Micro-Pricing: Tiny is the new Big

Brighter days ahead with micro-pricing

With the power of social media, anyone can be a rock-star entrepreneur.  And get paid like one if you’re willing to try the-pay-what-you-want model.  Would you try letting your customers pay what THEY think you’re worth?

An Internet Gutenberg

When Gutenberg invented the printing press he set the written word free.   One of my favorite authors, Stephen King, became one of the first self-published authors on the internet.  King did something similar.  He set  authors free.

How?  King published each chapter of his book for just $1?  Definitely not the traditional publishing model that takes years before you see fame or fortune.  He removed his publisher as the middleman and went straight to his adoring fans who were eager to consume more of his content.  (Note: King’s books are  like literary crack.  Once you turn the first page you don’t stop til it’s done. 800 pages-boom.  Then, you’re jonesing for more. What genius!) .

First day yielded over 41K downloads.  Do the math, people. That’s $41,000 in one day.  I’ll have some of that. You can be a published author and make money from your talents, too.

Build Your Own Money Machine

A little dramatic?  Heck ya, but true.  You can turn a part of your expertise into a mini-product and sell it at a micro price like Stephen did.

True, he’s Stephen King, a famous, popular author blah, blah.   But the same principles can be put to good use in your small biz, too.  I’m especially liking this ‘tiny is powerful’ pricing now for two reasons.

1. Micro-price your product/service and grab more attention and sales.   Entrepreneurs are always counting pennies, especially now in these recessionary times.  That sounds like bad news unless you realize that some problems just don’t go away.   They MUST be fixed or the business dies.  If your solution is essential, easy and well priced, small business owners will buy.  Not Stephen King sales. But steady I-can-pay-for-a-VA sales.  Yes, this thinking goes against conventional wisdom that encourages you to price for positioning in the market, i.e. be the BMW, not the Hyundai.  I’m zigging- this is what works now.

Case in point:  Guy Kawasaki self-published his latest book, What the Plus? on iTunes for $2.99.  I bought it (easy download) to learn what Google+ (new biz essential?) is about and I bet I’m not the only one.  Find, create, revise a product that you can micro-price today.  What’s a good price?  Play around.  Typically, I’d buy anything that seemed relatively useful if it were under $100.  Now, it’s more like under $40.  If it’s under $10 it’s an immediate sale. You can start where you’re comfy and test higher price points with each new version.

2. Entrepreneurs are incredibly loyal to solutions that work.  I love when something works like it said it would, don’t you?  Easy and reliable are two words every entrepreneur or small biz owner wants to hear.  It’s a simple formula.  Customers purchase & love your bite-sized, mini-priced solution + You provide more & better solutions they purchase= A very satisfied pair. Viola, a profitable business built on micro-pricing.

Worried this won’t work?  Think this is basically a volume play?  I understand but don’t agree.  Here’s a study and article that helped convince me.  Basically, consumers won’t stiff you if they like what you’ve offered.  They’ll pay because they are satisfied, they have the cash and they feel compelled to respond to ‘getting a deal’.  It’s only fair.

Here’s a goofy example.  I just purchased some airplants for my guest bath.  Wonderful, sculptural things they live on a little water and air.  However, I’m not sure how best to care for them.  Oh, they came with instructions- just not good ones.  I’d pay up to $10 for a audio or written guide on how to care for and propagate these beauties.

Where can you use this concept in your business?

Putting my two cents where my mouth is

I really like this idea so I’m running a test.  I’m creating a solution for a very specific business need- how to price higher.  Just the beginning step, though, how to write an effective survey that gathers data and promotes you.  I plan to micro-price and see what the reader reaction is (that’s you).

If you want in, sign up for my ezine on the sidebar. You’ll get insider news and my mini-course, Let Yourself Price What you Deserve, to keep you busy in the meanwhile.  I’ll report my findings here on the blog.

This is pretty controversial stuff. I’m up for a little debate.  Would micro-pricing work for your business? Why or why not?

 

 

 

Tags: , , , , , ,

Leave A Reply (24 comments so far)


  1. Muralidharan Rangan
    4 weeks ago

    Hi Dina,

    Nice article! I bumped into this blog while doing research on micro-pricing.

