what is the best way to experiment with pricing?

I love to tweak my pricing to see how it changes sign up rates. Sometimes I only change the look of the payment button. Sometimes I only change the actual price. Sometimes I only change the affiliate payout ratios. It's all a big experiment. Sometimes I hit dry spells where no one seems to buy, even at a price/payout ratio that seemed to be optimized, and at roughly the same traffic level.

How do you do it? How often do you experiment with your pricing, what types of things do you change? Do you ever lose affiliates by moving it around too much?

 

What pricing are you talking about? Selling products?

My business is slightly different but I change my prices according to the client's budget (for my website & graphics design services)

 

What you described sounds quite typical - that's simply the way to go. You may try price A for certain number of email subscribers, and then price B for others, but other than that you've pretty much described how to do it.

Oh, and I wrote a pricing guide in the past - perhaps you'd find some useful information from there.

 

I always look at the level of competition and the market to change prices from time to time.

 

I run A/B tests on pricing and multivariate testing on adcopy and page layouts to maximize earnings.

 

there is no need to experiment if you do a little reading in an economic book you will find out how you can get the ideal price for your service/product without guessing

 

*cough* - even though economic books (or articles etc.) can help in pricing... in the end there's nothing that could beat experimenting & testing. In the end it's the customer who defines value - and price must reflect the value to the customer.

 

when i was talking about economic books I was talking about college based economic books. After sitting through just one course I realized stuff like this couldn't be an easier

 

I think college based economic books are useless for two reasons. First, they assume rationality, which studies in behavioral economics have show isn't always the case wiht economic decisions. Secondly, the assume supply/demand curves that go on much further than the size of most markets.

Economic theory would say that your profit maximizing point is where marginal revenue equals marginal cost. For most Internet Marketers, the marginal cost is only going to be the cost of your promotions. That doesn't leave much on the table, which is why I prefer experimentation.