65: Pricing Strategies That Work: How To Price Your Digital Products With Confidence
Ever stared at your digital products wondering if you're pricing them all wrong? Trust me, I've been there! As someone who's given away tons of free content over the years, I know how tricky it can be to put a price tag on your expertise. In today's episode, I'm pulling back the curtain on three powerful psychological pricing principles that completely changed how I price my own products.
Whether you're selling courses, templates, or digital downloads, these strategies will help you price with confidence while keeping your offers accessible.
We'll dive into the famous 99-cent effect (and why it sometimes backfires), explore the clever decoy effect, and discover how anchoring can transform your pricing strategy. Get ready to finally feel confident about your pricing!
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[00:00:00] How much is your experience worth? Can you put a price on your expertise, on your efforts? If you're an online business, you pretty much have to. And as someone who gives away a ton of free content, I myself know the struggle. The struggle to find the perfect price for your products that are accessible to your audience and But still demonstrate your value.
[00:00:26] If you've ever struggled to price your offers, you're going to love this episode because I'm sharing three psychological pricing principles that have helped me change the way that I think about pricing my own products. Welcome to Think Inside the Square, a podcast full of tips and tricks to help you build a business that you're proud of.
[00:00:44] I'm your host, Becca Harpain, Squarespace expert and educator, an online business owner who makes a living selling digital products and a few services. For a transcript of this episode, along with the links to any resources mentioned, visit insidethesquare.co/podcast
[00:00:59] [00:01:00] over the last five years, I have offered hundreds of free tutorial videos on my YouTube channel and posts on my blog to help people understand how to create and customize their Squarespace websites.
[00:01:11] I've used this free content to position myself as an expert, and I do offer some paid products, but to be totally honest, I have struggled with properly pricing those products for most of my career. Because proper pricing isn't just about making money, although that's very important. Proper pricing is about valuing your work and your contribution and helping your audience understand the true worth of what you can offer. When you price your digital products effectively,
[00:01:37] you're sending a clear message about the quality and value. And that is where I was really missing the mark when it came to pricing my own content for a very long period of time. Now, over the last few years, to be honest, a lot of it was over the last six months. I've learned some new strategies and principles that have really helped me reframe the way that I think about pricing my products.
[00:01:56] And that's what I wanted to share with you in this episode. In this [00:02:00] episode, we're going to talk about the 99 cent effect. We'll, we're going to dig into why that will work and when it won't. Talk about the decoy effect and the power of anchoring, which is all about setting the stage for your prices.
[00:02:12] Now I know a lot of this might sound a bit technical or like we're getting into the psychological stuff, but stick with me here. Understanding these principles is definitely not about manipulating your numbers or your audience. It's about making informed decisions that benefit both your business and the people who want to support you.
[00:02:30] My hope is that by the end of this episode, you'll understand these strategies that I've learned, so you can confidently price your products, feeling good about the value that you're providing at that specific price point.
[00:02:41] So let's go ahead and kick things off with the 99 cent effect. Have you ever noticed how many prices end in 99? It's not a coincidence, it's actually a psychological strategy known as charm pricing. We put more emphasis on the first number that we see. So when you see something that's $19.99, it seems like it's more valuable than [00:03:00] something that's $20. Our brain tends to register that it's closer to the 19 than the 20, even if the difference is just a penny. That gives the impression of a discount or a better deal.
[00:03:11] Now if you're listening to this episode thinking "Becca, did I just tune in to this episode so you could tell me to take my $30 product and make it $29.99?!" That is not the genius i'm sharing with you my friend What I want you to remember about this pricing tactic is the deal part.
[00:03:26] This is only ideal for your lower ticket items. You shouldn't use this approach for larger, more expensive items. You want to make sure people feel like they're getting immense value, not a discount when it comes to something that's a higher price point.
[00:03:41] Save the 99 cent effect for your gateway items, your introductory offers. Maybe you sell a Squarespace template, but you also have a guide that teaches people how to create the color palette for their own website.
[00:03:53] That color palette guide could be a great example of something that's $3.99 - but don't make your Squarespace template [00:04:00] $299.99
[00:04:02] that's not a good place to use the 99 cent effect because that template has a massive amount of value. Instead, use the 99 cent effect for that smaller price point to make people feel like they're getting a great deal with your introductory offer.
[00:04:15] So if you're entry level products or when you're running a promotion, those might be listed at $4.99 or $19.99
[00:04:22] Your premium products, when you want to emphasize quality, should have rounded prices like $20, $50, $100.
[00:04:30] This can help reinforce the perception of value. So what if you have a few different types The affordable entry level products and premium products.
[00:04:38] Let's talk about using the decoy effect in combination with that 99 cent effect. I want you to imagine that you're selling a digital course on social media marketing. You're considering these pricing options. The basic course is $19.99.
[00:04:52] The premium course is $150.
[00:04:55] Or, the basic course plus a 30 minute consultation [00:05:00] is $350.
[00:05:02] Which option do you think would be the most popular? If you guessed option B, the premium course at $150, you're right. But here's the twist. The presence of option C actually makes option B more attractive. This my friends is the decoy effect in action.
