for underwater, left-handed basket weavers.

The tighter the niche, the more valuable the information is going to be perceived. It doesn’t matter that the information can be basically the same.

Here are some things you need to consider when pricing your products:

How much will it cost to produce your product?
Your final price needs to cover the costs of production before it will make you a profit.

How much will it cost to market your product and get it in front of its target market?
Not only do you need to cover production costs with your price, but promotional costs, as well.

How much will the target market be willing to pay?
You can’t price your product so high that your target market will not buy it. Every person has a limit to how much they are willing to pay for something they want.

What is the demand for the product in the market?
The more demand for a product, the higher you can charge. This is, in part, why niching your product can be so important.

What do similar products sell for?
Take a look at the competition. What are they selling similar things for? This can give you a ballpark idea of what the market will bear.

You may have to experiment a little with pricing. Sometimes pricing your product too low will hurt sales, at other times lowering the price is just what you need.

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