Pricing digital products can be intimidating. There are a lot of different models out there for pricing digital products, and it’s not always easy to know how to crack the digital product price formula.
On the one hand, you might want to make your products accessible to as many customers as possible to maximize profits. On the other hand, you want to price your products competitively and don’t want to sell yourself short.
So, how should you determine the right price for your digital products?
In this article, we dive deep into the three most popular pricing strategies for digital products and dish out our top tips for pricing your digital products for more sales.
Top 3 models for pricing digital products
Whether pricing digital image files is on your mind or you’re considering how do I price my product for a large audience, when it comes to pricing digital products, there’s no one-size-fits-all approach.
As you try to figure out the digital price list for your creator business, reference these three popular pricing strategies for digital products.
Digital product pricing strategies overview
Pricing model |
Overview |
Value-based |
Approach:
Advantages:
Disadvantages:
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Cost-based |
Approach:
Advantages:
Disadvantages:
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Competitor-based |
Approach:
Advantages:
Disadvantages:
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Top strategies for pricing digital products
Pricing digital products can feel like navigating uncharted territory. But it doesn’t have to be complicated! As long as you understand the different pricing strategies for digital products and align them with your goals and audience, you’re golden.
Whether you’re highlighting your product’s unique value, covering production costs, or staying competitive, you want to choose a pricing model that works for you.
Read on for an overview of some of the top pricing strategies for digital products.
1. Value-based model for pricing digital products
A value-based pricing model is when you emphasize product over quantity.
So, instead of pricing digital products according to the cost of production and distribution, you price them based on what they’re worth.
You might be wondering how you figure out exactly what your product is worth though. Here’s where the whole “value” thing comes in.
How it works
To make this pricing model work, you really need to focus on defining what the value of your product is, and then convince your customers of it.
Think of it this way, a valuable product offers a solution for your audience — whether it’s a mini-course with a treasure trove of knowledge on how to become a creative director, or a helpful guide that teaches you how to manage seasonal depression.
With value-based pricing, you capture the essence of what your audience gains — i.e. knowledge, skills, time saved — and price accordingly.
A value-based pricing model reflects the inherent value your product offers, allowing you to escape the trap of underpricing or solely considering production costs.
To convince your customers of your product’s value, you need to clearly outline and promote its benefits.
For example, a mini-course on job interview tips isn’t just a collection of videos, it’s a “career booster.”
If you’re feeling stumped on how to determine and clearly define the value of your product, a good exercise is to ask yourself some simple questions like:
- What’s special about my product?
- What makes it different from other products offered by creators in similar niches?
- Why would people want to buy my product?
If you can answer these questions, you should be able to clearly communicate to your customer the value of your digital product!
Bottom line
Ultimately, many content creators choose the value-based pricing model because it encapsulates the essence of what their digital products truly offer — value, knowledge, and solutions.
This makes the value-based pricing model a great strategy to thrive in what feels like an overly saturated market.
Since you’re pricing your products based on their value — as opposed to the cost of production and distribution — this generally means you can charge above the market average (since, as humans, we usually assume that higher prices imply higher quality). That means you earn more profit in less time!
Keep in mind that higher prices may also narrow down your target audience. But if you’ve done your audience research, hopefully, that won’t be the case.
2. Cost-based model for pricing digital products
A cost-based pricing method is probably one of the most straightforward pricing models. This pricing model sets prices according to the production or distribution cost of a digital product. This pretty much ensures a reasonable price for your product.
How it works
As mentioned, cost-based pricing is all about pricing your product based on the actual production and distribution cost. However, this isn’t as popular of a strategy compared to other models. There are a couple of reasons for this:
- While cost-based pricing takes into account the actual production or distribution cost of your product, it doesn’t factor in all the additional expenses at play, such as website, design and hosting fees, accounting, or the literal time spent creating a product.
- Since this strategy is based on production cost, there’s a pretty high risk that you might end up underselling your digital product because its costs aren’t as high as a physical product.
When it comes to cost-based pricing, you don’t need to do as much customer, competitor, or market research.
But if there’s data out there that can help inform your pricing strategy, it makes more sense to collect and build your pricing model around it.
