AP 0272: How Do I Price My Product Tiers?

AskPat 272 Episode Transcript

Pat Flynn: What's up, everybody? Pat Flynn here, and welcome to Episode 272 of AskPat. Thank you so much for joining me today. We have a great question today from Chris, but before we get to that, I do want to thank today's sponsor, which is a brand-new sponsor to the AskPat Podcast.

I'm so happy to have them on board. Of course, I only have great companies that are here to help you on board, and this is just that, plus more. This is SkilledUp.com, a cool site that I've been introduced to recently, that I just had to share with you. They have the largest collection of online courses in all spaces of the web, all put under one roof for you. You gotta check this is out; there is so many things you can learn here, whether you are an entrepreneur looking to improve skills on your own, to improve in your business, or you're an employee looking to improve your skills to impress your bosses, make your resume a little bigger. This is seriously one of the coolest things ever. They've just done all the work for you and just put all the great courses out there on the web in all different spaces in one spot. Check it out. If you go to AskPat.com/skilledup, you'll go to their page and be able to download their free resource or free toolkit, actually, which is 10 awesome tools for online entrepreneurs. You gotta check it out. Totally free—just go to AskPat.com/skilledup. It's free for you right now. Check it out. Again, thanks to SkilledUp for coming on board with us.

All right, now let's get to today's question from Chris.

Kris: Hey Kris, it's Pat from Essential SQL. Here's my question: I'm putting together an online course, and I'm going to have pricing, such as, like, bronze, silver, and gold. I'm looking to find out what type of content I should be offering at each level. Of course, I'm going to have like a video and I'll have a quiz that people can take for the module, but what are the things that you think would really set off the different pricing, so that a person would really look at that Gold Level and go, “Yes, this is what I want to buy, because this is really awesome stuff.” Perhaps it's the transcript of the videos; who knows? Anyways, I'm just looking for some ideas from you to brainstorm with. Thanks so much, take care.

Pat Flynn: Hey Chris, what's up? Thank you so much for the question. I thought it was really funny that in the beginning of your question you said, “Hey Chris this is Pat,” so maybe your name is Pat and you thought I was Chris, like Chris Ducker or one of the other Chrisses out there. I don't know. Whatever the case may be, this is a fantastic question, because selling books on your website is a great way to go about it, especially if you have an audience or you're driving traffic to your website through ads or something like that, and you have multiple tiers to sell your book from, which establishes a base price, but then you introduce these other products and bonuses and enhancements to the book in different tiered packages, so that you can better promote your book, offer more things, and have the likelihood that people are going to go for those upper-tier products and that, typically, if you do this right, is the case.

I've actually done this already. We are doing this right now on my site at FoodTruckr.com. If you go to FoodTruckr.com/book, you'll see my sales page there for my How To Start a Food Truck book, and you'll see that the book is offered in a three-tier pricing structure. You can buy the book now for $37. You can buy the book plus a few other goodies for $77, and then you get what we're calling the All You Could Eat Buffet package for $147. Interestingly enough, most people are going for the upper package. This is a model that was based off of Nathan Barry, from NathanBarry.com. You gotta check him out. He does this on his site as well, and does it very successfully. He's made hundreds of thousands of dollars by selling ebooks in this tiered pricing structure on his website. I'm going to go to his site right now and actually show you and read off some of the things that you can get. He has it structured in a way … it's different than mine in terms of where the offers are on the page. This is something I'm going to be experimenting with too, because this is something new that I'm just learning about Nathan's site right now. He has the highest price, with the highest tier in the three-tier package, which he's calling The Complete Package. I'm looking at his App Design Handbook. He has a number of other ebooks and helpful things right now as well. Right now, I'm looking at his App Design Handbook, and that's being sold for $249. In that comes the book, nine video tutorials, nine video interviews, and five resources, things related to the app design world which could be very helpful. Maybe those are toolkits, or code structures that people can use, or certain reports that are involved. I'm not exactly sure what those things are right now. Oh, they are listed here. There's some wireframe templates, there's code samples, there's case study PSDs, which are Photoshop files, and it kind of outlines everything, actually. He does it much better than we do, so I'm going to be taking a look at this in the future, but again, I recommend checking it out, nathanbarry.com. Go to Books and look at his App Design Handbook sales page.

Again, that's the book, which is sort of the base thing, and I'll talk about that in a sec, in terms of the pricing. The book, nine video tutorials, nine video interviews, and five resources at 249. Let's go down to his medium-size package, and that's $99. That's the Book plus Videos, is what it's called. This is the second tier. This is the book and then five video tutorials, five video interviews, and two resources. Here I see a wireframe template and a case study and that's it, as far as the resources are concerned. Then the last one is just the book by itself, and that is $39 and that's it. It doesn't come with all the goodies.

