Price and E-Commerce Sites
The price that you pick for your site’s offerings will be intimately tied to your sites conversion rate. If the price you pick is too high, then even with excellent presentation, your conversion rate will begin to drop. On the other hand, if you price your offering too low people will assume your product is not of much value, and your conversion rate will also suffer.
The exception to the two guidelines mentioned above is websites that run as discount operations. These kinds of sites can be successful, however this is very difficult model for those just starting their first business. One reason for this is because these kinds of sites usually require the business owner to maintain his own inventory.
If you are drop shipping, and acting as a middle man, then chances are that it will be just about impossible for you to undercut your competitors and still make a profit. The problem with keeping an inventory when starting out is that it requires storage space, and that it comes with the risk of taking a loss if you are not able to move your inventory.
In addition, discount operations usually depend on high volume to make up for low profit margins. Keeping up with high volumes can be a lot of work for budding online business owners. The model can work, however if you are going to attempt it you should know the risks involved, as well as how you plan to overcome them.
If you are selling physical products as either a drop shipper, or by carrying an inventory, then you will probably want to do some research and put a little thought into how you price your items. If you are selling a virtual information product, such as an eBook, then I would suggest you consider a price somewhere between $49 and $99.
If your product is a physical information product, such as a book that comes with CD’s a DVD and study materials, then I would suggest a price somewhere between $149 and $499.
Keep in mind that the numbers provided in this post are only suggested guidelines. The best results will come from conducting some pricing experiments and basing your final price on the results of those tests.
Another factor to keep in mind with info products is the possibility of an up-sell. If you check out a few sales letters online you will probably run into this technique. In this method, the buyer is first given the option to click a “Buy it Now” button, with no mention of an up-sell. This is done to keep things simple and avoid scaring the customer off with a complex decision.
Only after the customer has clicked “Buy it Now” is he given the option of one or more premium packages to choose from. Many of those who sell through sales letters report that more sales are made for premium versions of their products than for their basic package.