Bottom line
If you’re just getting started in the digital product universe and don’t yet understand who your customers are or what they’re willing to spend on a digital product, then a cost-based pricing model may work for you.
Whether you choose the cost-based model or not, it’s always in your best interest to conduct market research and spend some time getting to know your target audience!
3. Competitor-based model for pricing digital products
A competitor-based pricing strategy involves setting prices based on what similar products on the market are worth. This strategy can be appealing because it provides a reference point for content creators to establish their pricing.
If you’re new to the scene and have no idea where to start, you might lean towards competitor-based pricing.
How it works
As mentioned, the competitor-based pricing strategy is about researching what similar products cost and setting a competitive price for your product. However, keep in mind that this model has both advantages and drawbacks.
On one hand, aligning prices with competitors can offer your customers a level of assurance, and may attract buyers who are comfortable with existing pricing standards for similar products.
On the other hand, relying solely on competitor-based pricing might undersell the unique value of your content.
Mirroring competitors too closely might undermine its true worth. So if you’re deciding to go this route, consider whether your product offers significantly more or different benefits than existing products on the market.
Another thing to keep in mind with this pricing strategy is that the digital landscape evolves rapidly and market dynamics vary. So, basing prices solely on competitors might not ensure
ongoing competitiveness.
Bottom line
If taking this digital pricing route, you should blend insights from competitor prices with considerations of your product and your audience’s uniqueness. That way, you can strike a pricing balance that accurately reflects the worth of your digital offerings.
8 Tips for pricing your digital products
Read on to discover some tips and strategies for increasing your sales and making even more of that sweet, sweet passive income.
- Know your audience
- Create a lead magnet
- Consider tiered pricing
- Consider a subscription pricing model
- Calculate your costs step-by-step
- Consider bundle deals and upsells
- Build up your email list
- Don’t sell yourself short
1. Know your audience
If you’re feeling lost and don’t know where to start, researching your audience is the most important first step. The goal of this research is to find out just how much your audience is willing to pay for your digital products.
Knowing how much your audience expects to pay for a product will help you match their expectations. For example, if your audience expects to pay no more than a maximum of $10 for a budgeting template, and you’re charging $50, chances are that the pricing structure won’t work too well in your favor.
Reverse that scenario and say you charge $10 for a template when your audience assumes to pay a minimum of $50, and they might write off your template as low-quality and decide not to purchase it.
For this reason, knowing your audience is so important. But how exactly do you get to know them?
Conduct a demographic survey
A demographic survey helps you gather information about your audience’s social characteristics like income level, occupation, age, etc. While a survey can feel a bit formal — and it might not be the right discovery point for every content creator — there are creative ways to gather this information.
For example, you can create a questionnaire in a free form builder like Google Forms. And instead of asking your audience outright, “What’s your income bracket?”, consider rephrasing the question to, “Is it ridiculous to spend $30 on a nice plate of pasta?” An enthusiastic “No!” or a hard “Yes!” says a lot about someone’s disposable income.
However you decide to survey your customers, the goal here is to get an idea of your audience’s spending habits, which will help inform how you should price your digital products.
Analyze your audience’s pain points
Another important aspect of understanding your audience is to know, and we mean really know, their unique needs, preferences, and pain points. Doing so enables you to craft a high-value product and helps you understand what your audience might be willing to pay to address their pain points.
Once you’ve located what your audience’s pain point is, you’ll want to consider just how badly they want to solve it. If it’s only a modest inconvenience or mild existential crisis, they might not be willing to pay that much to address it. Alternatively, if it’s causing major stress in their life, it’s likely that they will be more willing to invest in a solution.
Wondering how to research your audience’s pain points? Take this mini-course by creator Juan Galán, where he shares his best tips for planning digital products.
2. Create a lead magnet
It may seem totally backward at first, but a smart pricing strategy for increasing your digital product sales is to create a free piece of content, also known as a lead magnet.
A lead magnet is a valuable piece of content that creators provide to potential customers in exchange for their contact information. The goal of a lead magnet is to attract and nurture leads within their target audience.
There are a couple of reasons why offering lead magnets can help you with pricing your digital products. For starters, a lead magnet helps you build a direct relationship with your audience by giving them something of value.
