If you have a product or service to sell and you aren’t sure what price to assign to it, the first step is to check the competitors to give you a ballpark figure. When you have a good general price range, you will want to split test various price points.
Split testing is basically funneling half your traffic to one version of a page and the other half to another version. Here’s an example:
Say I’m selling doll houses, and I checked with my competition and know that I can sell them for between $100 and $200 a piece. I can then set up a split testing campaign in which 50% of my visitors see the doll house listed at $100 and the other 50% of my visitors see the price of a doll house listed at $200.
Let’s continue with this example and say I sold 24 houses at $100 and 13 houses at $200. I then want to look at the total revenue to determine the better price.
24 x $100 = $2,400
13 x $200 = $2,600
I may have sold more doll houses when I listed them at $100 a piece, but I ultimately made more in revenue selling them for $200 a piece.
Keep in mind…
Ideally, I’ll run these split tests multiple times with different price points until I find the perfect price. Also realize that the more data you have, the more it can be trusted. So, If you run a split test and only have a handful of visitors to each page, the data is not as powerful as if you had hundreds of visitors engaged in the test.
In some cases, a higher price will not only yield more revenue, but can yield more total items sold. You might want to consider future value of a customer and go with the option that yielded the most subscriptions or sales rather than most current revenue.
Google has a free website optimizer system that automates most of the split testing process for you. MarketingExperiments goes into much more detail about split testing in this article.
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