Having to leave the house to buy a book, a guide, or new software is so 2001. These days, digital products are some of the most versatile and profitable products you can sell, with the market set to reach 38.2 billion by the year 2027.
Whether you're selling courses or access to private communities, the demand is only getting bigger, and with it—your bank account.
You may already be selling online, and if not, you're gearing up to do so. Don't forget that Whop is your #1 destination for selling digital products; you can get started in just minutes.
There's one more thing to consider before you show off your products to the world: the pricing. How do you price your digital products in a way that maximizes both your sales and your profit margin? You've come to the right place, as we'll show you how to price digital products for maximum success.
Setting the Right Price for Your Digital Products
Price is one of the most pivotal factors in making sales, so it's a good thing that you're thinking about it. After all, pricing your product wrong in one direction can eat into your sales cost and destroy your profit potential. Pricing it wrong in the other direction can price you out of your target demographic.
Regardless of your demographic, it's important to stay in line with your competition, too. Selling things at a higher markup is not out of the realm of possibility, but it also means you'll need to be able to provide something extra. It's a tricky line to navigate, that's for sure.
Luckily, there are ways to avoid falling into either of these traps, and we'll cover them all in great detail in this guide. And, in case you were wondering, we also have a guide that tells you how much you might make by selling digital products once you've picked the perfect pricing.
What are your production costs?
There's a cost to creating a product, even if it's not a physical object. If you make your product yourself, it might feel like it's free, but it never really is. After all, everything from your own time to the cost of your utility bills adds up to the final cost of a product, so don't undersell yourself.
Here are some of the more common production costs that may apply to you, depending on what you're selling:
- Software or software development costs
- Utilities (like your internet and power bills)
- Website hosting (although you can sell digital products without a website, too)
- Ecommerce platform fees
- Marketing and advertising costs
- Licensing
- Outside professionals (like an accountant for your taxes, or any contract workers you may hire)
- Insurance costs
- The value of your own wages
Write down each and every expense as best as you can, and don't forget to put a price on your time. Your product's price needs to not just exceed your expenses but also account for profit. Of course, if you're just starting out, you might run a promotion or two and take a loss just to attract more customers.
How big is your audience?
The next thing you should consider is your audience. Who you decide to sell to will determine what kind of price point you should place your products at.
In general, a lot of the information you seek will come from simply designing your product. You're building it from the ground up, so you already know who it's for. The question is how many people might be interested in it initially, and how you might scale your business as time goes on.
Market research comes in many shapes and sizes, such as:
- Online surveys
- Email surveys
- Virtual focus groups
- One-on-one interviews
- Expert interviews
- Search trends
- Existing market reports
- Trade publications
- Scoping out the competition
Some of these, like market reports that have already been done, only require you to do the legwork to find them. Others can be done with some effort and will also serve as a first step toward marketing yourself once you're ready. Things like focus groups or surveys will usually have an upfront cost, though.
What are your competitors charging?
Before you price your digital products, do some research and scope out what other people putting out similar products are selling them for. Your best bet is to start by looking through various online marketplaces, especially the ones you're planning to sell through. Whop has a robust marketplace that can serve as your guide here.
You can charge more than your competitors if you can prove that what you're offering has more value or is of a higher quality than theirs. Just remember that the responsibility to prove that value is on you, and the key lies in the strength of your marketing.
Allow yourself to be inspired by the competitors who choose to go the extra mile with their pricing. For instance, if one of them offers regular discounts, giveaways, or goodies for newsletter subscribers, that's often a winning strategy.
Keep an eye on their payment plans, too. Do they charge a flat fee for each product, or do they charge a monthly subscription? Is there a tiered payment system that locks the juiciest products behind a paywall? All useful knowledge, so make sure to look through a long list of your competitors.
How much is your audience willing to pay?
We discussed how to do market research when determining your audience size, but you can also use audience surveys to help narrow in on the ideal price point. All of this is part of creating your target persona.
One way to find out is to create an anonymous demographic survey with a tool like Google Forms, asking for a ballpark figure of how much they earn and how much they spend on products like yours.
It's not all about the money (although a lot of it is). Your audience's pain point matters, too. Your product should serve some purpose or fill a need for the buyers. If this need is something drastic and your product is something they can't do without, you should be able to price it on the higher end. If your product is just something that solves a small issue or inconvenience, then your customers may not be willing to pay as much.
