My Launch Pricing & Commission Strategy

chris munchNOTE: The information below is an article Chris Munch, founder of Muncheye.com, originally posted in 2012 and was last updated in November, 2015. After reading the pricing strategy in this article you might also want to take into account that optimum prices tend to rise and fall with the stock market – 2015 saw record new highs in the U.S. stock market which coincided with an increase in optimal prices for Internet Marketing products.

– In 2011 to 2012, after the great recession,  <$10 WSOs were a sweet spot,
– By the beginning of 2014 as stocks increased, $297 was a sweet spot for higher ticket, and low ticket worked better at $17 to $37
– As the U.S stock market hits all time highs in 2015 $497 is became another sweet spot, and in general higher prices are performing better, with more products being sold for $1000 or higher. For smaller plugins & simple software $27 to $97 is a current sweet spot depending on the product, typically $37 is a great price point for high volume smaller product low ticket software launches.

Let’s dig deeper into pricing and commission structure:

After 62,000+ IM Launch Transactions, This is What I Have Discovered:

By Chris Munch (follow me on Facebook, Twitter and Google+)

Anything Under $7:

I think this is too low to attract the ‘heavy-hitting’ affiliates who bring in the most traffic. At prices this low it’s hard to get decent EPCs, so affiliates shy away.

$7-$12 @ 100% Commission:

This seems to be a ‘sweet spot’ for the purpose of lead generation to a broader audience with a wide appeal topic like Traffic Generation. Consistently a $7-$9.95 price point with a dimesale works really well when offering 100% commissions to affiliates.

$17 @ 75%-100% Commission:

This price is too low to hit big profit numbers, and too high for optimum lead gen. With ONE Exception…

Lead generation for a SMART buyer (such as Product Creators or List Builders). I’ve found these sophisticated audiences tend to be more willing to pay a $17 asking price for more specialist topics.

To make this work though generous commissions are key. $17 @ 50% commission is no good, its less attractive than $8.50 @ 100%. Same $ per sale, but weaker conversions expected at that price point. So you want to be in the 75% to 100% region at the $17 price range.

$27 @ 60%-75% Commission:

This is a better balance of profit and lead gen… Back in 2011 you would sacrifice lead gen in a big way at this price compared to lower prices, but you could make solid profits at this price point, and still get a respectable number of buyer leads. UPDATE: In 2015 with a great software based product this pricing point works incredible for lead gen without needing to give away 100% commissions.

$37-$47 @ 50%-75% Commission:

I believe this is the ‘sweet spot’ if the goal is balancing profit and leads for a low ticket software launch… and tiered pricing will make a big difference here to maximize conversions AND leads (I’ll get onto that in a minute). 60% is a good commission to offer at these prices if you want to stand out from the crowd, and 50% is perfectly acceptable.

In 2014 the first launches that did over 10,000 units and 7 figures in sales appeared at these price points, VideoMakerFX is the most well known example. Compare to 2011-2013 where the only 10,000+ unit launch was at the <$10 price point which was Hook Pigeon by yours truly. Back in 2012 you could sell thousands of copies of an infoproduct easily so the market was ripe for an infoproduct like HookPigeon. Whereas in 2014 the perceived value of pure info products had dropped and people were looking for software solutions, which allowed for higher pricing, so the market was primed for a software product like VideoMakerFX to make a huge amount of sales.

$67 or $97 @ 50%-60% Commission:

These price points get good EPCs (when done right) BUT…

At these higher price points it becomes increasingly tough to convert in the launch market and the ‘amount’ of product you need to justify the price tag can become a point of diminishing returns. The value of products selling at this price could often be sold for $297 or much higher on the webinar circuit.

There are some exceptions where certain types of software or coaching will fare well at these price points (especially with tiered pricing, which I cover below), but the sacrifice in buyer leads can offset the lower front end profits of a $47 price point.

Consider offering less on front at a lower price point ($47 or less), and offering a higher ticket OTO ($67 to $497).

$297 – $997 – 50% Commissions:

To justify prices at these levels you need a whopping product, typically with a software component and a very strong sales process usually involving a video launch sequence, and/or a webinar. $297 and $497 has tended to out-perform $997.

$997+ – 40%-50% Commissions:

When you get to these prices you will likely need an exceptional sales sequence to make the sale with a multi-touch strategy with the buyer mixing in webinars, professional on-camera video launch sequences, retargeting. While such prices struggled after the economic crash of 2009, by 2013 seven-figure high ticket $997+ launches and webinars returned and were pulled off successfully. As you reach higher prices above $1000 it tends to be only those with blockbuster sales sequence quality with a big on-camera celebrity excitement element that make it work.

Should I Charge More?

What price point is right for you will depend on your own experience, the product itself, and your ability to put together sales material and a launch campaign that justifies a higher price. Ultimately charging higher prices for quality products is the best way to drive more profits, which can allow you to do even more with your business and provide even more value, but selling at higher prices requires more skill.

It is not unknown for products being sold at $17 to be bought out by an experienced vendor. Some improvements to the product are made and more value added. It is then rebranded, repackaged, and sold at a higher price such as $197 with a better marketing campaign. While the original vendor struggle to make 5 figures and grow his business, the experienced vendor nets an easy 6 figures and expands his business to the benefit of his customers.

Immediate profits are not the only thing to consider. Also bear in mind everytime you sell at a low price or a high price, you brand yourself in that way. You could be seen as the budget seller, or the high ticket seller, Walmart or WholeFoods. And with less income you are in a poorer position to grow your business and look after your customers, which is why so many IM products sold for cheap, become unsupported.

Focusing on higher prices in a specialist market like IM can bring more revenue and allows you to expand your business IF your product and marketing quality can justify the price. This is also why so many affiliates only promote higher ticket products, to help maintain their own positioning as being higher-end and so their audience becomes used to higher prices and higher quality.

Ultimately 7 figure launches are almost always from products that have prices of $197 of over and typically a lot higher, while it is very rare for a <$97 product to hit 7 figures.

While most people are selling at a price below the optimum for profits and would probably benefit by raising prices (unless they need leads), in the end you will have to do your own testing and try different prices to get an idea what works for you, and decide where your place in the market is.

Tiered Pricing Magic…

Tiered Pricing – By using tiered pricing you can justify your highest price and give it a really high perceived value. This will improve conversions and you’ll see more people choose the most expensive option, while still letting the cheapies in (so maximizing leads). Here’s an example:

pricing

In the above example 66% of buyers went for the highest price.

Also notice how the regular prices are crossed out – that’s another very effective pricing strategy to up conversions to point out your regular pricing. You should show this on your regular sales page too so people can clearly see it’s a discount.

UPSELL TIP: It is a great idea to match an upsell offer based on what teir they chose on the front end. For example, if they bought the most expensive option, then offer an expensive upsell, whereas if they bought the cheapest, offer them a cheaper upsell. This consistently converts better than sending them all to the same upsell. This has been dubbed a vertical funnel and I first heard it from Peter Garety.

Commissions, Higher Prices & Rapid Changes!

The launch and JV webinar market is increasingly competitive and generous commissions are almost always required for a successful launch.

The marketplace is always changing, every launch is different, as is every vendor. I’m not saying these prices are ‘perfect’, only that I have experienced these prices working very well.

But to keep moving closer to that perfect price point you just have to keep testing! Every product is different and the market is constantly evolving, so be plan to test and tweak.

 

The Next Step…

What do you think? Leave a comment below:



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