As we talked about in our last blog post, in order for you to determine the price of your product, you must first calculate its cost.
Once you’ve gone through the necessary steps, you will use that number as the foundation of your pricing structure. Most information marketing experts state that your product should be priced at least 10 times its cost. So if your product costs you $5 to produce, you should price it at a minimum of $50.
Of course, the more you charge for your product, the more profit you will make from it. But you also don’t want to price it so high that your customers won’t buy it. This is where you will want to apply some good old-fashioned research to determine your actual price point.
Some of the factors to consider are:
- Is there a similar product on the market? If so, what is its price?
- Does your product include more or less value than similar products?
- Will your customer be able to easily relate the price of the product to the value it provides?
By going through these steps and the necessary research, it can help you to decide if the product is even marketable. It’s better to know now than to start mass producing something that isn’t likely to sell.
It’s also possible that you may discover that a markup of 10 times the cost isn’t nearly enough. You may have to mark it up 20 times or more for it to match the market you’re selling in. Marking up your product allows you to more resources to market and present your product for a consistent sales flow.
While there’s no right or wrong in determining how much to charge for your information product, you still want to charge enough to cover costs and make a profit. The best part of an information product business is that it allows you to test prices and products for maximum results.