Pros and Cons of Selling High or Low Priced Digital Products
Ashley ShipleyShare
When you enter the world of selling digital products, the possibilities really are endless. You can start with a product that comes with rights to resell it, or you could start out with creating your own digital product.
No matter which way you go, there are things you need to know about what price-point the digital products you plan to sell are.
Let's break down the pros and cons of both high priced digital products and low priced digital products, starting with...
High priced digital products
Pros of high priced digital products
Higher profit margin per sale
The difference between your selling price and all the costs associated with creating and selling the product equates to your profit margin. The higher priced the item is combined with a lower costs to create and sell it gives you a much higher profit margin.
So think of it this way...
If you sell an item for $100, and it only took you $10 to make it, you've got a profit of $90. If you sell an item for $20 and it took you $10 to make it, you're still profiting, but much less per purchase.
Need to sell less items to reach your income goals
Depending on what your income goals are for selling digital products, you will need to sell less items to reach that goal with a higher priced item.
Less competition
Because of the nature of the digital product, and because of its higher price, there will likley (not always) be less competition when it comes to your digital product. The key is to get in now, get in early, so that when the market for the product is more saturated, you've got a solid foundation with a great sale history to back you up.
Cons of high priced digital products
Higher initial investment to get going - time and/or money
Getting started with a higher priced digital product will either take you a lot more money or a lot more time to get going. One path you could take is to purchase a high priced digital product that comes with MRR rights, so that you can sell it right away, but this will be a pricey investment. Or if you decide to go the route of creating your own high priced digital product, especially as your first digital product, it will likely take you a lot more time to get the digital product ready to sell, and then it will probably take some time to start generating sales.
Harder to sell a higher priced item
It will definitely be harder to sell a higher priced digital product than it will be to sell a lower priced item. Potential buyers will really need to see the value they are getting when they purchase your higher priced digital product, or they will likely not make the investment.
Buyers may need more lead time
It may take potential buyers a longer lead time to decide to make a purchase than it would with a lower priced digital product. You will likely need to nurture them more, and over a longer period of time, so keep this in mind when you are creating any email nurture programs.
Low priced digital products
Pros of low priced digital products
Easier to sell something that's lower priced
Let me tell you... it is much easier for a potential buyer to take a chance on a $5 digital product than with a $500 digital product. This gives them the option to test it out and see if they like it. And if they do, they could potential come back for more items.
Typically faster items to create
Being that the digital products is low priced, it will likely be a digital product that does not take a ton of time to create. It will likely be some sort of planner, journal, digital artwork, or something similar. This means you can get your digital products store up and running quickly too.
Likely a product that can be duplicated and modified
Depending on what it is that you create and sell, a lower priced digital product will probably be an item that you can clone, make updates, and add a whole new item to your digital products store.
Cons of low priced digital products
It will take a lot more sales to reach your income goals
Lower priced digital products will require you to sell a lot of items to be able to come close to reaching your income goals. This means you MUST have a solid lead generation strategy in place to attract potential new buyers. You'll also need a great lead nurturing program in place to help encourage new buyers to make a purchase.
Higher rate of competition
With lower priced digital products, you'll almost certainly face a lot of competition in a highly saturated market. Take planners for instance. You can go to just about any box store and get a physical planner for anywhere from about $7-$30. Plus, if you search on Etsy or Amazon, you'll be bombarded with search results.
The amount of competition with a low priced digital product is exponentially higher than the amount of competition you face with a higher priced digital product.
My recommendation is to offer a mix of the two - have some low priced digital products for sale and have some higher priced digital products for sale. This gives your potential buyers some variety in what they choose to purchase, and this allows you to reap the rewards of your product offerings.