Price Your ClickBank Products for Maximum Profit

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/

More PPC Advertising Articles

Expand Your Horizons - Sell Your Professional Services Through ClickBank
ClickBank allows its merchants to sell many different types of digital products, but with the proviso that they must be deliverable entirely over the internet within 24 hours of purchase.Most merchants focus on downloadable products (especially ebooks and software applications), although ClickBank can equally be used to sell digital content delivered by email or via membership websites and other online communities.

Protect Your ClickBank Products from Online Theft
One of the biggest problems faced by ClickBank merchants is the risk of content theft - people downloading their digital products without paying for them.To gain illicit access to downloadable product files, determined content thieves exploit a range of security weaknesses, each of which can be eliminated if the correct protective measures are applied.

Sell Multiple Products Through a Single ClickBank Account
A ClickBank merchant account allows you to define and sell up to 50 separate products. If you have more than one product in your range, it makes sense to sell them from a shared ClickBank account.

Earning from PPC Search Engine Affiliate Programs
What are PPC Search Engines?PPC Search Engines are search engines that allow advertisers to list their site within their search results on a pay per click basis. Advertisers bid against other advertisers for the same keywords or phrases.

Pay Per Click Advertising For Home Business Owners
The biggest stumbling block for most home business owners is marketing their business. Most will start at free to post FFA pages and safelists.

Managing PPC Campaigns Inhouse
Pay-per-click search engine advertising has generated ample interest in the online advertising community, primarily because of its measurability and specificity. However, running a profitable PPC Campaign is not as easy as it might seem.

How to Make More Money with Google AdSense
Like any Google AdSense Publisher, you will want to increase your Google AdSense revenue. Your AdSense revenue depends on 3 factors: (1) the number of visitors to your site, (2) the number of visitor that clicks on the ads (Click Through Rate, or CTR), and (3) how well the ads pay (Cost Per Click, CPC).

AdSense Secrets - Joel Comms Google AdSense Guide Reviewed
Joel Comm is the best-selling author of a book called "What Google Never Told You About Making Money with AdSense!"Some may wonder why Google never told you these AdSense secrets, but the reality is that Google tightly controls & denies their publishers from sharing specific click through, page views, and other internal metrics. It?s probably a good thing that Google controls this data as it stops a whole series of events that would only cost time to contain.

Pay Per Click Advertising - How To Uncover Profit-Pulling Keywords And Make Your Sales Soar
Choosing to bid on the right keywords can be key to your pay per click success. By choosing the proper keywords - words that your potential customers would use to search for your product - you can pre-qualify web traffic and skyrocket your conversion rate.

Choosing the Right Strategy for Your Online Business: Pay for Inclusion vs Pay per Click
Back in the old days of the Internet - in 1993, - there were 284 locations on the entire World Wide Web. According to Bill Clinton, only 8 of them ended in .