How do you pick the right price for a product?

Some of the advice is conflicting: do you price it low enough that buying is a no brainer, or price it high so that customers will value it more?

I've read plenty of examples of people raising prices and seeing sales increase, because they'd shed the perception that their product was "cheap". But that doesn't always work for all kinds of products.

Over at ProBlogger, Goddess Leonie wrote:

I dreamed a dream. I got told to offer all my ecourses, all my meditation kits, all my workbooks"”everything I had created over three years, and everything I was going to create for the next year. And I got told how to price it: $99 for a year's access to over $600 worth of my stuff.

When I asked why I needed to do all this, my dream elders just said:

You want people to say "yes." Without hesitation. With tremendous ease. Just: "I see what you are offering. It will help me beyond any doubt. Yes."

For her, it worked, and she made a lot of sales.

So (outside of testing a variety of prices...which can be problematic when people who paid more see the product offered for less), how do you decide whether and which way to move your price? Here are a few of my thoughts (yours are welcome in the comments):

  • If your product class is seen as a commodity, you'll have trouble pricing higher than the competition unless you find a way to position yourself as a premium variant, or even a new class of product.
  • Simply piling on more "stuff" in order to keep your price high may cheapen your product. If you're going to add bonuses, be sure they're things the customer will value. And not just after they get them and realize how valuable they are. Be sure it's clear before they buy that the bonuses have real value. Be sure you're not just fooling yourself into believing that customers will value them.
  • If you're making a generous offer, you've got to prove that what you're selling is worth more than you're charging -- that you're not just lowering the price because the product isn't selling. For example, if you have a testimonial saying "this is the best $97 I ever spent", people seeing a $47 price tag will feel like they're getting a deal.
  • Give a reason why you're offering such a low price. Research has shown that virtually any "reason why" helps, but the more believable the better.
  • In markets where product quality varies widely, low prices signal low quality, not a good deal. Only use them to drive volume if you've established a reputation for quality. On the other hand, high prices signal high quality. Just be sure you've got the quality to back up your pricing.