MarketingSecrets.com Blog

In the past 10 years or so prices have increased 35-100%+ in almost every product category and industry on the planet. But why are many marketers stuck in an OLD pricing model for their business?

There was a CNN.com article just published that reports that the average price of a car is now over $30,000. That is amazing. I remember when most new cars were around the $10,000 range. Times have really changed...

But other prices have dramatically increased as well -- from consumer products to even real estate values. Things just flat-out cost a lot more than they did just 10 years ago. And average salaries are much higher also -- so people are cashing bigger paychecks...

BUT WHY ARE SOME MARKETERS USING *OUTDATED* PRICES?

The good 'ol direct marketing and "Mail Order" books that were published well over 10 years ago always told us that our "front-end" product should be priced very low, like between $15 and $39. Some marketers "could" make a profit on just that front-end product, but we were taught that adding back-end products to sell to those same customers would allow us to make even more profit in our businesses.

I believe those front-end "economics" are now OUTDATED. I think it's very hard for anyone thesedays to make much of a profit if they are selling front-end products using those old price ranges. The fact of the matter is this... consumers are now accustomed to buying EVERYTHING ELSE in their lives at 35-100% (and higher) prices than what they purchased them at 10 years ago. So entrepreneurs should change their prices accordingly.

It's in my opinion, (especially if you are selling infoproducts) that you don't sell a front-end product that's less than about $50. Ideally, I think you should position a front-end product that will be more in the $70 to $100 range. Especially when marketing something online, these higher front-end prices make more sense. Primarily if you run an Affiliate Program. Anyone that knows anything about "affiliates" knows that they are very FICKLE. They jump from program to program to program. There's no real loyalty to a certain product line. Their actions are usually based on ONE thing -- how much money they make. Even, though, the actual amount an affiliate makes comes down to NET VISITOR VALUE most affiliates are driven to take action to promote products with HIGHER PRICES because the commission per sale is higher. Psychologically, affiliates think in terms of one sale at a time. So unless you have higher prices than your competitors, it's going to take a lot more WORK to gain the mindshare of active affiliates.

There are other major advantages to having a higher priced front-end product online. It changes the entire marketing equation when buying traffic, such as from PPC search engines. (Especially if you have NO BACKEND like many entrepreneurs that are starting a new venture.) Average lead prices (i.e. average per click prices) have been steadily on the RISE as more and more companies are turning to the Internet to drive prospects to their sites. As a result of this rise, it's now harder and harder to turn a profit...

SO HOW DO YOU IMPROVE YOUR PROFITABILITY?

Well, there are only two ways to do it based on that front-end product you are trying to sell...

1. You increase your sales conversion ratio.
2. You increase your product price.

I can tell you from vast experience (over 14 years marketing online) that it's much EASIER to increase your visitor value by raising your product price and working to PILE ON MORE VALUE for the prospect. Such as adding more bonus items and improving the offer itself so you can get more people to buy it at a higher price. It's a lot harder to make the same net profit results by simply tweaking your site and improving your headline or other basic elements of your site.

So the next time you launch a new product, or try to improve your profits, I strongly suggest you consider RAISING YOUR PRICES and improving the PERCEIVED VALUE of your offer rather than trying to get your sales conversion ratio up to 10% with a lower priced product.