Captain’s log, stardate 20170126
Sent by Jonathan Stark on January 26th, 2017
NOTE: This is a long and fairly “meta” email. However, pricing is the primary focus of this list, so I think you’ll find plenty of valuable info buried in it.
This past weekend I was working on the Expensive Problem site. After a little bit of thought, I decided to change a couple prices and consolidate two products.
Much to my surprise, some folks noticed the price change immediately. They emailed me about it with this sort of reaction:
“So I guess those book discounts from earlier this month were just a marketing tactic then?”
This isn’t an unreasonable reaction so I would like to share what was swirling around in my head at the time and be totally transparent about my thought process.
Okay, grab your drink. Here we go...
I know from experience that offering 3 tiers is a great idea when selling a book because we used this strategy with the Independent Consulting Manual (ICM). The price tiers for ICM were $49, $119, and $399.
The sales numbers for tier 2 were insane.
The majority of people bought tier 2 of ICM which was more than double the price of tier 1. Had we only offered tier 1, we would have made about half of what we actually did.
Because of this, I wanted to offer 3 tiers right out of the gate when I originally launched Hourly Billing Is Nuts (HBIN) in July 2016. However, I didn’t have enough valuable additional material ready to justify the prices for tiers 2 and 3, so I had to go with just a single $49 tier.
By the end of 2016, however, I did have enough additional material. So I relaunched with:
The big unknown for me at the time was how much demand there would be for tier 3, which includes a fair about of personal attention from me. If there was high demand, I would end up getting slammed and risk disappointing people by delivering an experience that didn’t meet expectations. That being the case, I erred on the cautious side by pricing it pretty high (i.e., $999).
Fast forward a couple weeks...
I ended up selling 12 tier 3 packages, which I was able to fulfill without undue stress. The feedback I got from those buyers was extremely positive. And as an added bonus, I particularly enjoyed the 1-on-1 calls.
Every single one of the 12 tier 3 packages I sold were to folks who bought the original release of HBIN. I presume that pricing was a factor...
To thank the HBIN early adopters, I offered them a 50% off coupon code which brought their tier 3 price to $499. I offered the rest of the list a big 30% off code which brought the tier 3 price to $699. The remaining 7 billion or so people on earth were offered no discount :)
All buyers of tier 3 purchased at the 50% off rate. I sold zero tier 3 packages at the 30% off rate, and I have sold zero since then at the full $999 price.
While I was pondering these numbers, I noticed that tier 3 of HBIN2 was very similar to (but slightly different from) the 1-on-1 coaching call that I have been offering independently at $499 for months.
Completely unrelated but during the same period, I received a handful of emails from people who were traveling and missed out on the launch discount. I set a very short launch window of about 72 hours for HBIN2 discounts. In retrospect, this was probably a mistake considering that early January is a time when people are likely to be traveling for holidays and/or vacation.
So, all of this was swirling around in my head when I decided to - without warning or explanation - change a couple prices and consolidate two products on my site.
At the time, it made sense to me to normalize the independent coaching call and tier 3 of HBIN2. If nothing else, I felt that this would reduce confusion between the two products. More importantly, I decided to bring the price in line with the actual value that people feel they are receiving. Both the independent 1-on-1 coaching call and tier 3 of HBIN2 are now $499.
I think this was the right decision, but I recognize that the change coming so soon after the launch raised a few eyebrows.
In my mind, the bottom line is that nobody paid more for tier 3 than they would have if they bought it today. And TBH, I probably would have issued refunds for the difference if anyone had.
Phew... Sorry, that was a long email... I hope you found it useful.
Thanks for reading and please hit reply let me know what you think.