In return, this helps you build an audience and track customers outside of social media platforms, which we all know are notorious for having fickle algorithms.
Secondly, a lead magnet gives you the opportunity to give your potential customers a taste of the kind of valuable content that you bring to the table. Once they’re hooked, you can encourage your customers to move up the value ladder to purchase higher-priced products.
If you want to build a lead magnet but don’t know where to start, check out The Leap. Backed by powerful AI, The Leap’s digital product generator helps you quickly and effortlessly create digital products to offer as lead magnets. It’s also 100% free to use!
The Leap can help you sell and create lead magnets and more. Sign up for The Leap Way mini-course series to learn more.
3. Consider tiered pricing
A tiered pricing approach helps to diversify your options while catering to a broader audience.
For example, you might have thousands of loyal followers, but only a handful of them are in a position to pay more than $25 for a digital product.
Offering your customers options will greatly improve the chances of more sales. For example, as a personal finance coach, you can offer a mini-course on “Daily Budgeting Tips” as a taster for a more comprehensive online course on “Budgeting for the Future.” This approach allows you to offer digital products at different pricing tiers for different segments of your audience.
When presented with different prices, customers usually lean towards the mid-range option. This is because each tier offers distinct value; the lowest might seem less valuable, while the highest could be a bit too pricey.
Providing tiered pricing allows you to show your customers that you understand there’s no one-size-fits-all option when it comes to pricing, and that you’re committed to meeting them where they’re at.
Create a low-priced product
Low-priced products are the perfect starting point for getting your cash flowing. If you’ve already offered your audience a lead magnet, follow up your offer with something of more value at a low price.
We’r
e talking about valuable mini-courses, tutorials, guides, or other cheap digital downloads that are simple to make. Anything that will inspire your audience and keep them hooked!
The Leap’s AI digital product builder can create a mini-course in just minutes. Check it out here.
Create a higher-priced product
It may seem cliche, but when it comes to offering higher-priced products, slow and steady wins the race.
Now that you’ve already offered some lead magnets and/or low-priced products to gain your audience’s trust, you’re ready to graduate to higher-priced products like a more robust mini-course or a fully-fledged online course.
4. Consider a subscription pricing model
Rather than a one-time sale, a subscription-based pricing model focuses on building a relationship and a steady income stream.
Subscriptions offer customers continuous access to your product, creating an ongoing value loop for both sides. Instead of a single purchase, customers sign up for recurring access, ensuring consistent income for you while providing them with consistent content.
Moreover, subscriptions build loyalty and commitment. Customers invested in your product are more likely to stick around, explore more of what you offer, and become bigger brand advocates.
If it makes sense for you and your content, subscriptions can become a reliable income and an evolving, valuable experience for your customers. Ultimately, it’s a sustainable way to grow your digital product’s presence and profit margins.
5. Calculate your costs step-by-step
Whatever pricing model you decide on for your digital products, it should at the very least cover the cost of production — i.e., don’t forget about fees and expenses.
Your expenses will largely be determined by the digital product builder you use. Free, or low-cost, platforms like The Leap or Thinkific offer you the ability to create and sell digital products quickly and inexpensively.
Step 1: Add up direct costs
Direct costs represent any expense related to production. That could be personal website hosting, software subscriptions, or freelancer fees.
Sometimes these costs can seem so inherent to your spending — or like quick blips on your credit card bill — that they might not seem a part of the actual cost of your digital product, but it’s important you consider them.
Step 2: Calculate indirect costs
Indirect costs represent expenses not necessarily tied to a specific product but contribute to the overall production process. Think internet bills, music subscriptions, electricity bills.
Yes, at first, it might be a little extra to include these in your pricing strategy. But, as a content creator, the cost of the internet is a production expense and can be factored into your overall digital product cost, if you choose to do so.
FYI: We’re not saying you should charge your customers your monthly internet bill on top of each product sale. Think of it as more of an overall consideration when designing your pricing strategy.
Step 3: Add up fixed costs
The operating expenses of your creator business represent things like taxes, insurance fees, interest on loans, and other administrative expenses.
Say, for example, you borrowed money to take a course or workshop in your particular field of expertise. The interest on that loan would be a fixed cost.
