A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.
We're closed, folks!
Doug Nebeker ("Doug")
I enjoy pricing articles that come with real numbers from personal experiments. The following is by Nathan Berry, a developer who experimented with ebook pricing.
After listening to people debate the merits of pricing low and selling lots of goods vs pricing high and selling fewer, and thinking in terms of a simple curve like is taught in economics and business classes, he tried pricing his web design ebook high, at $39. He then broke out "add ons", in particular videos and photoshop templates, for $40 more, and 10 code snippets with license for $130 more (presumably the sort of code excerpts that would normally just be included in line in the book).
Notably, a significant number of people purchased the deluxe package with everything and it was the largest source of revenue.
So, a slam dunk right?
I'd say not exactly. Did customers really feel they got $130 in value for the extras? Did they feel the pdf file ebook was even worth $39 to begin with? If they don't, perhaps they won't be back to buy a second time. Or maybe they will. Hard to say if this is a good long term strategy.
I did not purchase his product. If I did, I would have been outraged to buy the ebook and find that 10 code examples had been removed from the text and that he was charging $130 more just to see them.
This technique works really well with weight loss products. It works because prospects/marks really want to believe that there is a secret solution to their problems that doesn't involve hard work (or that the real solution is to solve real problems in their lives, not obsess about their weight). In this example, nobody needs a solution to design beautiful bitmaps for an iOS app. What everyone wants is a solution to making money with iOS apps. The customers for this product make the connection by themselves between beautiful bitmaps and making money, and they become very good at selling this product to themselves.
I have no doubt the author of the article hit $100,000 in sales, if he had gone after a bigger market than wannabee app store millionaires, he could have hit $1,000,000 in sales, easy. Programmers are people, they are just as vulnerable to this approach as accounting clerks.
Yeah, I pondered about that pdf too. This guy is analytical enough he did that for a reason. Obviously .txt makes more sense from every conceivable practical standpoint if a developer is buying it. But he is probably selling the dream of being a developer as you say. He may have gotten feedback "What is .txt file? Why not this be .pdf? I print .pdf, but not .txt!" So he thought, OK, sure thing buddy, I'll even make that a feature.
I mentioned wondering if it would be repeatable. The rest of the article deals with his further experiments raising the price, eventually to $250, and then making that the standard product. Sales and profits kept going up with these changes.
I think a big part of this is marketing. If you look at his presentation, he has gorgeous photos of a huge spread of things that you are "getting". It's all a download, but he presents it like you are receiving a large set of 8x10 glossy photo art stock and such, which looks to be a better value than "just some downloads".
Lots of products use this approach, but not usually books and software. Usually stuff like cleaning supplies sold on late night TV. But wait, there's more! In easy payments of $19.95*.
<font size=4>* 72 easy monthly payments.</font>
> Did customers really feel they got $130 in value for the extras? Did they feel the pdf file ebook was even worth $39 to begin with?
The marketing types often cite a psychology law where an individual who made a specific choice (buying decision) in hindsight tries and finds all kinds of justifications for it. Essentially customers are misleading themselves.
So I inclined to believe that customers won't be disappointed and will come again UNLESS the value and price are in screaming mismatch. Which probably not the case with this guy -- he's quite a good pro, I was told.
Wednesday, May 22, 2013
There's also such a thing as 'buyer's remorse' and chargebacks.
Let's not get carried away out there...
Monday, May 27, 2013
This topic is archived. No further replies will be accepted.Other recent topics
Powered by FogBugz