Obviously, you can see, or hear for those of you listening, just how beneficial these upper-tier pricing packages can be. What the whole premise of this is, is you have the book as sort of the base price, and the book … you know some people will buy it, it's sort of the budget option, I guess, you could say, but, in order to make things work … you want to entice them with a lot of these other goodies. For Nathan, he uses resources, he uses videos, and he uses video interviews. For me, on How to Start a Food Truck, which is the name of the book, we have the book as $37. And that's the book, and it also does come with a couple of bonus packs as well, including the FoodTruckr Podcast transcripts, which aren't available anywhere else, so there's a little bit of a bonus there as well. But for about double the price, you can get to the medium tier, which has the book, and that's where it introduces the audio book as well, so the audio version of that book, which is another thing you can add. Just recording yourself reading that book or having somebody read it for you, which is something I've done before by hiring somebody on elance.com to do it for me, a voice talent. That's been very successful in the past for me, as well. This also comes with the Marketing Bonus Pack. The other one was just the Business Bonus Pack and the Truck Bonus Pack, which are things to help people find the food truck that they want to use, and also the sort of business logistics situation, trademarking, and all that sort of stuff. That was included with the book. Now we get into the Marketing Bonus Pack, which helps with branding and what the logo might look like, and all those sorts of things. Exercises to go along with that. There's also a Worksheet Pack, which is some more bonuses, and then also the transcripts are included with that, as well. Then here's the upper tier price, which we are going to experiment with, not just in terms of what's being offered, but just the pricing, as well, because I can see that Nathan goes a little bit higher on the upper tier price, but most people are buying this upper level on the food truck site.

So, how will we know if people would be willing to pay $295 for Nathan, instead of $147, which we're charging? We're going to experiment with that. Here's what they get with that. They get the book and they get the audio book, which was in the middle one, as well. Then they get those bonus packs, they get eight work sheets, as opposed to just half of that in the other one. They get the transcripts, but then here's a few other bonuses that you might be able to consider for yourself too, Chris. Here is a Restaurant Engine special discount. They get a special discount to a product that is not ours, but it's related to what they need. A restaurant engine is something that's going to help them get their website up and running for their food truck to make it really easy. They get a special discount on that, if they get the upper-tier package. Then they get lifetime access to the private FoodTruckr mastermind group. This is essentially a Facebook group that is private, that they get access to, and that is a big reason why a lot of people go to this one, as well. That's a place where people can connect, and that community is going strong.

Those are just a few ideas on what you can continue to add into those upper-tier packages. You want to make sure that you play around with the pricing. Don't undercharge for those upper-tier packages like we might be doing on FoodTruckr, actually. You gotta realize that with all those things that you're adding on, there's a lot of more value that you're adding and providing to them. Just this discount to Restaurant Engine alone is worth potentially $100, so that can be added on and tacked onto the price very easily, or at least part of it. You want to think about these things. What I would do from this point forward is just make a brain dump of anything and everything that you might feel would be a great value to be within the book packages that you have. Don't put them in order yet, or what goes where, or what goes in the base, in the middle one, and then the upper one. Just dump it all out, because as soon as you start to try sorting those, as you are dumping them out of your brain and putting them on to Post-It notes or paper, you're going to start to lose that creative mindset.

This is a big strategy that I've been using lately in terms of writing books, stopping myself from getting into that editing mode or that mode where I start to question and wonder whether that's a good idea or not. It doesn't matter. You can always crumple up that Post-It note or throw it away, or obviously put it in the recycle bin, but you want to just dump all your ideas out there. Dump all your ideas out, if you haven't done that already. You had mentioned videos with the quizzes and stuff like that. That's cool; that's a great start. More. Put more. You want 50 of these things right in front of you, and then you can hand select the ones that seem to make sense and put them in different buckets and start to put them in, and you'll see that it's going to add a ton of value to what you have to offer.

Chris, thank you so much for the question, I really appreciate it. An AskPat T-shirt is headed your way. I wish you the best of luck with your product and future products, as well. For those of you listening, if you have a question you'd like potentially featured here on the show, all you have to do is head on over to AskPat.com and you can ask right there on that page.

I also want to thank today's sponsor which is, again, a brand-new sponsor; that's SkilledUp.com. If you go to AskPat.com/skilledup, you'll get access to 10 awesome tools for online entrepreneurs that they've specially created just for you. You'll get an amazing array of different things you can do. You just have to download that PDF file. It's really sweet. Then, also make sure to check out SkilledUp.com, because that's going to help you understand all of the offerings that they have and other people have to help you improve and increase your skills with whatever you want to learn. It's seriously the largest collection of online courses out there. Check it out: AskPat.com/skilledup. Thank you again for coming on as a sponsor, guys. I really appreciate it.

For those of you listening, thank you, again, as always, for spending time with me today. I want to end with a quote, as I always do. This quote is from Confucius, and he says, “Study the past, if you would divine the future.” Cheers, take care, and I'll see you on the next episode of AskPat.