Pricing is hard
As we record the Johnny.Decimal Workshop, I’m thinking about how to price it. I wanted to record my thoughts somewhere that I could link to them later.
Pricing things is hard.
I’m not a salesman. It’s the part of my new job that I enjoy the least.
When we released the Workbook I had no idea what it was worth. How could I? What baseline could I possibly have? It’s a PDF that we’d written.
It’s simultaneously worth nothing (it’s a digital good with zero marginal cost) and everything (it’s how we pay our rent).
So it’s an equation. Basic maths. Price × sales. Higher price, fewer sales, and vice versa. Where’s the sweet spot?
Doing it wrong
I treasure my audience. Lucy and I call you ‘the Johnny.Decimal family’. We really do.
So when I price a thing high, my best supporters buy it immediately, and then if I lower the price … that feels bad.
This happened, obviously. There’s nothing I can do about it now, other than learn the lesson.
#1: Turn it up, not down.
Unfortunately, discounts work
I hate the bullshit where someone says that some thing is ‘worth’ some amount and if you get this one thing and this other thing then really the ‘value’ is $499 but unbelievably you get it for $4.99!
I refuse to play that particular game, but people do love a deal. It’s just human nature.
#2: Price it higher, but always have a deal.
This feels a bit sleazy, but I need to get over it. Make the base price higher, but nobody actually pays it: there’s always an offer.
And it aligns with #1: you can easily turn it up by adjusting the coupon discount.
Lower price × higher volume = lower stress
When the Workbook was $37, some days I’d wake up to zero sales. (~80% of my sales occur while I’m asleep here in Australia.)
That’s terrifying.
So when I dropped it to $19, the overall earnings didn’t necessarily go up, but the chance of any given day being disastrous certainly went down.
#3: I prefer volume over price.
This sits nicely with me. I’d prefer to be more affordable, and this means I get to help more people.
(The alternative is to go high-end. The price of entry for some of my competitors starts at multiple-hundreds of dollars. Good on them, but that’s not for me.)
Sales are spiky
What are you people doing out there?
If my best day last week was 100%, my worst was 19%. The sales graph is super spiky and as far as I can tell there’s no pattern.
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s│▓ ▓ ▓ ▓ ▓
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ThFrSaSuMoTu
(Indulge me my passion for pointless ASCII graphs.)
So you’ll have a great week — the first week of January was a record-breaker — and you’ll think, mad!, we’ve cracked it.
And then the next week will be crap.
It’s been long enough now that I’ve learned to ignore it.
#4: View sales month-by-month not day-by-day.
#5: Don’t respond to yesterday. It was random.
An experiment
This header was going to read ‘this isn’t science’ and then I realised, no — it’s the very definition of science: I don’t know the answer, and I’m testing hypotheses with experiments.
And so if you see prices change, or you wonder why he did that, the answer is … experiment. It’s just some guy with no expertise trying to figure it out.
It’s not nefarious, and it’s certainly not personal.
Discuss this on the forum.