How to Price Your Online Product

One of the most common questions we receive related to our platform and to the content being promoted through it is related to pricing. How much should someone charge for access to video on demand content or for a seat in a live online course? What is the market rate, but also, what is a good going rate for specific types of content?

There are a lot of opinions on how to price your online product.

Digital content has no tangible value. It is more of an experience than a possession.Click To Tweet For this reason, many people devalue their own content, thinking no one would voluntarily pay more than a certain amount for access to a temporary, intangible good.

How Others Price Their Videos

If you look at other online courses and digital platforms, pricing is all over the place. Some courses cost as little as $10 while others cost $300 or more and at times, there is little or no difference between the two.

So what does the $300 course owner know that the $10 course owner doesn’t? It depends on the market and it depends on the data they have pulled, but in most cases, there are two issues – the cost to produce and the perceived value of the content.

Cost to Produce

From a purely economics standpoint, you want to make a profit. It’s important to establish the cost of production, marketing, and sales and ensure your sale price ensures profit higher than those totals. Some things to consider here include:

Cost of Production – The equipment cost, time spent recording, editing time, and any other time or money that goes into creating your videos.
Cost of the Sale – How much do you spend getting traffic to your website and converting traffic to sales? Are you paying for ads on Google or Facebook? Are you creating free content for YouTube? This is a cost and should be factored in.
The Competition – What does your competition charge and how many sales (if any) are you likely to lose based on your pricing. If your pricing is significantly higher than the competition you’ll lose a large portion of the market, but if it is much lower, the perceived value may be too low.

Which brings us to the next point – the perceived value of the content you provide.

How to Sell Based on Perceived Value

It costs hundreds and sometimes even thousands of dollars to take a single college course. Why? Because of the credibility that a college’s name provides and the certification that the course works towards. A degree or other certification deriving from a course taken at a university has value intrinsically higher than the actual experience of taking that course. In most cases, you could learn everything taught in such a course for free online.

But not only are few people willing and able to do that research on their own – it doesn’t feel authentic. How are they to know if what they are reading is really true?

That’s where your expertise comes in and putting a price on expertise is much harder. As a thought leader and trusted advisor in your niche, you know things others don’t, and because you have actively done these things, you are better suited to teach them than anyone else.

Pricing then should match.

Setting Your Prices

The best thing you can do is to start slightly higher than you think is reasonable for your content and then adjust based on the feedback and response you get.

We’ve established a good starting point for our customers when this question comes up. For PPV videos, we recommend no less than $2.99 per view and for subscriptions a rate between $9 and $18 per month. This pricing is based on two factors.

First there is the risk assessment. We don’t want a prospective customer thinking it isn’t worth the risk of handing over their credit card to someone they don’t know for an unknown property. This will change with time, of course, as people get to know you and your brand is established to the point that they come in ready to purchase what you have to offer.

Second there is the issue of demand. When starting, it’s hard to assess what demand will be and how effectively your content will convert. You will start to learn more very quickly as you utilize your customer dashboard and analytics data to set and adjust prices from your video library backend. This will allow you to make changes rapidly and test different price points as traffic starts to come in.

What you will often find is that the number of new customers will decline as the price increases, but the cost per customer increases. Your goal is to find the line at which the two cross and stop there. Higher paying customers at a smaller volume means bigger profits and less support, a perfect combo when trying to build your online video business.


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