Pricing Digital Content

vintage toy cash register

I sell digital content. I’m selling lots and lots more of it in 2011. For instance, at Kitchen Table Companies, we sell an ebook for $97. It’s amazing how many times I hear, “I’m not paying a hundred bucks for a hundred pages. Regular books only cost around twenty bucks and they’re made of PAPER!”

Er, um, what the book is made of isn’t usually what makes a price point. (Best book on pricing right now is this one, by the way.) Books are priced by what the market will consider, plus they’re priced by the perceived delivered value of the contents within. One part of pricing is always kind of random, unless you’re a stats and research freak, and I am not.

Be VERY wary of pricing your digital content really low. I just read a bit in USA Today about an author in the young adult format who’s moved 450,000 books, but she’s charging between 99 cents and $3.99 per book. If she’d even done the typical $9.97 that lots of Kindle ebooks cost, she’d have made 100% more money. You might argue that her sales would have declined, but there’s a curve (as there is in all math), and I just don’t know that she’s getting the best price.

Digital Doesn’t Equal Cheaper

Yes, you can make a digital copy. However, the CONTENT is what you’re buying, not the format. For whatever reason, people have made this change reasonably cleanly with digital videos and with audio downloads at the iTunes store, but books seem to evoke a weird spot in our heads. We seem to have a righteous sense of what a book “should” cost.

I’ve paid $147 for a really good ebook on affiliate marketing, and then paid another $97 (I think it was) on a book about blogging, to see if I’d pick up some neato tidbits. Yes to book A and no to book B, but the yield of money I got back from what I learned on A paid for A, B, and a month of my mortgage, because I used what I read in the book.

I just bought this book by David Bullock (the title is ridiculously long) – List Blueprint: Paint By Numbers Exact Steps To Build A Huge Mailing List; 5 Strategies For Building Massive Traffic; The Main Mistakes Almost Everyone … A Road Map For You To Follow! Mission-Surf (amazon affiliate link) for a few bucks. It has some good stuff in there, and it made me start looking around for some more materials, because it was low-priced, but another thing happened, and I’ll talk about that next.

Low Price Triggers Worries of Perceived Low Value

Yep, because I paid less than three bucks for that information, I found myself worrying that maybe it wasn’t the best resource. There was another book about list building that had a $31 price tag, and I almost bought that ONLY because it cost more, so naturally, I’d presume that they put more meat in it.

I’ll tell you, as an author, if I’m going to charge you $100 for a book, I am going to make sure you can reasonably stand to make $500 or more back from buying it, *IF YOU EXECUTE WHAT YOU READ.* (Books on fitness don’t give you six pack abs. Look at me for a case study in that.)

Never Ask Your Community For Pricing Advice

Hint: no one really jumps up and down and demands to pay the actual potential value of a product. That said, price in a way that signifies something to your community. Let them know what they can expect based on your pricing, and make damned sure you deliver.

How are you doing it?

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  • http://twitter.com/Faryna Stan Faryna

    Beyond everyone loving the good deal or free lunch, I believe that people tend to spend according to the value they can own.

    My girlfriend doesn’t care about the quality of a cut of beef, she cares about how cheap she can get it and how quickly she can get the shopping done. Of course, she’ll hand it off to me in the kitchen and expect me to do amazing things with it. Sometimes, I suceed. Sometimes, I don’t. She’s ok with it, either way.

    On the other hand, I’ll go to three different butchers to get a nice cut. That could take two hours for the round trip. Because I know what I’m going to do with it. Because I know how wonderful that morsel will come off my fork into my mouth. Because I’ll finish the meal with a warm, fuzzy feeling in the knowledge that life is good, today. That the Lord has blessed me.

    When I started out making websites and online advertising creative (15 years ago), I was often flustered by clients who wanted the world on a dime. 15 years later, it isn’t any different – with a different class of products and services. About 5 years ago, I finally understood.

    Years earlier, I had sold my client a multi-million dollar license for a killer social platform to support an important industry. And they never used it! I could blame the client across a long list of failed actions as directed by my recommendations and many reminders. Bottom line: that organization wasn’t able to make use of what I considered to be the best thing since southern biscuits and gravy.

    You can imagine the duck and cover, finger-pointing and panic drills that went on – when it became clear to them that they had misspent good money on something that doesn’t bring value to them. I felt bad about it. The software was my baby, but, more importantly, I had lobbied hard for this sell- a sell that I was sure would return tens of millions in cost savings within five years.

    Actually, it happens all the time with Oracle and PeopleSoft products and services. Of course, there’s a theory that you can’t be fired for doing the savvy thing and buying Oracle, IBM, etc.

    Anyway, the take away for me was that most of the time, the client has accurate gut feelings on how much value they are going to get out of a product or service. Regardless of the value you would get out of your own service and product, your average customer may get three to five percent of what you could “own” from the same.

