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Test Results: Ebook Pricing We recently finished a price test on an ebook. The ebook was on a travel topic so we didn't initially know if the ebook could command a higher rate. We decided to price test it at $10, $20 and $30. The results were interesting mostly because they really highlight the importance of the Internet Business Box's ability to do multi-variate testing with the "dollars per day" metric. Most testing software uses conversion ratio. The Internet Business Box does that, but it isn't the most important metric. Here are the conversion ratio results: $10: 1.26%$20: 0.33%$30: 1.08%Using conversion ratio, the winner is $10. We also see that $30 did almost as well, but earned three times as much. That is the next generation metric. We really want to maximize visitor value, not conversion ratio; right? Here are the visitor value results: $10: $0.1263 per visitor$20: $0.0662 per visitor$30: $0.3226 per visitorThat is a completely different winner by a long shot. The $30 price wins. But the Internet Business Box takes it one step further. The winner ends up being the same in this test, but you can see that the ratios are very different and it would have been possible for a different winner to have happened with the most important metric of all. Visitor value doesn't measure how the price might affect traffic. How can the price affect traffic? For one thing, there is word of mouth traffic. Visitor value doesn't capture how many more or less people might tell their friends about $10 vs $30 as being a great price for an ebook they just found. There are other more subtle ways that ad copy and even price can affect traffic levels. Visitor value doesn't capture that. Let's say $10 had a visitor value of 10 cents and resulted in 100 daily visitors. That was tested against a $100 price tag that had a visitor value of 20 cents, but traffic was reduced to 1 daily visitor. Obviosuly you would rather have the $10 price tag in this case even though the $100 price tag has a higher visitor value. The true metric you want is "dollars per day."Here are the results we had for that metric: $10: $19.83 per day$20: $20.63 per day$30: $32.02 per day$30 was still the winner, but you can see that with the visitor value test alone, we might have expected $30 to earn almost three times the $10 price tag because the conversion ratio was almost the same and the earnings per say were three times as high. In the end, traffic suffered at the $30 price tag level. It still won, but it only earns about 30% more than the $10 price tag. This test also shows the importance of using the magic numbers. What are the magic numbers? 0, 1, 3, 5 and to a lesser extent 6 and 8. These are the digits used in successful pricing strategies. $20 failed miserably regardless of the metric used. The 2 in $20 doesn't have a chance against the magic digits 1 and 3. Construct your prices using the magic numbers and you will find that they beat the digits that aren't magic numbers in almost every test. The worst digit to use? 7It consistently fails split tests, but people still price things at $97 or $67 because they have been told by their competitors that prices ending in 7 sell better. They were lied to. Do your own tests and discover the magic digits for yourself. And use the Internet Business Box for your testing so that you are optimizing for "dollars per day" which is the metric that matters most. You can't spend visitor value or conversion rate. You can spend dollars per day which is just another way of saying income. You can get your own Internet Business Box software here: |
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