Choosing a Pricing Model for Your Products
So, you've decided on your pricing. But how do you want to get paid? Will it be subscriptions or a one-time fee? Will all your products have their own separate costs, or will they fall under several umbrellas, where you sell a few of them at a time?
To decide the above and more, you should take into consideration factors like:
- The nature of your product
- Your demographic and their preferences
- Your cash flow needs for updates and maintenance
- Customer retention
- Administrative effort
- How much flexibility you need
Some pricing models will naturally be a better match for specific product types. As an example, courses that require a time commitment lend themselves to subscription-based payment plans. That way, you're getting money every month for something you only spent time creating once, and as many courses are evergreen, they're a super good source of passive income.
On the other hand, things like ebooks tend to be a one-time payment instead of a subscription. However, you can still lock your ebooks and other downloadables behind a subscription plan as part of a pricing tier. For instance, you can sell a cheaper subscription tier that only offers access to a course and a pricier one that also adds some ebooks.
Let's take a look at each of these pricing models.
One-time-payment pricing
The one-time-payment pricing model is the simplest. In essence, if someone wants to buy your product, they pay for it and they own it forever. This is ideal for anything that doesn't require continued support or updates, like ebooks, music, stock photos, templates, graphic design, or fitness plans.
This is a straightforward way to make money online, but by accepting one-time payments, you might limit your earning potential slightly. You'll have to entice your customers to keep buying new products.
Freemium pricing model
A freemium pricing model is exactly what the name implies: a hybrid between a free product and a premium one.
This model is very common with all manner of apps and SaaS, such as Spotify, Adobe Photoshop, or Dropbox, where the company offers a base free product or service to everyone. Once you've started using such a service, you have the option to unlock premium features at an extra fee.
Freemium pricing is good if you want to offer something with a low barrier of entry. After all, everyone can afford it if it's free!
Still, keep in mind that only a small percentage of free users will end up paying. Even a massively known and used platform like Spotify reports that only 40% of its users pay extra to get rid of ads and use the Spotify Premium service.
Make sure that you price your premium features in a way that sustains the business, but also encourages constant growth in paying audience numbers. Free trials are also a good way to invite people to try your product without fully committing.
Subscription pricing
A subscription model is perfect if you want continuous income that you can rely on. The good thing is that many different types of digital products can warrant a monthly subscription, from running your own exclusive community to offering weekly meal and fitness plans.
Flat pricing and tiered pricing are both common formats used by people who sell via subscription.
Flat pricing
Flat pricing involves charging everyone a single price. For that fee, they gain access to everything you have to offer. For example, let's say you sell meal plans, you could set a flat fee of $50 a week for this service. This is by far the simpler option, and will involve less work on the back end in terms of billing and customer support.
If you want to prioritize a method of subscription sales that you can have a set it and forget it attitude with, flat pricing will be your best bet. Just keep in mind that you do potentially lose some money by giving every customer access to some features that certain people may be willing to pay more for.
Tiered pricing
Tiered pricing lets you charge more for the best bundle of your products.
A subscription with tiered pricing divides up your content, products, or services into different levels. With each higher level, you can offer more content, more usage, or items of a higher value, and subsequently, charge more for it. This allows people on more of a budget to still be able to buy your products, all the while you can get more money for the whole bundle.
Let's take that previous example of selling a meal plan. With a flat subscription fee, you charge one price for everything on a regular basis. with tiered pricing, you offer different plans - perhaps $25 per week for 3 days of meal planning and $50 per week for all seven days planned.
There are some downsides to tiered pricing, though. By giving your customers options, you may have people who temporarily pay more, make the most of it, and then end up downgrading their subscription. This is called downgrade churn.
Churn is inevitable, so don't stress too much about trying to avoid it too far in advance. Instead, consider incentivizing these higher subscription tiers in a way that's easy for you to maintain, but highly attractive for your customers.
No matter what pricing structure you opt for, finding the right platform for your subscription style is important.
Support, Bundle, and Upsell
By this point in our guide, you already know how much it costs you to make and market your products. Now, don't forget that you'll also need to provide customer support, and that can cost both time and money. Offering good support is important for your word-of-mouth reputation and customer retention. People who feel like they've had a good support experience are more likely to keep coming back to you.