    That said, if you sell insightful e-books at $100, you’re market will be minuscule. But you will have the great satisfaction of seeing your ideas executed upon and ringing in outstanding results. Myself, I prefer the later. Maybe, you too.

    Best regards,
    Stan Faryna

  • http://bloggingwithamy.com/how-to-write-an-ebook-pricing/ Amy Lynn Andrews

    OK, so who knew I would publish a post on pricing ebooks the very same day Chris Brogan did….except that I came to a very different conclusion. {{blush}} But still, here’s my deal…

    I launched an ebook in October on time management and billed it as “What if you could change your life in less than 30 pages?” My tagline came from a tweet one of my affiliates wrote about how much my tips had helped her. So, two things:

    1. Uber short ebook (but purposeful because why do time management books always have to be so time consuming?)

    and

    2. As a smallish blogger without a lot of followers on my own, I knew affiliates would drive my sales. Most of my affiliates are frugal, simple living, bargain-hunting, work-at-home-mom types and I knew they wouldn’t be comfortable promoting an ebook for $47 (which is what was suggested to me on 3T).

    In the first 3 months after launch there were over $17,000 in sales, which was huge for me, but I guess my question is, did I shoot myself in the foot to price according to (a) the length of the ebook, but more importantly (b) what I thought would be most comfortable for affiliates to promote?

    • http://www.facebook.com/profile.php?id=1134202412 Morag Gaherty

      Amy, at the price you set, you sold $17,000 worth of your ebook AND you considered the ethics of your affiliates. Maybe you could have made more by charging more, but equally maybe you must have lost some affiliates (and therefore also lost credibility in their eyes).

      I think you made the right decision, for what it’s worth.

      • http://bloggingwithamy.com Amy Lynn Andrews

        Thank you so much. I appreciate your encouragement, Morag.

  • http://twitter.com/ThingsBright Elizabeth Drouillard

    I am not doing it yet, but I am a buyer. There’s also a lot of discussion in the craft/art/DIY communities about free and pricing because craft patterns and DIY proliferate for free just like everything else. How to balance it all and stay in business as a creator? After some of these conversations and reading the comments here, a lot of the pricing woes seem to come from a lack of basic marketing, ie. not explaining what people will really get.

    Some comments are saying digital books should be lower b/c less production costs, no paper, etc.. Others are saying they should be higher b/c of all the links, extra pix, resources, immediacy and such.

    This makes me think it’s easy to forget how many people still haven’t bought digital books yet and how it’s crossing a threshold for them. Taking time to explain that while they won’t be having it sit on their shelf where they can touch the spine, finger the pages, and show off the collection to their friends, but will get a ton more extra resources seems to be something that still needs to explained well to people.

    People still aren’t sure what they are getting when they buy digital books (or classes and courses). Every author has different levels of resources and expertise.

    Also, I have a hunch that a $100 ebook filled with resources deemed “too expensive” renamed an ecourse filled with “sessions” instead of “chapters” with all the same links/graphs/worksheets would be deemed a great value or even a steal by the same people.

    What do you think?

  • Anonymous

    I agree with you 100% that “paper” is an irrelevant benchmak to price ebooks – a reference whch might more easily go away if authors and publishers of these contents found a way to reframe them with a new name instead of creating the expectation that ebooks are like-books-minus-the-paper. Hardly a surprise with that angle that buyers would compare prices with the printed version.

    That said, when if comes to pricing itself, I think there might be ifferent schools of thought depending on your objectives as an author, and how creative you get with the format as you leave the constraints of paper.
    - $9.99 price point, which seems to become the norm for books designed to be experienced “like their pape counterparts” on kindles and iPads. Anything lower than that instantly screams “cheap”
    - super expensive if you are selling a resource or a service to professionals. Your $100 might as well be $500, selling to five times less people, but giving them access to you for Q&As, follow us etc… Halfway between book an consultancy,
    - completely free, if you want to put your ideas out there with bigger revenue sources in mind – book becomes ad or your ideas become ads for your services,
    - by surbscription or chapter – might even be delivered as a blog you pay to read (who said blogs had to be free?)
    - any other model we can think of!

