Price Test Flowchart for an Undeveloped Product

What’s the best price to charge for a product? How about, what’s the best price to charge for a product that’s not even developed yet?

Market price-testing is a simple concept: It’s mostly about finding the price that makes the most money.

For example, if you market test the prices of $50 and $100 for the same product, you might expect to make more money on the $100 price. However, if you sell more than twice the amount of the same product by charging $50, then the lower price would be the most profitable one.

Of course, you really have to analyze this against all your costs, to reflect your overall return-on-investment (ROI) of producing, marketing and delivering the product.

Although in another example you may very well sell less of the same product at $100, as long as you make more overall profit than selling a larger quantity at $50, then the $100 is the way to go.

From a business perspective, sometimes it’s best to select the price that creates the most customers, regardless that it may not generate the most profit, simply because more first-time customers means greater opportunities for increased sales later on.

And just to make things more interesting, there are examples of selling a product at a higher price that results in a larger volume of sales than offering it a lower price.

Still, the more pertinent question for this article is how do you determine what’s the best price for a product that’s not even developed?

Market Testing For The Best Price

The accompanying flow chart illustrates a simple way to test 4 different prices via online pay-per-click advertising (in this case, using Google Ads). This particular example is also constructed to determine if the product in question should be developed at all. (In this example, what is being tested is a potential information product).

An important purpose here is to spend a small amount of advertising money upfront – before creating the product – to determine if the product will be profitable enough to bother developing in the first place.

Another important purpose of this test is to determine the response levels of four different prices. The responses are then evaluated to determine which price is the most profitable. Of course you would also evaluate the results against your business intent:

  • Do you want to use the price that generates the highest ROI?
  • Or do you want the price that generates the greatest number of responses with an acceptable ROI?

Price Testing Flow Chart

In this flowchart the four prices are rotated and displayed to searchers looking for the keywords specified for this product. (The same keywords are used for all four ads).

Google Ads allows rotation of the ads to searchers and provides good metrics to evaluate the responsiveness of each ad. (Which, in this case, is simply how many clicked on the product landing page).

If this were solely a “Price Test,” this campaign could be simplified by ending the test at the landing page to reveal which ad generated the greatest response. However this flow chart depicts a test which goes further by also seeing how many respondents would click on the “Buy” button.

If you were testing different prices with a product that was ready to be delivered, then anyone who clicked the “Buy” button could be charged the indicated price and the product delivery would be executed.

However, in this flow chart example, the product has not been developed.

Hence, each visitor who clicks “Buy” is directed to the Registration Page, informed that the product is not ready, and is given the opportunity to be notified as soon as the product is available.

Of course, not everyone who lands on this page will enter their name and email. For example, those who would want the product immediately will probably continue their Internet search to buy what they’re after. However, any visitors that do add their name and email would be categorized as “hot prospects” in a database.

So in addition to using this test as a way to determine the best price, it’s also a way to generate potential buyers. (Of course a number of the hot prospects will have been introduced to the offer by any of the other four prices than the price they originally clicked on, so not all “hot prospects” will buy the product in the end with a different price).

From a testing perspective, the amount of visitors who click the “Buy” button represents an important metric, since it would be the best estimate of what percentage of visitors would result in a purchase.

Once the results of the test have been evaluated and the price determined – and in this case, the decision made to even develop the product – then the hot prospects can be sent a series of emails offering them the opportunity to buy the product when it is ready.

In this way, some of the advertising money may be offset by some initial purchasers.

This would also be the time to ramp up all of your marketing efforts to sell this product in volume at the best price.

Future Price Testing

Once a product is developed, price testing for the exact same product can be repeated from time to time, as the market evolves and changes. Some of the conditions that might indicate an opportunity for a higher or lower price could be accounted for by more (or less) competition, an increase in your brand’s prominence, a greater (or reduced) demand for your product, or even a different business intent for the product itself within your company’s overall business goals.

Of course if the results of the test demonstrate that it won’t be profitable to develop the product at all, then the next step is to abandon this product and test your next product idea.

By the way, it’s worth emphasizing that this article is about “Price Testing,” especially to determine the viability of developing a product. However, there are other types of testing. In fact, testing is an ongoing proposition. For example, once you have determined to develop a product and have determined the best price, a larger body of testing would be directed towards improving various aspects of the ad copy and the landing page presentation, to make the sales process MORE profitable.

Simple Email Lead Generation Flow Chart

There are many ways to generate leads. Heck, there are many ways just to take advantage of online lead generation, which is only one component of all the channels that can be used to drive leads to your business. (Check out Ten Lead Generation Models).

In the world of online marketing, incorporating email into a lead generation campaign would be considered a mature practice, since it’s been so thoroughly and routinely utilized going back to the 90’s. (I began my email marketing career back in 1995 and have never stopped.)

The accompanying graphic of a simple email lead generation flow chart depicts the flow of a stream of Internet visitors moving through a website, getting sorted into segmented databases and leveraging those databases to maximize marketing leads and sales.

Free Offer in Exchange for an Email Address

It all begins with some kind of offer – and it’s typically a free offer. This can be as simple as a free download that would be valuable to the targeted market segment. The download could be a PDF, or an audio program or a video, or even a multi-part email educational “course.”

The offer should be something desirable for your target audience. As an example, if you were generating leads to cultivate financial service clients, you would offer something of value to those types of clients. If you were offering leads to potential students for educational products or services, you would need something that specific target audience needs, and it should also relate to the product or service you are selling.