[00:05:18] The decoy effect, also known as the asymmetric dominance effect, is a phenomenon where
[00:05:23] consumers change their preference between two options when presented with a third option that is asymmetrically dominated.
[00:05:31] In our example, option C is the decoy. It's priced more than option B, which makes option B look like an incredible deal in comparison. But this isn't about tricking your customers. It's about helping them see the value in your offers and making a decision that they'll be happy with. Plenty of people out there might want the hands on experience that Option C offers.
[00:05:52] They need to recognize that that level of experience, the actual consultation, has so much more value [00:06:00] than the premium course because it requires your one on one presence. This helps demonstrate your value as well as the value of your products.
[00:06:08] To use the decoy effect in your pricing strategy, I want you to consider creating a good, better, best pricing structure for your digital products.
[00:06:17] For the good product, consider something that's using the 99 cent effect,
[00:06:21] like a $12.99 guide or a $19.99 introductory course to some type of content.
[00:06:27] For the better option, provide more value for a higher price point. And for the best option, make that the maximum amount of value at your highest price. Now, the goal here isn't to confuse your customers with so many options.
[00:06:40] The good, better, best pricing helps them make a choice that aligns their needs with their budget, while also helping them appreciate the value of what you're offering. Now, this actually brings me into the third pricing tactic that I wanted to share with you in this episode, and that is anchoring. I want you to try a little experiment with me.[00:07:00]
[00:07:00] I want you to think of the last three digits of your phone number. Okay, now I want you to imagine that phone number has a dollar sign in front of it. Now think of that specific number right there, and let's say I have a Squarespace workshop that's $147. Does that workshop feel expensive, or does it feel cheap?
[00:07:19] It doesn't matter what the workshop is about, whatever the number is that you have in mind, those last three digits of your phone number, that influenced how you perceived the price afterwards. If your number was high, that $147 workshop could seem reasonable. I might not have to put that much information on the sales page for you to think it's a bargain.
[00:07:40] But if your number was low, that $147 could seem really expensive, and I might have to work really hard to demonstrate the value of that workshop to you. This, my friends, is the power of anchoring.
[00:07:53] People have a tendency to rely heavily on the first piece of information that they're presented with. And when they're making decisions [00:08:00] about pricing, this can be incredibly powerful. For example, if you offer services alongside your digital products, listing the service price first can make your product prices seem like a total bargain in comparison.
[00:08:13] Starting with your highest priced offer and working your way down can make your lower priced offers seem more affordable
[00:08:19] and also demonstrate the value of your higher priced offers. You'll also see this used in sales strategies with what's known as strike through pricing
[00:08:28] where they'll show the original higher price before the actual price anchoring its value to the higher price in your customer's mind.
[00:08:36] Now, it's crucial to use anchoring ethically. The goal here is to help your customers understand the true value of your offer and not to manipulate them. When implementing anchoring in your pricing strategy, make sure you're providing genuine value at each price point. I want you to focus on being super transparent about what customers are getting for their money
[00:08:56] and then use anchoring as a tool to highlight the value [00:09:00] you're offering, rather than creating a false sense of savings.
[00:09:03] Building trust with your audience is so much more valuable in long run thank any short term gains for misleading pricing tactics. Now let's talk about how we can strategically use this anchoring pricing strategy the decoy effect, and the 99 cent strategy for all of your products.
[00:09:19] First, if you can offer services alongside your digital products, consider listing your service prices first. This can make your product prices seem like a great deal in comparison and also elevate the value of working with you directly. For example, if you charge $500 for a one on one coaching session, your $150 digital course suddenly looks very affordable. Then you can consider offering a $12.99 or $19.99 guide as the lowest price point here. That budget friendly offer still provides a ton of value for people that don't have the budget for your higher ticket offers
[00:09:54] using each one of these techniques, you can help customers understand the true value of what you're offering. [00:10:00] I want you to remember that it's not about maximizing profits here. It's about finding that sweet spot where you're fairly compensated for your amazing work while still providing amazing value to your audience. So that's your homework today, my friend. I want you to come up with a good, better, and best pricing strategy for the main digital products that you offer. Now, first and foremost, focus on clearly communicating the value of your products. All the clever pricing in the world will not help if your audience doesn't understand why your product is worth it.
[00:10:30] Then, get experimental. Try that good, better, best structure we talked about and see how it impacts your sales.
[00:10:35] And if you want to see some of these pricing strategies in action, check out the new products page on my website at insidethesquare.co
[00:10:42] I've put my money where my mouth is, and I've implemented these strategies there. It's a great way to see how they work in the real world, and you can test
[00:10:49] your own experience when you look at these price points for different products and see which ones you consider to be the most valuable.
[00:10:56] Alright my friend, we're gonna wrap it up there. Thank you so much for listening to this [00:11:00] episode of Think Inside the Square. I hope that you're inspired
[00:11:02] to try some new pricing strategies for your products and really consider demonstrating how much value you have to give to your audience.
[00:11:09] That is the most important part. Thank you so much for tuning into this episode of Think Inside the Square. I truly hope you enjoyed it. If you did, be sure to subscribe to this podcast wherever you happen to be listening to this episode. Thanks again for tuning in and most importantly, have fun with your pricing strategy.
[00:11:25] Bye for now.
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