This transcript was generated from the episode audio and may contain minor errors.
[Music]
We talk from time to time about pricing. How do you price a new product or service? It's really important to get it right. There's usually a range of appropriate prices, and that range can often be quite broad. Today we've got an extreme example of that.
Somebody is launching a new information product, and they're trying to figure out, should I sell this for $30 or $300? And you might think, well, that's absurd. Like surely it has to be one or the other, or it has to be close to one of those numbers. But the whole thing is, like we're gonna talk about perceived value, buyer psychology. There really are different markets for different price points.
So you have to think about that as part of pricing. It's not just about the product or service. It's also about like, who do I want to attract? So the lower number isn't always best, but the higher number also isn't best. So it can be tricky.
Let's look at how pricing shapes perceived value, influences potentially the support load, and signals the market you want to serve. This is a fun one. Gonna bring you the question from Raymond and my answer right after this. [Music]
Hi, this is Raymond. Found your podcast last year through a Reddit thread about recurring income streams.
It's been on my morning walk playlist ever since. I'm finishing my first info product. It's a detailed video guide for beginners in my niche. And I like, I'm like stuck on the price. I've seen similar materials sold for like 30 bucks, also for 300.
Lower feels more accessible, but I've heard cheap buyers create more support headaches and the higher could signal value, but what if nobody buys it? How do you decide whether to price an entry-level digital product at the low end or the premium tier? And what does that say, you know, what does that toy say about the customers you attract? [Music]
All right, this is a big decision and the right price depends less on production hours and more on positioning. All right, so I talked about that a little bit in the introduction.
You wanna think of price as a filter. It's going to attract certain buyers. It will repel others. So let's think about the market norms, the perceived value and support economics. I'll try to make this as simple as possible.
So market norms, you know, consider your market's existing offers, like what's currently out there. There might be some impulse buy, mini courses, eBooks, et cetera. There might be $100 or $300 courses, structured outcome driven programs. And there might also be $500 plus certification style or cohort courses that offer direct access to the creator. So just consider now, like what does your guide offer?
Is it a clear transformation? Does it, is it like go from zero to first confident project? Well, if so, you're already in the $100 plus lane. If you price at $30, that signals, I don't know, maybe I just wouldn't even take it seriously, right? Like would I believe it?
Or if I price at $300, that kind of says, oh, this is an investment, but it's gonna pay for itself quickly, which is really important. So this leads us to perceived value and buyer psychology. Having a low price sounds inclusive, but cheap buyers often expect handholding and refunds. Whereas premium buyers typically consume more of the content. They implement faster and they're just happier overall.
It's strange, but true, but a lot of people, a lot of creators in many different industries, finest to be the case, that low priced buyers require a lot more work and handholding than higher priced buyers. And then lastly, support economics. A $30 product can require nearly the same inbox time as a $300 one, right, as mentioned. So just think about like, how much time do you plan to spend answering questions, working on your marketing, working on other offers and so on. I think it's really helpful to anchor high and then stair step.
So you could like launch at $249, with this promise of like, follow these steps, land your first client in 30 days. Maybe then you could offer a discount like $199 to help you get going or to like, increase the urgency of purchase. And then later perhaps introduce a stripped down light version at $49, which has no bonuses, no community access, et cetera, for price sensitive buyers who finds you later. So there's more than one way to do these things, but thinking about them intentionally is gonna help you. And generally, I think you should consider like who do you want to attract?
Like what are the clients or customers you want to attract versus the ones that you don't necessarily want to serve? And your answer could be different for each product. It could be different based on your season of life or how much time you have for your side hustle, how experienced you are. There's all kinds of variables. Remember, price isn't permanent.
You can also change it as you go. All right, I hope that's helpful. Listeners, let me know what you think. If you have a question or a scenario, sidehustleschool.com. You can access every episode of the podcast 3181 so far, all completely free for download or streaming on the site.
And new episodes drop every day, seven days a week, wherever you get your shows. Thanks for tuning in. My name's Chris Guillebeau. This is Side Hustle School. [Music]
From the Onward Project.
