Determining A Price For Your Special Interest Videos
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Some people say, "the high the price, the more perceived value”, while others say, "with a low price, you’ll offer a better value and increase your sales". In reality, both of these statements are true. However, the determining factor is the market it self. In some markets a higher price can actually pull more sales than a lower priced video. On the other hand, you will find that in other markets a lower priced video will increase the number of sales, thus increasing profits.

Here are a few examples of what I am talking about. A few years ago I attended this ceramic trade show. During the show I noticed that there were two people there selling video tapes on ceramics. So, I spent some time talking with both vendors about their special interest videos and the ceramic market.

Donna was the first vendor I talked to. The special interest videos she produced was two hours long and sold for $49.95. The video covered all the major topics such as cleaning the greenware, painting techniques, proper firing techniques, etc. Donna told me that she was selling about 25 copies a month from an ad in one of the ceramic magazines.

$49.95 x 25 copies per month = $1248.75 (average sales per month)

Nancy, who was the other vendor we talked to, was offering 10 different instructional video tapes. Each tape was on a specific topic and they were price from $9.95 to $19.95 depending on the length of the video. For example, a 30 minute video was $9.95, a 45 minute video was $14.95 and a 60 minute video was $19.95. Since each video covered one topic she was able to give more specific, detailed instructions and more examples.

Nancy went on to explain, that her average sale was for 4 to 6 videos and that most customers came back to purchase the remaining videos as they needed them.

The average sale is 5 videos x an average price $14.95 = $74.75

Nancy explained that she was getting in about 45 orders per month, with monthly sales totals of approximately $3500.

Now you might be thinking, that one of them has a bigger ad or that one of them does more marketing than the other. The fact is, they are both only running one ad, they are the same size and it is in the same magazine. That is the extent of their marketing efforts.

So why does Nancy sell more videos? From talking with Nancy, she explained through some market research she did, this particular market is somewhat price sensitive. Higher priced products tend to move very slow, where as low cost items flew out the door. Nancy went on to say, that since the prices are set low the customer feels they are getting a better deal or more value for their money and thus she sells more videos. Also, by making the videos on specific topics, the customer only has to buy the videos that they have an immediate need for and this makes it more enticing for the customer.

Now our experience has been the opposite for the computer market that we began in. When we were producing special interest videos for the Tandy computer market, our first video we priced at $39.95 and sales were great. When we came out with our second video, we priced it at $19.95 to see if a lower price would increase sales. During the first 3 months we only sold 40 copies. We pulled it from the market for 3 months, sort of a cooling down period. Then, using the same ad, we changed the price to $39.95. Sales took off! We sold 80 videos in the first month at the new price and sales continued to grow. For this particular market, the higher the price, the better the sales.

Here is another example. One SIV producer I know, make a video on collecting Beanie Babies. When the tape first came out it was priced at $29.95. Sales were horrible, just two or three videos a month. When we talked, I suggested he lower the price of the video, but he was thinking about raising the price to increase the perceived value. I didn’t think this would work in this market, simply because Beanie Babies are an inexpensive collectable. Current beanies sell in the $5 to $7 range. My thinking was, they were not going to put their money into a high priced video, they’re going to put their money into their collection.

He lowered the price of the video to $19.95 and the video started to sell. I said lower it even more, I though it was still too high for the market. He dropped the price to $14.95 and sales really took off. He was selling around 80 copies a month. I said drop it to $12.95. That was hard for him to swallow, but he tried it and guess what? Sales jumped 150% over the $12.95 price. We hit the magic price point.

It was hard to believe that by dropping the video by just $2 made a difference, but it did to this particular market segment. Even though he was making $2 less on each video, he more than made up for it with the increase in sales. He decided to test one more price, $9.95. So he put the video on sale, but the sales didn’t change any. He just made $3 less profit, so the price went back to $12.95.

As I was finishing up this article I got a call from a gentleman named Dave Thomas. (No, not the founder of Wendy’s.) Dave has produced a 2 hour video on loss prevention for small store owners. Dave was telling me he first priced the video at $29.95, but had a very hard time selling it. People didn’t think the video was any good if it was so cheap. So, he raised the price to $49.95 and that increased sales somewhat. He then decided to raise the price to $89.95. Sales took off and in the first month he sold 200 copies of the video and the sale are still climbing. For this particular market, the higher the price means, the better quality of information you’re going to get. After all, most business videos are up in the $70 to $100 range.

As you can see from these real life examples, every market is going to be different. Before you decide on a price for your video, do some market research. If there are other videos in the market place, see what price they are selling for. If the market is based on low cost products, such as the Beanie Babies, don’t try to sell them a $100 video. It just won’t work.

There are a few other things you have to remember before setting your prices. How much did it cost you to produce the video? How much is it going to cost you to market the video? Are you planning on making a profit by selling your video or do you plan on working for free?

Take some time to figure everything out. Make sure you get to know the market before you set your price. It can make all the difference in the world between success or failure of your video.

For more information on marketing Special Interests Videos, then check out our popular SIV Business Kit in the Online Catalog.