    Tom
    @tommoradpout

  • http://faleafine.com NEENZ

    Here’s what Chris left out, he gives away for FREE a lot of knowledge and value too. So, when you weigh the value of a $97 for an ebook plus the value from all of the stuff he gives for free, we the readers, the audience are the ones who benefit. Assuming of course that you’ve been paying attention (that’s free too). :)

  • http://faleafine.com NEENZ

    Here’s what Chris left out, he gives away for FREE a lot of knowledge and value too. So, when you weigh the value of a $97 for an ebook plus the value from all of the stuff he gives for free, we the readers, the audience are the ones who benefit. Assuming of course that you’ve been paying attention (that’s free too). :)

  • http://twitter.com/susangiurleo susangiurleo

    People pay for value…more specifically, perceived value. But it’s what THEY value, not what YOU value or think is valuable. Wal-mart makes lots of money, so does Cartier. I can buy a doll at Toys R Us for x and American Girl for Y. Same with information. Make it valuable, but more importantly explain the value in clear ways (we call this marketing, I believe). Paper vs digital – that’s not so relevant.
    Oh, yeah, and never ask what they’ll pay. They have no idea : )

  • http://twitter.com/karengunton karen gunton

    “LOW PRICE TRIGGERS WORRIES OF PERCEIVED LOW VALUE”

    i talk about this quite a bit with the little biz building mums i help on my blog. pricing is part of your brand – no matter what you sell! your advice works for more than just ebooks – as a photographer i run into this a lot – just because it costs me only 40 cents for a 4×6 print does not mean that i should have low low prices for my prints. if i client says “why would i order a print from you when i could get it printed at walmart for so much less” then they are definitely not the right client for my biz. =)
    thanks for this – i will be sharing it with my readers!

  • dotcom

    Chris,

    This post is excellent. It is straight to the point, lucid and convincing. While it is impossible to argue against the argument of a $100 e-book having more helpful information than a $5 e-book, a lot of us can’t validate spending that much money on a read when bills are due. I agree that you pay for exclusivity as well but it just isn’t fair that the “rich” have more opportunities of exclusivity than a person who works hard to pay the bills. I think that people are having a hard time coughing up $100 for an e-book when they could buy groceries. If you could provide scholarships for those in need, then I guarantee your fans will grow exponentially (and if they apply your tips in your book, then they won’t need another scholarship;)

  • http://www.care2.com/causes/trailblazers/ Sue Anne Reed

    I would probably never pay more than $5-$10 for a fiction book in digital format. But, I rarely pay more than $10 for a printed fiction book. Most fiction work is a one-off experience. You read it once, and that’s enough.

    eBooks on marketing and other business topics are different. A) Most are written in ways that they can be used a reference in the future. If they are really well-written, they are something you’ll come back to again and again for inspiration and ideas. B) There is a value to them. If you bought an ebook for $97, can you apply tips from that ebook to better yourself and your business and make more than $97 in income? You can directly measure the ROI.

    My struggle lately is trying to decide whether or not to pay for “digital conferences”. I’ve mostly chosen not to pay, and I’m trying to decide if that is a wise decision or just me being stubborn.

  • http://linkedin.com/in/joesorge Joe Sorge

    You are most certainly welcome Sam. So happy to hear it.

  • Derek

    Great post, as usual…the only argument I have to disagree with is the suggested notion that movies and music have made a “smooth” transition to digital. While all three forms of media (yes, including books) have made relatively smooth transitions to their digital forms, the distribution and pricing models on all three are whacked out. Since the internet made accessing ALL media quicker and easier (and free-er), it has caused extreme uncertainty to the estimated value of each product. No one want’s to pay for something they can get for free.

    • http://invisibleinkdigital.com Invisibleinkdigital

      I agree with Derek. As somebody who works for an entertainment studio there is a herd mentality to pricing digital content based upon historical costs of the physical product. Until there is an end to end digital supply chain will an accurate cost base be determined

  • Derek

    Great post, as usual…the only argument I have to disagree with is the suggested notion that movies and music have made a “smooth” transition to digital. While all three forms of media (yes, including books) have made relatively smooth transitions to their digital forms, the distribution and pricing models on all three are whacked out. Since the internet made accessing ALL media quicker and easier (and free-er), it has caused extreme uncertainty to the estimated value of each product. No one want’s to pay for something they can get for free.

  • Derek

    Great post, as usual…the only argument I have to disagree with is the suggested notion that movies and music have made a “smooth” transition to digital. While all three forms of media (yes, including books) have made relatively smooth transitions to their digital forms, the distribution and pricing models on all three are whacked out. Since the internet made accessing ALL media quicker and easier (and free-er), it has caused extreme uncertainty to the estimated value of each product. No one want’s to pay for something they can get for free.

  • Lainehmann

    You talk about pricing according to expected value. I see how that works for a sales or IM book, but what about a book in another niche where the expected value isn’t as clear? Like fitness or knitting or cooking?

  • http://www.expensiccino.com Carl Natale

    I’m not a pricing consultant, but I wished I played one on TV.

    There’s a lot going on here. I love Conor’s comment about how happy people are with their negotiations. It sounds like one of the experiments detailed in “Priceless: The Myth of Fair Value.” Basically, our perceptions of value are influenced heavily by other numbers. This is why the concept of an anchor is so powerful in pricing.

