Price Your ClickBank Products for Maximum Profit

 


Visitors: 440

Choosing the right price for your digital products is one of the most critical, yet difficult, aspects of your business strategy.

Most merchants understand that over-valuing a product kills sales. It is also fairly well understood that under-pricing cuts the unit revenue without any guarantee of a significant gain in sales volume. But few people are aware of a third (but equally important) pricing observation; that compromise pricing can be as harmful as either of the other two blunders.

To understand why this is the case, we need to examine the principles that lie behind effective pricing strategy. In general, merchants adopt one of two key philosophies when they price a product. They either set the price at a low level (which produces a low margin but high sales volume), or they choose a high price level (which trades off volume in order to gain margin).

These two approaches are known respectively as “penetration pricing" and “pricing for profit. " The former strategy is typically used by new competitors in a market, or by existing retailers that need to quickly establish a position of dominance after a product launch. The latter technique is favored by established businesses with mature products, where the objective is to earn the maximum profit yield from an existing dominant market position.

It is clear that, whether the strategy is to price low or high, going too far in either direction can be self-defeating. But mid-way pricing is equally ineffective, as it compromises both strategies; it unnecessarily discounts the product without doing so sufficiently to generate a significant improvement in volume.

As a vendor of digital merchandise, you are at a distinct advantage over traditional merchants, since there are no marginal costs associated with your business. Regardless of how low you choose to price your product, you are still guaranteed to show a gross profit on every sale. In contrast, a merchant of physical goods has real fulfillment costs (product manufacturing, damaged and unsold inventory, storage, shipping and handling) that impose a fixed lower price limit below which each sale represents a loss. This advantage affords you great flexibility in your pricing, but even if you use this flexibility to pursue a penetration pricing strategy, you should still be aware of the risk of counter-productive price-cutting.

Some ClickBank merchants use an experimental approach to pricing. Their aim is to establish the most profitable price through trial an error. Although this is understandable, even logical, it can be a customer-relations nightmare. You should think carefully before over-pricing a product and subsequently being forced to reduce the price in order to stimulate demand. Nobody likes to return to a website and see that a product they already purchased is now being offered at a lower price.

The opposite approach is to steadily increase prices from a low level, and is usually less of a cause for concern. Some merchants launch their products with a deliberately low introductory price - a benefit that they emphasize in their sales pitch. The time-limited, or volume-limited, nature of this technique can be a powerful incentive to buy, and it also allows the merchant a trial period in which to observe sales behavior before setting a definitive price to meet his longer-term strategic objectives.

About The Author

Copyright © Tim Coulter. All rights reserved.

Tim Coulter is a consultant and software developer who helps netpreneurs to harness marketing technologies.

He is also the author of “ClickBank - The Definitive Guide" The Ultimate ClickBank Tutorial & Reference Manual.

http://www.clickbankrevealed.com/

(612)

Article Source:


 
Rate this Article: 
 
Clickbank Basics - How To Profit As An Affiliate Or A Merchant
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

Setting the Best Price for Your eBook for Maximum Profit

by: David Hennebery (November 23, 2005) 
(Internet and Businesses Online/Internet Marketing)

How Do I Profit by Selling Clickbank Products?

by: Tayo Binuyo (July 09, 2008) 
(Internet and Businesses Online/Affiliate Revenue)

Five Hot Profit Reasons to Use Pay-Per-Click to Promote Your ClickBank ..

by: Avril Harper (July 24, 2008) 
(Internet and Businesses Online/PPC Advertising)

Clickbank Marketing - Maximum Exposure for Maximum Commissions

by: Suthep Sachasiri (July 16, 2007) 
(Internet and Businesses Online)

Clickbank Profit Machine Review - Make Money With Clickbank For Real or Scam?

by: Tom Harrington (February 29, 2008) 
(Shopping and Product Reviews)

Clickbank Profit Secrets - How To Become A Top Clickbank Profiteer In As Little .

by: Fabian Tan (April 23, 2008) 
(Internet and Businesses Online/Affiliate Revenue)

Clickbank Formula Profit

by: Niramit Soonthawong (April 23, 2008) 
(Internet and Businesses Online/Affiliate Revenue)

A Review of the Clickbank Profit Machine Marketing Course

by: Brian Garvin (June 16, 2008) 
(Internet and Businesses Online/Internet Marketing)

Profit Praxis Review Clickbank Secrets

by: Mark Dulisse (June 25, 2008) 
(Internet and Businesses Online/Affiliate Revenue)

Clickbank Basics - How To Profit As An Affiliate Or A Merchant

by: Daniel Sitar (May 02, 2007) 
(Internet and Businesses Online)