When it comes to pricing your products or services as as online business owner, the struggle is real.

But at least with physical products or services, you’re doing semi-concrete math like how many hours you expect it to take you, multiplied by how much you hope to make an hour. Slap on enough to cover any building costs, expenses, or shipping and you’ve got a pretty solid idea of where to price your thing.

But passive income products are not so cut and dry.

Sure it took you a longggg time to build and automate the thing, but you only had to do it once to be able to sell it infinity times, so you can’t exactly base it off of hours…

You probably didn’t drop too much $$ creating the thing since it’s all online, and you’ll never have to worry about shipping, but there are those continuing software fees to think about…

Oh, and don’t forget about time spent doing customer service and possible future updates to your passive thing if anything changes…

If you are feeling lost for how to price your passive income offering, knowing what not to do might be a good start!

7 of mistakes to avoid when pricing your passive income offering

1. Basing Price on length rather than value

I don’t know about you, but I would pay way more for an extremely helpful two page pdf that gets me answers now, than I would for an entire encyclopedia-sized document that is filled with fluff, with only a few helpful answers sprinkled here and there that I have to go digging for.

So a simple question to ask yourself when pricing your passive thing is, “How much would I honestly pay to get the help I am offering?”

If your answer doesn’t match up with the dollar amount you had in mind, add more value, not necessarily more content.

2. Not communicating value as well as price

It’s important to prominently display your pricing & payment plan options because if people have to ask, many will just assume they can’t afford it.

But beyond letting people know the actual dollar amount they can expect to pay, what does your messaging around price communicate about your product’s value?

What would it cost to hire someone to achieve a similar result to what you’re promising? Is the alternative to take a lengthy college course or hire an expensive consultant to advise them 1:1? How much time and money will they save by buying your thing? Or how much can they reasonably expect to earn with their new skill?

Don’t be afraid to include tangible numbers!

You obviously can’t make any guarantees about someone’s outcome, but you should give people a ballpark achievement of what they can look forward to if they take the leap, invest in themselves, and commit to truly implementing your help and advice on that topic.

If you are aiming or a higher-price point passive product, it never hurts to throw in a bonus or two and create some hype around the fact that you are throwing those in for FREE.

(But again, only if they add value.)

3. Forgetting to talk to your audience

Don’t have an audience yet? You may want to spend a little time doing what I recommend in this post, first. (that’s consistent content creation, if you’re wondering).

That’s a nice little email list you got there! Have you asked them what they thought lately?

My fav way to talk to my audience is through surveys. People love to help for the most part, and if they are genuinely interested in your topic and have benefitted your free content in the past, they’ll likely be glad they get to have a say in what goes on next.

(Check out My favorite set-it-and-forget-it survey collection method for more on that!)

I also love jumping on a video chat or call with people from my audience who seem to really fit my ICA.

Talking to your audience is not just about validating your product idea, but also for seeing where your ideal client is at in terms of being able make an investment.

If your ideal client is brand new business owners, they may not be in a place to be jetting off to an all inclusive business building retreat (no matter how much you really really reallyyyyy want to throw one.)

Talking to you audience is key if you want to avoid spending time creating a thing they could likely never afford in the first place. Knowing your audience’s goals, lifestyle, and limitations will help you to pick a price-point to create your product around.

4. Eyeballing the competition

When it comes to running a business, it usually is best to avoid the comparison game…

But when it comes to pricing, a little rubber-necking in the name of market research could actually be very useful!

Customers will naturally compare your product to your competitor’s to see who offers the best bang for their buck, so it’s worth looking at what others in your industry are charging for similar offerings.

This doesn’t mean that you automatically sell your thing for less. If you really want to beat the competition, consider adding bonuses instead of lowering your prices. Valuable bonuses can be the final nudge customers might need to invest and can help separate you from a sea of similar offerings.

Oh, and it’s totally ok if the price you hope to charge is greater than the competition! You just really need to look at the downfalls of their product and make dang sure your thing is better to justify that difference in price.

5. You undersell yourself

You may be tempted to offer your passive product at rock bottom prices, thinking a lower price-point means more people are likely to buy, but you should know that there’s a bit of a golden rule when it comes to converting clicks into actual paying customers…

The average conversion rate for online sales is 1-2%, meaning that if you have an email list of 1000 people, you can expect anywhere from 10 to 20 people to purchase your thing.

Yup. Regardless of the price.

Not to mention there’s a decent amount of work that goes into setting up any passive income, and the steps to automate the thing are going to be similar whether you are charging $27 or $297.

There is also a bit of psychology around pricing your products too low. By underselling yourself you greatly diminish your product’s perceived value, and are likely not going to be attracting the ideal client you had in mind when you first created the thing.

I was recently talking to a few of the women from my business mastermind group, and when discussing what to expect when creating offerings at different price-points, there was one thing that became super clear…

The customers you attract with a lower price point can be a lot more more challenging to work with than those who are paying you premium prices.

So, if you are the expert in your field, and if you have done the work to establish authority with your audience it will be much easier for you to be pricing based on value, rather than trying to compete on price alone. (For more on this, check out Dreaming of adding a passive income stream to your business? Do this first!)

6. Not tracking sales or sign-ups

Don’t be afraid to test out offering your product at a certain price-point that you think is reasonable based on the above.

Just make sure you have a way to track your sales and sign ups right from day one.

This can look like a simple spreadsheet you update once a week with:

  • The number of people who signed up for your freebie (and therefore would have received your offer to buy the related paid product next)

  • The number of people who purchased your thing after receiving the offer

  • The price you were tested and any other variables that may have affected the number or sales or sign ups (ie. were you running a Facebook Ad? Did you have a pop-up on your website talking about your freebie opt-in gift etc.)

Pro-tip: Try to change only one variable each week. So if you are testing a different price, it’s best to leave all the other things in your process the same.

Test it out, see how it converts, and adjust as needed! That 1-2% conversion rule is a pretty good benchmark for you to be testing your product’s sales against.

7. Not tracking expenses

It’s easy to think that there would be little to no overhead when creating a passive income product, because again, it’s all online. But there are a few things that might escape your notice, and they can really start to add up each month!

Will you use a software to host your product? What about the software needed to automate the sale and delivery of your product? Will you be charged any fees per sale? Are these expenses recurring? Can you save money by paying for some of these things annually rather than monthly?

Even if it’s just a couple dollars here and there each month, be sure to keep track of your expenses. At the very least, you need to be sure they are covered by the sales you make – otherwise this is just a very expensive and time-consuming hobby.

Wondering your next steps to successfully setting up passive income in your business?

My passive income roadmap can show you!


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7 mistakes to avoid when deciding how to price your passive income product