Conversion rates

Lowering price to sell more?

[Lovejoy]

Hi all,

I sell informational products such as online tutorials and priceguides. I find that my best product has a conversion ratio of about 5%, but was wondering if dropping the price would increase the amount of conversions enough to increase profits.
Is a 5% ratio considered very good for online sales?

[lgn1]

With most conversions between 1 and 2%, I would raise prices. The idea is to make as much money as possible by doing the least amount of work. In economics this is called price elasticty of demand.

[hp11]

Lowering your prices may not help you increase your profits because:
1- If, for example, you need to sell two items to equal your previous profit margin, then you need to take into account that you are now doing double the work, which takes time away from what makes you money, marketing and running your busines.
2- Sometimes consumers view spending more as "worth the investment", whereas if it is too cheap, the opposite is true.
3- If it ain't broke, don't fix it.

[otc_cmnn]

Some buyers like to spend more to get more perceived value. Others want a bargain.

Sell the "discount abridged - only the essentials version" for less and then pump up the "Must Have Complete works of" Version for more.

Get the best of both types of buyers.

Experiment. It is the only way to know for sure as every product has its nuances.

Target your ads accordingly - send your PPC ads for "Discount Widget" to the cheap version and ads for "Best Widget Money Can Buy" to the expensive one.

[jaffstar]

Two points:

Sometimes low price is perceived as low quality. Therefore a higher price might be key.

With regard to price elasticity, once you lower your price, its almost impossible to raise it a later stage as the damage is done.

[jsinger]

"Is a 5% ratio considered very good for online sales?"

That's a very high rate suggesting that you might want to try a HIGHER price.