Pricing your products and services involves much more art than science. There are so many variables to pricing that there can't be a magic formula telling you exactly how much to charge in every given situation. However, you can rely on some guidelines to help you set your prices.

One rule of thumb to keep in mind when pricing information products is that you should charge at least 8 to 10 times your cost of production. If a book costs you $1.50 to produce, can you price it at least $11.95? Better yet, can you charge $14.95 or more?

Use that rule of thumb as a minimum. It is important to remember that you are not selling paper, CDs or other materials--you are selling the information contained in your book, report, ebook, audio program, etc. What is the information worth to your customers, and how much will they be willing to pay for it? An item may cost you $15 to produce, yet be worth every penny of $495.

What are your competitors charging for similar products? You can charge more if your product has a higher perceived value, but not if your products are seen as the same as something available at a lower price.

Consider your marketing costs. Will you have to give discounts of 25%, 40%, 60% or more to affiliates, retailers or distributors? Make sure you can do so and still be profitable. If you plan to sell books through direct mail or two-step classified ads, your marketing cost may be $10 - $20 for each book you sell. Obviously, you won't be profitable selling a book for $11.95 this way.

You also have to consider the value of your time in creating and marketing the materials. If you have invested 500 hours in creating something, make sure your pricing leaves room to recover payment for your time. How many items do you expect to sell? If you think you can sell 500, then every dollar you build into the price for your time pays you $1 an hour. If you can sell 5,000, then $1 per book pays you $10 an hour.

Set your prices high enough to recover your costs, get paid for your time, and to reflect the value of the information.

Cathy Stucker

As the Idea Lady, Cathy Stucker, IdeaLady.com, has helped thousands of people discover creative paths to success on their own terms. She is a frequent speaker and consultant who shows clients creative ways to attract customers and make themselves famous.

Cathy has appeared on many radio and television programs, and she has been featured in The Houston Chronicle, The New York Times, Black Enterprise, Woman's Day, and many other publications.