    Joe’s $97 book is just one of the products being offered here. There also is a KTC membership and a six-week course. Somewhere in those packages is an anchor. I’m not sure if the book is it or not.

    This is what I do know.

    The reason why ebooks tend to be priced lower than physical books has little to do with production costs. Customers tend to put more value on physical products. That’s why software comes in such big boxes. Wasteful I know. But our subconscious minds are driving that decision.

    That doesn’t mean a $97 book is a bad decision. The subconscious tells us to buy it because we want our businesses to succeed. That $97 will buy a form of mental insurance. We’re more likely to make the most of the information because we’re investing more than we usually do. Even if we don’t learn something that nets us thousands of dollars, we will be happy with our decision to do everything possible to ensure success.

    Also, subconsciously we are reluctant to admit we make bad decisions. That barrier gets higher the more we spend.

    I know. Logically, we should be more skeptical and demanding when we pay $97 for a book. But logic really doesn’t have much to do with pricing. Many of you will object and swear you’re smarter than this. I don’t mean to insult anyone. But our behavior is guided by thousands of years of evolution.

    Like I said. There’s a lot going on here. Good luck with it.

  • http://www.expensiccino.com Carl Natale

    I’m not a pricing consultant, but I wished I played one on TV.

    There’s a lot going on here. I love Conor’s comment about how happy people are with their negotiations. It sounds like one of the experiments detailed in “Priceless: The Myth of Fair Value.” Basically, our perceptions of value are influenced heavily by other numbers. This is why the concept of an anchor is so powerful in pricing.

    Joe’s $97 book is just one of the products being offered here. There also is a KTC membership and a six-week course. Somewhere in those packages is an anchor. I’m not sure if the book is it or not.

    This is what I do know.

    The reason why ebooks tend to be priced lower than physical books has little to do with production costs. Customers tend to put more value on physical products. That’s why software comes in such big boxes. Wasteful I know. But our subconscious minds are driving that decision.

    That doesn’t mean a $97 book is a bad decision. The subconscious tells us to buy it because we want our businesses to succeed. That $97 will buy a form of mental insurance. We’re more likely to make the most of the information because we’re investing more than we usually do. Even if we don’t learn something that nets us thousands of dollars, we will be happy with our decision to do everything possible to ensure success.

    Also, subconsciously we are reluctant to admit we make bad decisions. That barrier gets higher the more we spend.

    I know. Logically, we should be more skeptical and demanding when we pay $97 for a book. But logic really doesn’t have much to do with pricing. Many of you will object and swear you’re smarter than this. I don’t mean to insult anyone. But our behavior is guided by thousands of years of evolution.

    Like I said. There’s a lot going on here. Good luck with it.

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  • Darius Tulbure

    Never say never. You say “Never Ask Your Community For Pricing Advice”. This is a pretty absolute advice. Are you sure there aren’t situations where asking your community about pricing as part of a market research is a useful thing? OK, they will give you a lower figure, but you already know that and you can keep this in mind when actually pricing your goods.

    Anyway, it looks like an extraordinary statement that’s not backed by strong arguments. Would you clarify this? Thank you!

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  • http://imageperceptions.com Ted Vieira

    Great insights as always, Chris. Thanks!

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  • http://www.callummahoney.com Callum Mahoney

    The one thing with digital pricing that I find odd, is that it always seems pricier than a physical counterpart,especially with the hardcore internet marketers. An ebook might be worth $37 but it also might be worth $7 like its physical equivalent. I certainly think there is nothing wrong with a $27, $97 or $997 ebook but as long as it isn’t priced because other digital products are.

  • http://www.callummahoney.com Callum Mahoney

    The one thing with digital pricing that I find odd, is that it always seems pricier than a physical counterpart,especially with the hardcore internet marketers. An ebook might be worth $37 but it also might be worth $7 like its physical equivalent. I certainly think there is nothing wrong with a $27, $97 or $997 ebook but as long as it isn’t priced because other digital products are.

  • http://www.garious.com Heba Hosny

    Another great post, Chris. I agree with you that if you managed to create “real” value for your digital product and offer it to real potential buyers, they will buy it in massive numbers.

    However, it takes a lot of effort to target potential buyers not freebie freaks! Some businesses have huge mailing lists of “freebiers”! So, when it’s time to sell a product, they make zero money! Huge traffic! Huge list but no money!

    The solution to this problem is to learn how to target real buyers in addition to adding great value to your product.If you manage to do both, the sky is your limit.

    The only I know that guarantees building a list of buyers is applying the one-dallor optin method. As the name implies, you offer a great product for just $1 and require visitors to optin. This way, your entire list will be made of buyers and your chances are high for selling them more expensive products in the future.

    Is there any other ways you could think of to target real buyers? pls fill me in :).
    Thanks again, Chris for another brilliant post :)

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  • kenessar

    Agree with you, low price may be low value too