Regardless of what the offer is, it should be emphasized that it needs to be valuable. Over the years it’s gotten harder and harder to inspire visitors to part with their email address in exchange for downloadable information, and if what you provide is not truly deemed valuable by the recipients, then you will have lost the opportunity to convert those visitors into new customers. In fact, they might not be interested in anything you have to offer at any time thereafter.

Conversely, if you truly delight them with your offer, they may be inclined to consider that if you provided that much value for free, you’ll probably provide even more value for your paid products or services.

Do You Really Need More Info Than Your Visitors’ Email?

By the way, the more information you ask of your visitors, the less of them who will respond. Of course all marketers typically want as much information as possible from their potential leads, but that’s not always the best practice. In other words, if you ask for more info than their name and email (such as their phone number, and address, etc.) many visitors will decline your free offer.

It’s more acceptable to simply ask for name and email. Some marketers only ask for an email (and no name), knowing that the more visitors that they convert into their database, the more FUTURE opportunities there will be to get more contact information, and more importantly, MORE SALES.

Lead Generation: Quality vs. Quantity

Some marketers are willing to accept less potential leads, and instead, ask for as much information as they believe is necessary to qualify a lead upfront. This is simply a business decision. Do you want a larger volume of leads? Or do you want a more qualified stream of leads?

However, this particularly flow chart highlights a process that attempts to gain a higher quantity of leads AND a higher quality by guiding visitors through an initial two-step process. It’s simple and gives visitors more control over their experience while gaining more demographic information for the marketer.

More specifically, the initial offer in this example only requires name and email. However, once that is provided, an optional survey is presented, which has several qualifying questions, and also makes an optional request for a phone number. Since a visitor can choose whether to provide their phone number or not, most that do enter their phone number, can be considered to be amenable to a sales call. (Especially if you make it clear that someone will contact them if they leave a phone number).

By the way, if you want to make this simple flow chart even simpler, then the survey can be dispensed with.

Database Marketing

This flow chart represents a simple, rudimentary and initial aspect of database marketing. In this example, ALL emails that are exchanged for the offer go into a central “All Prospects Database,” and those that give their phone number are segmented into a “Hot Prospects Database,” whom are immediately contacted via telephone as part of a sales process.

Of course, not all the prospects that are included in the sales process will be reached by phone and of those that are contactable, not all will turn into customers.

However, by way of the ongoing email follow-up campaign, which integrates more information about the topic that is of interest to the visitors (as well as additional marketing email messages), these follow up emails represent the crux of this campaign as they can continue on indefinitely until the subscriber buys a product or service or unsubscribes from the database.

Bear in mind that most prospects will “not” provide their phone number, which means the majority of conversions from inquiries to actual hot prospects will be a result of the ongoing email marketing efforts. It is only then, after those who are reading the emails get to know your business better, that they will select themselves into the “Hot Prospects Database” by contacting you to ask questions or to buy your product or service.

And the best part is that the entire lead generation process is automated up to the point that prospects enter the sales process. (If interested, you are welcome to contact me about which email services may be best for your business).

Email Lead Generation Conclusion

There is certainly more that one can know about online email lead generation, including testing the offers and landing pages, testing which survey questions yield the best results in terms of prospect engagement and qualifying the leads.

Furthermore, there is more that one can know about tuning the variables of quantity vs. quality of leads.

And there is definitely more that can be known about database marketing and lead segmentation, especially as it relates to gaining more demographic information from your email database as time goes on and as your readers receive more of your mailings.

But this simple flow chart does serve as an example of one method that can be used to construct an email lead generation campaign to increase your business profits.

Simple Flow Chart for an Email Marketing Joint Venture Campaign

What are the sequence of steps involved in a joint venture email campaign? That’s the question I was answering when I sketched this flow chart for a client to illustrate an email joint venture that we are developing and which will be launched within a few days.

In short, three email messages will be sent to the subscribers of Joint Venture Partner (A) over the course of 2 weeks. The emails will offer a free video and a series of three downloads in exchange for their names and emails.

Some percentage of interested subscribers from the email database of Joint Venture Partner (A) will be directed to the landing page of my client (Joint Venture Partner B) to view a video that will further inspire and encourage the visitors to subscribe to the offer.

Although the primary intent of the video message is to increase the percentage of subscribers via this video Landing Page, a secondary purpose is to develop a relationship with the visitors that positions the subject of the video as a thought leader in his niche industry.

Once the subscribers have entered their names and emails (and optional phone number), they will be directed to a “Success” page which features a one-question poll to gather additional info from the subscribers, which will be used for the marketing of follow-up products/services.

These new subscribers will instantly receive the first PDF download, via email, and will receive PDF downloads #2 and #3 over the following 10 days, also via email, which will familiarize the subscribers to the ongoing email newsletter which will continue on into the future offering valuable information, as well as offers for products and services, all specifically relevant to the same niche subject.

Joint Venture Partner (A) will also share in the profits generated by this campaign that I have developed for this client.

Once this campaign has run its course, a new one will be initiated with a different joint venture partner. Furthermore, additional subscriber generating strategies will be developed, tested and refined, as part of an ongoing process of increasing leads and sales.

UPDATE: The campaign was a success. My client received lots more newsletter subscribers, some of whom will make purchases in the future, as well as ample purchases made now, which paid the Joint Venture Partner well. However, there are some key variables which will generate different results for different partnerships. How big is Database (A)? How good is the content being offered? How good is the paid offer? And of course, how closely does the demographics of database (A) match the primary target of Partner (B)?

UPDATE: Here’s another email flow chart:

Simple Email Lead Generation Flow Chart