It looks like 2014 WordPress entrepreneurial resolutions include launching new products.
I’m also on that list and because of that I’ve been thinking a lot about pricing.
In fact, my friend Chris recently published a new e-book, The Price is Right An Introduction to Product Pricing that I downloaded for my two-day getaway in Maine. A quick read you can finish in less than an hour that gives you some solid advice for your next product launch.
If you’re a resolutioner looking for some pricing advice you’ve come to the right place!
Two new products, one new pricing strategy
In Chris’s book he unearth’s the discussion about product pricing for operating a sustainable business. Makes sense right? We all want to be profitable in order to pay ourselves, our team and reinvest back into the business. That’s the hope for any business — not just WordPress.
In my opinion the WordPress product business has found itself cornered over the last few years.
The days of low priced plugins and unlimited everything are going by the way side. No longer are we working a full-time job and selling themes on the side. Our client service commitments are winding down as our new SaaS businesses spin up. It’s a natural maturation process that a lot of us are going through right now.
It makes sense right? How can we operate on unlimited everything forever? At some point there’s going to be a customer or situation that totally obliterates our support costs.
Look at these two new plugin packages:
- AppPresser Agency model is $499 for unlimited apps w/ 1 year of support.
- Design Palette Deluxe package is $149 for 50 sites w/ 1 year of standard support.
What we see is higher than “average” pricing with an annual renewal on upgrades and support. We saw Woo do this last year with other companies following suite. This is a good thing. Let’s stop the race to the bottom.
If the market can bear it, raise prices and kill off unlimited support.
The bad news, you can’t just raise prices
Now before you run out and jack up the prices on your website for the hell of it, look at the context of your pricing.
- Who is your customer?
- What’s your competitor pricing?
- Marketing costs?
- Support costs?
Another tip from The Price is Right An Introduction to Product Pricing is to tell a better story.
As many of you know, I grew up in the auto sales business and telling the story is something I’m very familiar with. Note: it’s telling the story not a story.
By doing this, your pricing will reflect a better value proposition if you convey why someone has to fork over their hard earned dough. Let’s look at our two products again:
AppPresser charges an agency $499 to build unlimited apps. Unlimited Apps!
If you’re running a web services business and you can’t justify that cost you’re doing it wrong. A high end iOS development company isn’t going to move a muscle for anything less than 100k and even if you hire a freelancer off oDesk you’re still looking at 10 – 15x the cost of AppPresser.
If I were Scott, this is the story I’d be telling.
On the other hand, our pal Andrew is charging $149 licensing for 50 Genesis sites — that’s less than you pay for a cup of Starbucks PER site! Again, if you can’t sell 1 site for greater than $2.98 you need to hire me.
So in a market segmentation of folks like you and me, I’d be telling the story that these solutions are mere pennies on the dollar to what we’re charging our client.
When properly demonstrated, parting with our cash seems a bit easier now.
My 2 tips on pricing
I don’t want to give away everything that’s in The Price is Right but Chris warns us there’s no perfect science to pricing your product. We must test our pricing and prepare ourselves for change.
My first tip is use your gut.
I’ll be launching the Pro version of Matt Report, a members only section, and my first tier of pricing is based solely on what I feel I would pay. I like to identify one strong value proposition or scratch one major itch and put an honest price tag on it.
It makes me feel more confident which transcends into the product and marketing of the service. Afraid you’re not charging enough? We never do — that’s ok because we have options.
From there I’ll build out additional pricing packages that add more value for a higher cost. You can do this too if you want to avoid messing with your initial product pricing. It allows you to set that base level price and A/B test the other packages instead.
Then there’s the use of an asterisk. If you launch with the plan to raise your rates, you can add this to your promotional material. That way you’re giving customers a chance to buy in low while you work out your internal support costs.
Second tip, I recommend getting the book and spending an hour with it. It’s a collection of some great examples and stories that will get you thinking in the right direction. Plus, using my link will earn Chris and I a few pennies and we’ll love you for it. 🙂
What are your thoughts on pricing? Have a story to share? Let us know in the comments!