This week Hannah Lipsky of Chaotic Shiny released her first Gamer Lifestyle product. Congratulations Hannah. It was a pleasure reading Martial Flavor. I’ll be using at least two clans for my upcoming Pathfinder RPG campaign. Well done.

A few hours ago I received the following question by email:

Hannah’s selling Martial Flavour for $20. It’s a good product, but I was surprised at the price. Did you and Yax help her set it?

Do you think that going in low is a mistake? I was planning on selling my product $1 for the first two weeks, then $3 from then on, with a release schedule of a new product every two months. Do you think I’m shooting myself in the foot?

These are great questions. I quickly answered back, and then thought you might find the answers interesting and useful as well. So, here they are:

“Yes, we did help Hannah set her price.

At $1 you’ll need to sell 20 times what she does to make the same money. At $1 some people will not buy because they’ll think the price is so low it can’t be worth much – probably just as many, revenue-wise, who think $20 is too high.

Hannah is taking advantage of affiliate marketing. At $20 she has enough room to give part of her profit up as sales commission and still have enough left over to pay herself. This extends her sales reach dramatically.

One can always lower a price in the future, but it is much more difficult to raise a price.

You are doing a promo, starting low and finishing high. You are training your customers to buy quick at the cheap price. In time you’ll always sell the most units at your lowest price. You want the opposite. Especially during the new release phase.

Never lower your price for new releases. Add more value instead. Limited time or quantity bonuses, for example.

Hannah has three more items coming in the series. She won’t be able to sell them as a bundle for $80. But her $20 price today gives her many bundle pricing options – something $1 products would never have unless you made a ton of them. She is setting her business up for future success.

You asked me about the cost of ezine advertising. My current rate is $50 per issue. At Hannah’s price she would need to sell just three and she’s made her money back. You would need to sell 50. You need to make sure your business is covered with positive cash flow so you can meet your expenses and make strategic purchases, else you won’t be in business for long.

Hannah is also declaring to the market what she thinks her product is worth when setting her price. You are telling people your product is worth a pack of gum. At $1 I personally would not go through the hassle of a PayPal or shopping cart transaction to buy. No offense intended.

Just my thoughts.”

I know the person who asked me the questions well, so I was able to be a bit blunt. But I hope you see the wisdom in what we’re telling our students: create remarkable and unique RPG products and never undervalue yourself.