    We are a startup in mobile apps space. We are trying to bring the micro-pricing and micro-billing model to mobile apps. Imagine a consumer having the ability to spend every dollar across all apps, based on metered usage on different apps. A gaming app may be priced at 2 cents per hour, an education app may be priced 1 cent per 2 chapters, etc. Consumer pays by topping up a prepaid balance with at least $1 and micro billing based on metered usage happens against that balance. When the meter is on, there will be no ads or locked out features – the consumer gets to experience the full version of the app with no annoying ads. Billing stops the moment the consumer stops using the mobile app. Pricing is set by the developer. With this model, consumer gets to experience full value of every app. Developer earns higher revenue through volume sales – in mobile apps, the developer has the whole world to sell to.

    We would love to hear your feedback on this model for mobile apps.

    Thanks,
    Murali


  2. prosper
    6 months ago

    You realize hence considerably concerning this particular subject matter, produced everyone in my opinion accept it as true by quite a few a variety of aspects. The similar to both males and females are usually not interested unless of course it is actually think about make use of Lady crazy! Your own things excellent. Continuously tackle it up!


  3. Terri Altergott
    2 years ago

    Love the idea Dina. My mind is swirling. I wonder if it will be my hubby mad at you next because I’m not sleeping tonight. :)

    Terri


    • Dina Eisenberg
      2 years ago

      Terri! We’ll have to put our heads together. These days I’m like a broken toaster, popping out of bed before I’m ready Lol

  4. I absolutely love the idea of micropricing! I’m hoping to experiment with this a little in my event floral business. Thank you so much for the great read!


    • Dina Eisenberg
      2 years ago

      Makes sense oesnt it? Keep me posted on your experiment. To follow micro pricing experiment- sign up for my ezine. Thx!


  5. Cindy
    2 years ago

    Hi Dina

    I am a event planning how can micro help in the event
    Planning business. But I would like to try it


    • Dina Eisenberg
      2 years ago

      You know, I think event planners can definitely use this concept. I’ve had the pleasure at speaking at many event planning conferences and I keep my ears open. There are plenty of things you know that the average bride or newbie planner don’t know but need to. What pops to me for me Oh, the detailed stuff like how inches is the tablecloth for a 10 person round. What’s the per/person food count for a passed reception? You might pull together a ‘Tricky Event Question Answers You Absolutely Need for Planning a _______’ checklist or ebook. Just thinking out loud…Thanks so much for coming by Cindy!


  6. Diane Kunze
    2 years ago

    Dina – I like the idea and the process of out of the box thinking. How would this apply to a wedding planner? I can do packages or custom design a package for each couple. I do have invitations and such available, but I don’t control that pricing. So, how would an event/wedding planner take advantage of this?


    • Dina Eisenberg
      2 years ago

      Hey Diane- thanks for coming by! I think this is perfect for a wedding planner. You know, the obstacle has been: how can I get the bride to realize she’ll save more and have a better outcome with me. Now, with this approach you don’t have to convince the bride of your entire worth. You sell her the means to do part of the planning, and she’ll be back to have you do the rest. I’d say look at the questions you repetitively answer. Those look like ecourses or ebooks to me.


  7. Alan Berg
    2 years ago

    Thanks, Dina, this is a great conversation starter. I’ve been thinking about releasing my next book using Amazon’s Kindle Singles, which are $1.99 shorter-form books (which mine already are). You can’t have published it elsewhere.

    The issue is whether there’s enough mass-appeal for books like mine to make up for the low price.

    I think the “choose your own price” idea is interesting, but I agree that people like to know how much something is going to cost.

    I used to go to a massage therapist who had a “sliding scale” for her pricing. She gave you a range and you could pay what you wanted within that range. It always made me uncomfortable. If I paid at the bottom of the scale I felt like I was cheating her. If I paid at the top end I felt like I was being cheated, knowing others were paying less. Her time is the same, her services were the same, why should the price be different? Since none of us really wants to sell on price alone, setting a fixed price changes the discussion from “How much?” to “What do I get for that?”


    • Dina Eisenberg
      2 years ago

      Alan, hey! Kindle books rock. I’m definitely planning on releasing a Kindle book. If I take Guy Kawasaki’s approach then the ebook is simply the beginning.

      I see micro-pricing as a way to capture lots of entry level folks and get them to stay around long enough to move up in skills so they want the next level up. I also see an audience that just buys at the micropricing level but also buys lots of those 1-answer solutions. Kinda like being at the checkout aisle and grabbing the M&Ms. Next time, I grab the Snickers. After that it’s the Butterfinger. Each tasty and satisfying right at that moment.

