It's Me Again, Margaret...
October 2010
Pricing Decisions
     TpT's teacher/author team is clearly erasing the word "timid" from its collective vocabulary. The fainthearted would never invest time and talent in a vanguard business venture with few tried-and-true procedural guidelines and no predictable guarantees. Still, we keep growing in number, moving along, and learning how things work. Our product quality and presentation continue to reach higher and higher standards. Our customer base is now more than a quarter of a million.  We have covered a lot of new territory.

    There is one area, however, where our forward motion seems to be stalling. To say that each new product we post is unique is an understatement. No wonder determining prices for our items is such a confounding task. There are no precedents. Zero to zillions. Where do we begin? 

    In the word of physical storefronts, entrepreneurs use pricing formulas based on cost of production + 25% profit margin. This traditional concept has applicability to many cyber-based businesses, but for TpT it's pretty much horse-and-buggy thinking. We have no store-front rent or website hosting fees. Neither are we responsible for payrolls. None of us shell out big bucks for marketing. TpT does all of that for us! And we scoff at the 25% profit margin, so blasť in comparison to our 60%--85%! 

    On this point, we have shoved "timid" off the edge of the earth.

    TpT's structure and policies make it possible for us to sell our products at unprecedented low prices and still realize a profit. With no guidelines, however, we appear to be constructing an undesirable downside to this issue. In our zeal to provide fellow educators with quality materials at affordable prices and to achieve a perceived competitive edge, we occasionally lose our grip. A vestige of timidity takes control (what if nobody wants to buy this?), and we attach unrealistic, lower-than-low, positively subterranean price tags to our work!  Stuffing the site with underpriced items is not a good idea in terms of meeting operational costs or the over-all public perception of our product standards.

     Now that the TpT has celebrated its fourth birthday, it seems appropriate to begin developing a few ideas/guidelines for determining the characteristics of a fair product price. We are at an excellent starting point. Rather than having to think about cutting our prices, we simply need to give some extra thought to the true value of our work and then translate our findings into a commensurable dollar amount.

   Let's begin by putting the element of effort into perspective. Though it is a vital part of product production, it holds no sway as a separate entity in product pricing. Our customers are not concerned with how much time, exertion, or heavy thinking we weave into our items. Their interests lie in the merits of the FINISHED product. We USE our talents, intelligences, experiences, etc. in the production stage.  We SELL the product.

    Based on this idea and my experience, I have found that focusing on the completed item and what happens AFTER the sale are good price-setting strategies. I consider, for example,

  • how much work the material can do in the classroom, especially its duration. Will it hold its audience in tow for 30 minutes, a day or two, a month, or maybe a whole semester? 
  • he number of pages.  Logically a twenty-page, fully developed teaching unit should be more expensive than a one or two-page activity or idea, but each page's classroom potential, no matter how many, is an important factor.
  • the product's self-sufficiency.  Can a teacher present a successful lesson using only the product?  Is it as complete a package as possible?
  • it's versatility.  Can its components accommodate a variety of ability and interest levels? 
  • the potential savings in teacher prep time.  No doubt about it.  This is one of the major reasons teachers buy our products and a top motivator in our authorship. Do not skip this important element.   
  • how much I  would be willing to pay for the product. 

     Of course, novice seller/authors will also find it beneficial to survey the site for ball-park figures on similar items. Purposely underpricing postings as a way to garner sales, however, is NOT a good idea. Established sellers have learned that TpT's customers buy products that compliment their teaching styles and meet their classroom needs. They do not choose one item over another because it's less expensive.  As a matter of fact, gross underpricing can actually be detrimental as it pretty much removes any aura of quality from the product. The same can be said of a TpT store in which a majority (or all) of the items also show up in the $3.00 or less store. Bottom line-on TpT, cheap does not automatically equal sale!

     No matter what you decide initially, be prepared to change your mind. Long-standing sellers (including me) will admit that we have lowered, raised, reconsidered, and reposted our prices numerous times before settling into our current amounts. Working independently we have constructed pricing rubrics of sorts, most of them existing only in our heads, to keep us on track. A recent discussion on the Seller's Forum indicates that we are very much willing to share our strategies and to welcome new ideas on the topic. We recognize pricing as a work in progress.

     Click here, where I have started a new chain, to add your pricing-strategy ideas. Because we are such a diverse group of personalities, writing styles, and technological experts, we need a wide assortment of options. We especially need to hear from the Smartboard and Power Point producers. 

     In the meantime, go on a reconnaissance mission through your store and look for any timid price-setting that might be sticking around. Let's do our best to erase what's left of this word from our TpT experience. Then, why don't we relegate all of our how-low-can-you-go skills to the world's limbo dancers?   

     That should work.

 
Signed

                                                                                                             Margaret Whisnant

Postscript from Paul... I have stayed mum on pricing purposefully for 4 years, for I have the needs of both sellers AND buyers to think about, and though I saw prices going lower and lower, I also heard buyers telling us that they loved how cheap everything was. I'll just say that I think some items are underpriced. This doesn't mean you have to touch your prices, just try not to underprice and certainly don't overprice! To encourage more on-target pricing--very difficult I know--but also to continue to help our buyers find great deals, we will be changing the $3 or Less Store to the $5 or Less Store this month.