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.
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.