SEM Tycoon

**Bryan Le** · 07-08-2006, 07:14 PM

Hey guys,

Another debate which I have been trying to tackle for one of my sites is - which is better? To sell your products at a higher price - or at the market price (in which you'd have to compete with just about everyone in your industry) - or selling it at a significantly lower price that ANYONE and making up the costs and the revenue in volume?

Is it better to sell 1,000 $5.00 products? Or 200 $25.00 products?

**Fredto** · 07-08-2006, 07:17 PM

It's better to sell 1000 $25 products, of course.

But I think people will always buy the cheapest, unless your product is very specific and not available anywhere else.

Of course, if it costs a lot of shipping for the 1000 items at $5, you'd better sell the $25 ones.

**imported_Bas** · 07-08-2006, 07:34 PM

If you are talking about the forum skins on your site, ForumShock. Then I think you should go with the cheaper option.
Why? Your forum skins are not of the same - or better - quality than the products of your competitors; such as Transverse Styles or vB Styles.

Also, your presentation is different. The forum skins are not your main product but they are 'just one of' your products.

**chovy** · 07-08-2006, 07:38 PM

depends on what you're selling, and how limited the supply is.

Supposedly, prices in a free market should always be determined by supply and demand. I sold software at $1,000 a pop, and sold a few.

I changed the price to $10, for a couple of months, and I didn't sell any. Go figure.

**zeekr** · 07-08-2006, 07:45 PM

It depends. It's all about the perceived value. Always remember the phrase "you get what you pay for". Usually people looking for the cheapest price are the worst quality customers.

Also, I think it's not what you sell, but how you sell it. Do you really believe any of the major brands make better products than any other? Take Ipod for example, always at a higher price than many better products out there, they still own the market.

You could also sell at different prices for different markets with different brands and get the cut from everywhere. Many companies do that..

**Bryan Le** · 07-08-2006, 07:46 PM

Quote:

Originally Posted by Fredto

It's better to sell 1000 $25 products, of course.

But I think people will always buy the cheapest, unless your product is very specific and not available anywhere else.

Of course, if it costs a lot of shipping for the 1000 items at $5, you'd better sell the $25 ones.

There is no shipping involved.

**imported_Bleys** · 07-08-2006, 08:21 PM

Well, in that specific scenario, it doesn't really matter. You're making the same amount of money.

But if they're the same product, and you're talking about selling 200 at $25 or 1000 at $5, then I think I'd lean toward the more expensive. Because that likely means you're selling a product that is original to you (i.e., you can sell them at a higher price because you have fewer competitors undercutting you)... so the potential for long term sales growth is probably greater. I'm not sure that makes much sense. Guy Kawasaki explains it a lot better.

**Jak** · 07-08-2006, 09:06 PM

With most of the software products I develop I tend to price them higher.

First, you make your money quicker. Second, you have less customer service issues to deal with. The second point also leads into a third area which is entirely my own experience, and that is the apparent law that the less something costs, the more you can expect that the people buying it will have trouble.

Also, the lower you price something, the more reason there is for people to question why the price is so low. Is it inferior? Is there something wrong with it to make it sell so low?

Psychologically, when you price something higher people will actually feel better about buying it. They will even defend the higher price if asked about it. They spent a decent amount of money on it, and people's natural tendency is to defend purchases they made. As long as the product isn't garbage, and does what the buyer needs it to do, they will be happy.

One software product I developed years ago was selling for $19.99 and selling about 10 a day. After a couple of months I decided to experiment so I se the price to $30.00, just to see what happened. Guess what... same sales numbers. On the $19.99 sales I was clearing around $11 each after paying affiliates and processing fees. On the $30.00 sales I was clearing about $20.00 each. Raising the price brought in an extra $90-$100 per day for the same item.

With that said, I'm currently working on a script that has some competitors out there. The thing is, all of the competing scripts sell in the $150-$300 range. I'm going to release mine at around the $50 price point, and I'm designing it accordingly. No rules are set in stone, and in this case I'll be the only one with a quality, in demand script at a lower price point than the competition.

Basically my thoughts are... if the competition is in the high price range, make yours lower. If theirs is in the bargain range, make yours higher priced.