There are some ways to make up for the extra costs, though. For starters, make sure that you work with a platform like Whop—that way, you won't have to worry about any issues on the payment side, as Whop takes care of all that.
What else can you do? Tap into some tried-and-tested ways to boost your digital product sales, such as bundling and upselling. Here's your new battle plan!
Bundling
If you're selling multiple products, you can bundle them to provide your customers with more value at a discounted rate. They're going to feel extra satisfied because they're getting a great deal, while you'll earn more money for your time.
Bundling is common practice in both ecommerce and brick-and-mortar stores. You know all those deals where you're, as an example, getting a bottle of shampoo and a smaller bottle of conditioner for "free"? Or maybe a Nintendo Switch with Mario Kart pre-installed, both at a cheaper price? That's bundling, and it makes a lot of sense financially for both parties.
The price tag is higher than if you just bought the console alone but less than if you bought the console plus the game individually. On your end, just make sure the added value is good enough to incentivize someone to spend more than they'd planned. As a seller of digital products, you could bundle a course with an ebook, or private community access with a webinar.
Upselling
In the context of digital products, upselling can mean approaching a customer who's already interested in your wares and getting them to spend more. Let's say you sold them an ebook. You could add an extra page in the book with a discount code to buy more of your products—that's a way to incentivize them to go back and buy more the second time around.
Another way to upsell is to offer multiple pricing tiers, all priced in such a way that it's hard to say no to an upgrade. Fast food chains do this type of upselling a lot, such as offering you a meal deal, but if you supersize it, it's only an extra $1. Most people will go ahead and say yes to a cheap upgrade; for you, it means extra revenue through and through.
When pricing your individual products, you might keep the pricing fairly affordable, but bundling and upselling together can increase your revenue by quite a lot. If the cheapest deal is $5 but the most expensive one is $15 and gets the customer a lot more content, they're far likelier to spend $15.
Sell Your Digital Products with Whop
Setting the right prices for your digital products is tricky, and with some platforms, you won't just have to price your products—you'll also need to pay an upfront fee to even start selling. That's no good. You're much, much better off trying Whop. Whop is the best platform for selling digital products, and the best part is that there are no platform subscription fees.
When you create your own whop hub, you can manage your payment strategies and set your price points for one-time payments, subscriptions, and bundles. Tiered payment plans offer you a way to give customers freemium content, including trial periods, but also price your products higher for extra profit. You can even offer buy-now pay-later with Whop.
Whop is also versatile when it comes to what you're selling. You can add or remove apps in your whop hub on a whim, including things like community access, Courses, Chat, and Forums. You can also sell all kinds of downloadables, including ebooks and PDFs.
If you're worried about the time you'll spend on customer service and billing issues, Whop also has you covered there. There's a 24/7 live support team available to help you with whatever you need, so you can keep your customers happy without stretching yourself thin.
Need another reason to get started? Whop offers industry-leading fees, only taking 3% out of each sale. This means that you keep 97% of your sales, with no platform membership fees. Whop doesn't make money unless you make money.
It only takes a few minutes to start selling. Sign up with Whop and sell your digital products today.
FAQs
How to price your digital products?
Do some market research and note how much your competitors are selling, then account for your expenses, and try to offer reasonable prices. If you're new, it can be a good idea to undercut your competitors slightly to drive new sales, but not too much—you need to make a profit.
What tools can I use to help price my digital products?
If you're looking for tools online to help you price your products, there are a lot out there. Here are some of the more popular and commonly used options.
- Whop Marketplace
- Google Trends
- Trustpilot
- SurveyMonkey
- GoogleForms
- Hootsuite
- Brandwatch
- Optimizely
- Quickbooks
- FutureFuel
Should I offer discounts on my digital products?
Offering discounts on your digital products is a great way to get the attention of customers. After all, who doesn't like a cheap digital download? This is especially helpful when you're just starting.
You can also use a free trial method. This might come through in the form of images or photographs that are watermarked, software or an app that you can only use for a week before you have to pay, or access that ends after a set amount of usage. Consider running giveaways and advertising your discounts on social media to benefit from organic marketing.
