How Much Should I Charge For My Digital Product?

How much should I charge for my digital product? We get asked this a lot, because pricing is tough. We've typically shied away from giving an answer to this question because it's equally hard - whatever generalisation we give won't be right for all sellers. However, in a moment of inspiration, we realised that we could extract some meaningful answers from our SendOwl dataset. After all, we've got thousands of SendOwl sellers getting pricing right, and at least 29 of them have made more than a million dollars! So, we dived into our database and analysed millions of orders to see what patterns we could spot. Here are our answers.

Single digital products are best priced at $100-$165

This was our main finding and we think you'll be encouraged by how high this price is. Read on to see how we got our answer.

What are the most popular price points?

We started out by asking: what is the most popular price points? This wouldn't immediately tell us the optimum for income, but it's a useful starting point.

As you can see there's a lot of products at the cheaper end of the spectrum, especially under $20. Popular price points also included: $30, $40, $50, $75, $100, $150, $200, $250+. There's actually a fair amount of data over $250 but it becomes more sparse so we decided to stop the analysis at that point. Don't let that you put you off charging a lot for your products though - we have customers selling a decent volume of products at $5000+ every month (and you don't need to sell many digital products at that price!).

Does digital file type matter?

We also produced graphs of the most popular prices by file type. Text, audio and images were similar but it was interesting to note that the big area on the very left of the graph was further to the right on the video graph. In other words - sellers are charging more for video. This makes sense: video can seem more valuable than text, audio or images.

How can I maximise my income?

Next we worked out the optimum price at which to sell a digital product. Generally speaking, as price increases sales decrease. But with that extra income from each sale what's the point at which it's no longer sensible to keep increasing prices? To find this we plotted the price of a product against its total sales:

The optimum average price is about $135. The curve isn't that steep and it seems anything in the $100-$165 range will yield around the same returns.

This number is much higher than you might initially expect. The more we looked into it though, the more it made sense. At this price the average seller is making around $20,000 from the one digital product. And I'd say that's fairly consistently what we see. An average product will make that much, a good one will make much more, and a poor one (or a poorly marketed one) less. If I'd had to put a number in the sand before we did this, based on all the sellers we've seen over the years, that's pretty much what I'd have gone for.

Sell at $135 if you have a good product, well marketed

When I looked at the products selling in the $100-$165 price range one thing stood out: they were all extremely professional products. The product quality and the marketing matched the price point. So, if you're going to charge this much for a product, make sure you can justify it with good marketing and a good website.

Here's some of our favourites we found from a random sample around that price point: Kayla Itsines (look at the sample product quality), Design Aglow (look at the website quality and product previews) and CEO Works (you may not like the design here but it's perfectly in keeping with its audience - and that's what you need to do).

Most sellers underestimate the price they can sell at

The final thing to notice on this graph is how even the optimum pricing line is compared to the most popular price points, which have big spikes and troughs (even allowing for the fact that successful sellers reuse the same price points across lots of products, skewing results).

In other words, most sellers are under estimating the price they can sell at.

Bundle products are best aimed at $35-$55 with bundles in the range 1.5-5x

Next we took a look at multiple price products. These are digital products that are often bundled in with extras and sold at a higher price: for example, interview notes/videos, member forum access or an hours consultancy are common extras.

We found that the main digital product is best priced at $35-$55 and that extras could bump the price up to 5 times as much (i.e. to around $175-$275) and still achieve maximum revenue. Read on.

What is the most popular ratio of main product to extras?

First, we looked at the most popular ratio of main product to extras. As an example, if the original digital product was $20, then a bundle of $40 would be a factor of 2x and a bundle of $50 would be a factor of 2.5x. Here's the graph of the most popular factors:

There are many more bundles in the 1.5-3x range than there is beyond that point. This makes sense, because it can be harder to sell higher price products. However, this doesn't tell us the optimum bundle price.

To find out the optimum bundle price, we looked at the bundle factor (ratio of main digital product to extras) versus sales volume to find the optimum bundle price point:

The graph show that you can go to 2.5x before income starts to drop off too much. By 5x the trend line is starting to go down faster and we think that's logical. If you factor up too much in the bundles you're either offering stuff people don't want or they become suspicious of the initial offer quality.

What is the optimum price for the main bundle product?

Next we looked at the initial price to offer the main product at. For that we took all the bundles and looked at sales volume of the original product:

As you can see the price point for the main bundle product peaks around $45 although the difference from $35-$55 is marginal. At this price point the product is bringing in around $15,000 which isn't too bad considering there's still the income from the bundles to add on. As with single product prices you need to make sure your marketing/website matches the price point you're wanting to sell at.

Does the ratio of main product and extras vary depending on initial product price?

Yes. We looked at how the bundle factor varied according to the starting price. To do this we used a scatter graph and then introduced an average line. That's shown below (without the scatter data for ease of viewing):

As you can see, the higher the main digital product price the lower the average scaling factor. Again, we wouldn't have expected anything else. The higher the initial price the harder it's going to be to convince buyers to go for 5x.

Conclusion

So that wraps up our analysis of the data and a weeks worth of hard number crunching on our part. What have we learnt from this? In conclusion:

• Single priced products are best sold aimed at the $100-$165 price point
• Bundle products are best aimed at $35-$55 with bundles in the range 1.5-5x
• You can charge a lot more, or less, than this very successfully - you just have to back up that price point with your product/website/marketing quality
• Working out simple rules of thumb from vast amounts of data takes much longer than expected (ok maybe this one just applies to us)

If you are serious about selling come join us at SendOwl! We're a digital delivery provider with plenty of helpful marketing features.



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A quick word on our methodology

If you love your data, then you'll want to know that we do as well. Here goes.

In analysing the vast amount of data in our database we had to make a few restrictions, specifically:

• we only analaysed products in US dollars
• we excluded any items that were free
• we excluded big sellers ($1 million+) as they skew results
• we used a median average rather than a mean as it gave a better reflection of what the average seller was doing and wasn't altered as much by lots of high/low results
• for any graph data we calculated, we voided any numbers with less than 10 data points
• we only looked at products of our most popular types - text (pdf), audio (mp3), images (png & jpg) and videos (mp4)
• we only took orders from the last 2 years

There's loads of other data but in using the most popular configuration we could get 80% of the results with 20% of the effort.