Step 4: Add up all costs
Add all the costs together to get your total cost of production. Let’s say your total costs look something like this:
- Indirect costs: $1,000
- Direct costs: $500
- Fixed costs: $500
Since the total is $2,000, that means you need to sell at least $2,000 worth of your digital product to cover your expenses and break even.
So, if you’re thinking about producing and selling a mini-course at $25, you would need to sell your mini-course 80 times before you break even on your total costs.
It’s helpful to do this math beforehand to set realistic expectations for yourself.
6. Consider bundle deals and upsells
As a content creator, bundles and upsells can be a real game changer for product sales.
By combining related products into one package, bundles offer added value and convenience at a “bundled” price.
For example, bundling an ebook with complementary guides, or pairing a mini-course with exclusive access to templates is a win-win for customers seeking more bang for their buck.
Upsells are a smart marketing strategy for amplifying the ROI of your lead magnet offers and beyond. For example, after a customer signs up for your free mini-course, you can entice them with an upsell for a premium ebook or a deeper dive into a related advanced course.
Tailor bundles and upsells to complement your customer’s purchase, offering solutions or enhancements that will actually amplify their experience and knowledge.
Done right, bundles and upsells can elevate your sales game, pull in your audience, and expand your offerings all at once.
7. Build up your email list
There are several reasons why building an email list can result in higher digital product sales. For one, your email list represents your “owned” audience, contrary to the followers you “rent” from social media platforms.
You have full control over who gets to see the content of your email list. It’s also an opportunity to target different audience segments. For example, you can send a “Welcome” email to new subscribers and a friendly “check-in” email to existing subscribers.
The Leap’s automated email marketing tools can help you with that! The Leap has a catalog of expert-approved, pre-made email templates that can be customized to your preference and used to set up automated email flows and send email broadcasts.
Essentially, The Leap does the heavy lifting for you.
Your subscribers have willingly opted into your email list, meaning they’re already interested in what you’re serving. You want to take advantage of this by delivering quality, engaging content to their inbox consistently.
To learn more about how to master email list building, check out The Leap’s free mini-course with Millie here.
8. Don’t sell yourself short
In other words, don’t underestimate yourself or your digital product! Just because something may seem easy to produce one time, that doesn’t mean it isn’t bringing tons of value to your customers.
It can be difficult to know how to price your products like courses, ebooks, or templates for sale, but remember that the number one step is to consider what value you’re bringing to the table.
If you’ve conducted thorough audience research, chances are you have a pretty good idea of what type of product will solve your customer’s pain points.
For more digital pricing tips, check out The Leap’s free resources.
Sell digital products with The Leap!
It’s time to elevate your pricing game and witness the surge in sales firsthand.
Try The Leap, an all-in-one creator store that combines a link-in-bio tool, an AI-powered digital product builder, powerful email marketing automation, and creator analytics to help creators build the ultimate monetizing machine.
The Leap is mobile-friendly, ridiculously simple to use, and backed by powerful AI that does all the heavy lifting for you.
Do you want to create a digital product to sell or offer as a lead magnet? The Leap can generate digital products like mini-courses, tutorials, how-to guides, and challenges in just minutes. Maybe you want to offer digital services like 1:1 consultations and coaching sessions. The Leap’s Book My Time native calendar feature can help you with that!
Looking for crucial insights into your audience’s preferences? The Leap’s Creator Analytics dashboard tracks store performance, product popularity, and overall marketing channel success to help you optimize your digital products for increased sales.
The best part about The Leap is that it’s 100% free.
Ready to create and sell digital products like a pro? Try The Leap free today!
Follow The Leap on TikTok, Instagram, and YouTube for more monetization tips for creators. We also make a newsletter.
Further reading
- How To Promote Your Digital Products: 10 Ways To Boost Sales
- What Is a Value Ladder? (And Why It Matters to Your Creator Business)
- How To Sell Digital Products Online: A 6-Step Launch Checklist
- How To Make Passive Income Selling Digital Products
- How To Write Digital Product Descriptions for Your Online Store (Tips + Free Template)
This article was originally published in December 2023, and updated in December 2024 with additional information.
