23 Dec 2015 Pricing Strategies for Selling Direct

While finding buyers is the critical part of making direct sales financially viable, your pricing strategy also plays a big role.

While there’s a lot of different parts to consider, the fundamentals are whether to price at or above microstock prices.  Which one works best depends on the specific nature of each business, but all options share the ultimate goal of maximising revenue, aiming at overcoming the considerable costs –in both time and money– in setting up a direct sales website.

I personally remain convinced that for the vast majority of microstockers it is far more lucrative to invest in production and improvement – better equipment, learning, portfotlio reviews, etc – than in setting up a direct sales website. But for some there are strategies that can, in the right circumstances, make it work. Let’s have a look.

Match Microstock Prices

Low prices can make it easier to convert price-sensitive buyers. Setting your prices at roughly the same levels as microstock agencies can be profitable since you keep 100% of the license fee. For the same reason it’s also possible to offer slightly lower prices than microstock agencies to provide a financial incentive for customers, and still be more profitable than selling via agencies.

However, this strategy requires selling in high volume to overcome the setup and maintenance costs of a direct sales site, including time costs.

In order to compete with the wider variety of content that a microstock agency offers, additional benefits can be added to the direct sales product.  Ideas include:

  • earlier access to new files
  • more complete selection of images –agencies always reject some files
  • assistance with research for specific image needs
  • custom files and/or alterations
  • offering bundles
  • more rights in the license.

Price High

If you don’t have the resources to attract a large volume of traffic, or if very few buyers need the kind of content you produce, you’ll need to charge higher than microstock agency prices to make up for small number of sales and/or high costs of customer acquisition.

But pricing high can potentially upset buyers when you have the same content at microstock agencies.

A high-pricing strategy works best in a range of cases:

  • you have a very specialised portfolio where subject knowledge is key
  • you’re the best of the best, like Jim Erickson, who only sells direct and only RM
  • you have a LOT of resources to make an awesome website and employ a sales team like Yuri’s PeopleImages
  • you have an uncommon niche so you can do very focused SEO & PPC campaigns

Read Between the Lines

If you understand the above strategy and agree with the underlying assumptions you’ll see the situation pretty clearly:  a direct sales website is not for everyone.

But it’s a good business strategy to think about what you need to do to get to the point where you have the resources and the content to make something like direct sales work.

  • Alexander Jemeljanov
    Posted at 05:39h, 24 December Reply

    Hi Lee, seems direct sales are not for hobby microstockers (like me) as time and money investments usually are huge (Just launched a blog and I know a little about this). On the other hand – agencies like iStock take 85% that is almost a steal. Good we have some agencies that offers a fair 50% commision (like Pond5). Do you know some hobby level examples where person have success selling direct?

    • Lee Torrens
      Posted at 10:14h, 28 December Reply

      Hi Alexander, I think you need to decide for yourself whether for each agency the 85% – 50% they take is worthwhile for the quantity of buyers that they bring you. At 85% iStock used to be great because sales were so high and consistent, but now, not so much. Shutterstock used to be the most hated agency for the low per-download royalty rate, but is now considered the darling amongst most contributors for the amazing quantity of sales they generate.

      I don’t know any hobby-level contributors who are achieving what I would call “success” with a direct sales website, but that doesn’t mean there aren’t any. I think there’s a massive range in what people consider “success”, so any sales at all may be success to some hobbyists. The professional I’ve spoken to about it are much more critical, measuring their time and money invested and looking at the profit after all time and expenses, then comparing that to the profit of producing more content. It’s these conversations that have lead me to the conclusion that it’s not worthwhile for those who aren’t at the top of the industry in some way.

      Hope this helps.  

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