      You know I don’t like selling on price alone. Just too exposed and vulnerable. So my idea is to start selling a terrific product that makes people say, ‘gosh I would’ve paid more for that; it’s great. Where’s the next thing?’ The high quality is what cements the buyers.

      It’s an experiment so we’ll see how it goes. My test product, Survey Sherpa, is launching soon. I chose a survey tool because that’s the first thing to do as you prepare to set/raise prices.


  8. erika
    2 years ago

    Great idea!


  9. Christine
    2 years ago

    Dina,
    THANK YOU for helping us all to think outside the box. There are tons of untapped revenue opportunities for all of us. Sometimes, it’s hard to think of them because we get bogged down in our day-to-day. I can’t wait to access your upcoming survey tutorial! This is just what the wedding industry needs.
    Thanks again for what you do,
    Christine


  10. Terri Zwierzynski
    2 years ago

    Dina — great out-of-the-box idea! I’ve heard the “name your own price” model discussed and like that I am hearing more about people trying it, seeing what works and what doesn’t. But micro-pricing for micro-businesses — brilliant, I think! I’d love to see more people experimenting like this!


    • Dina Eisenberg
      2 years ago

      Me, too. Trying to think of an analogy this morning, Starbucks came to mind. They revolutionized coffee by using mass personalization. I think service firms could do something similar. Parse out their knowledge in sips. I’ll keep you posted when the Survey Sherpa experiment launches. Thx for coming by- I so appreciate it.


  11. Tai Goodwin
    2 years ago

    This is a great approach Dina. Putting out small products that solve a specific problem is a great way to build your credibility, reach a new audience and generate passive income on the side.


    • Dina Eisenberg
      2 years ago

      I think this works well for your tribe. Someone transitioning to do their own thing, create an income stream to to fuel growth slowly. Thx for coming by Tai.


  12. Stephanie Padovani
    2 years ago

    Very interesting article, Dina!

    I think the trick is that you have to have a real sales funnel set up when you use the micro-pricing model. You’d have to sell A LOT to really make a dent, and most small businesses don’t have that kind of website and social media traffic.

    However, it makes great sense to have a “micro-priced” product as a first customer purchase. This way, you can win over a new customer, give them something they love…and then sell them something with a higher price tag down the road.

    When used as a part of an overall marketing and sales strategy, it has legs.

    As for naming your own price, I’m still skeptical. It may work for Radiohead and it’s legions of die hard fans, but it’s not a choice for everyone.

    Something to note about the Radiohead experiment: they never released the stats about how many purchased and how many chose to download free. It was at least successful as a marketing strategy because it climbed the charts so quickly.

    My main concern about a name your own price product is that it’s too difficult for the customer to make a choice. It’s hard enough for our simple human brains to figure out the value of something (much as we might like to think otherwise). The more difficult it is to make a choice, the less likely a customer is to take any action at all.

    You could get around that impediment by offering 3 separate choices, or showing an average of what people were paying. Some suggestions if you choose to use this strategy in this article: http://www.getelastic.com/name-your-own-price/

    And another study that showed 85% of people choose FREE when downloading their eBook: http://blog.smashwords.com/2010/02/what-happens-when-ebook-customers.html

    Will it work for your business? I think it depends on your business and your customers. It’s certainly worthy of testing.


    • Dina Eisenberg
      2 years ago

      What a thoughtful response. Just like you. You gave me a lot to process. Two thoughts come to mind, though. I agree with the basic premise that a confused mind says no. However, this is a little different. I think people know what something is worth to them personally. They knew what they’re willing to pay for a solution or some relief.

      Radio head might not have released their stats but heck, I’m guessing I’d be ok with their sales. Or even half. Part of the micro- pricing message for me is that small & consistent can lead to big, or at least bigger. Stats say the most small biz owners make $25k or less. Even a small income stream annually could help.

      I agree about the funnel. Tits great to have several ducks in a row. This idea isn’t for everyone but if someone can make it work it’s worth talking about and trying., I think.

  13. Hey Dina, GREAT article. For some small biz owners, this might unlock all sorts of untapped potential. I remember when Radiohead left EMI and became the first band ever to release an album by download on a name-your-price basis in 2007. It was an insanely huge success. The pre-physical release sales brought in more revenue than the total sales of its previous album! It’s definitely a scary and revolutionary concept, but worth looking into since its now been proven to work.


    • Dina Eisenberg
      2 years ago

      Very cool. I like that example too. I’m doing a test product so
      Come back to see the results & buy it if you want. D

Conflict Coaching

Join Dina on Facebook!

Connect with Me