How to Price a Digital Product?

Do you know what costs are involved in pricing a digital product? In other words, what are the production costs that will directly impact your final price?

Most people instinctively say a resounding “Yes!” without even thinking—pricing is the easiest part of the job!

Considering that the other parts of the job involve developing the digital product itself and marketing efforts for its promotion, pricing is often left aside until almost the last minute.

Or worse: it is established early on, based on benchmarks and competitor research—basically looking at the price of other courses and deciding on your own based on weak foundations.

However, just as there is a correct way to price physical products, pricing a digital product is a task that involves some calculations.

Let’s dive deeper into these calculations in today’s article. Are you ready?

Listing the Elements That Make Up a Digital Product

The first step in pricing a digital product is truly understanding the costs involved in its production.

This applies to any product, whether it is on a shelf or listed on Hotmart.

The fact is that the costs of a newly arrived physical product are often quite simple to calculate. And yet, they can be simplified even further.

Fixed costs for a physical product are calculated in the finance department and reviewed a few times a year. They don’t usually change drastically. So, they are added to variable costs and function as a constant.

At the same time, variable costs are extracted from the product itself, mainly related to purchase price, shipping, etc.

By adding both together and including the profit margin, you get a priced product.

A digital product works similarly, but it comes with some unique characteristics. The investment in its creation is more abstract and, in many cases, even blends with personal expenses—especially for first-time creators.

In the next sections, we will discuss the elements that make up a digital product in more detail.

Then, we will talk about how to price them correctly. Let’s go:

1 – Physical Resources

The first point we need to discuss concerns the equipment needed to create a digital product.

Of course, this depends on the type of digital product you are creating. For this article, let’s consider a classic course—primarily multimedia but with some other digital resources like an e-book and an activity list.

So, we can consider that the necessary equipment for producing this course includes:

A computer with a good graphics card and sufficient memory for rendering;
At least one microphone;
A set-up for a recording environment;
Lighting (at least a ring light);
A simple sound mixer for audio capture;
A camera.

These are the basic pieces of equipment needed to create a digital product, with variations depending on your specific needs.

It is important to highlight the computer among these resources, as it is often overlooked due to its cost and because it is primarily needed for editing.

Editing a video is a highly demanding task for any PC. If yours has less than 16GB of RAM, no SSD, and no dedicated graphics card, rendering a single video may take over 10 hours.

So, either invest in good equipment or partner with a videomaker for external editing.

2 – Variable Resources

In addition to these resources that require upfront purchases, there are also other, less obvious, specific costs.

For example: if you have another source of income and need to take time off to create your course, the financial impact on your life can be factored into your digital product pricing as well.

It’s almost like a salary. You are investing your personal time in creating a digital product. In many cases, this time has a price.

Here, we include all types of variable expenses you can think of—gasoline for transportation, if necessary, hiring a temporary team, product launch costs, etc.

Speaking of launch:

3 – Marketing Resources

It is essential to have a marketing plan in place before launching the product.

The marketing plan will determine all the actions you need to take, with special focus on the pre-launch and the actual launch of the product.

By the way, in our article on product marketing, we explore these three stages in detail.

Marketing expenses are quite variable. Since we are talking about a digital product, where prices can be adjusted at any time, it is not necessary to have every cost precisely calculated beforehand.

Moreover, when it comes to digital marketing with a stronger focus on Inbound Marketing, it is likely that you will not have all the costs outlined if you work alone without an agency partner.

Now, if you do have an agency partner, the costs are much simpler to understand—essentially, the monthly fee plus investments in paid traffic.

So, we now understand the resources needed to price a digital product, right?

Keep this information handy because we will need it soon.

For now, let’s discuss some other aspects that also influence the pricing of a digital product.

Let’s go:

How to Conduct Market Analysis for Digital Product Pricing

What we have discussed so far relates to internal analysis—your structure—to understand what will shape the price of your digital product.

But we also need to talk about another aspect just as important: analyzing the market you are entering.

Here, we will discuss three key points:

Competitor analysis;
Target audience analysis and persona creation;
Expected average ticket price.

These are the three main market aspects we need to consider to arrive at a solid pricing calculation.

By understanding these points, we have more tools to approach digital product pricing effectively.

Let’s go together:

Competitor Analysis

When pricing a digital product, it is crucial to understand the market landscape—what is considered a high, medium, or low price.

We are not suggesting that you base your pricing entirely on other infoproducts in the market. Rather, analyze the market to understand which price range your product fits into.

Think about a physical product for a moment—a mechanical wristwatch.

There are various types of wristwatches on the market, each with its own characteristics. But if you are producing a watch that uses nickel and brass as the primary components, you need to price your product within that range.

Rolex, Timex, and Patek Philippe use different materials to build their pieces—gold, titanium, silver, and even gemstones.

Similarly, simple digital watches primarily use plastic and rubber.

Your wristwatch needs to be in the same price range as those made with the same materials.

This is obvious, but when we think about a digital product, things can get much more complex.

When analyzing digital products, it is important to do the same. You need to assess:

What digital products in your niche offer;
How much digital products in your niche generally cost;
How much digital products with the same features as yours cost.

In other words, if your digital product is a course, how much does a course with the same number of hours and content as yours cost?

Considering this, you arrive at a base price. This price needs to be confirmed by the specific aspects you identify in other digital products similar to yours.

This is also how you can find differentiators. What does your digital product offer that no other product does? And how much is it worth because of that?

But of course, it’s necessary to analyze more than just your competition. You also need to consider your target audience.

Target Audience

Who are you selling to? Would your target audience accept the price you’re considering?

This is a very important question when pricing a digital product, especially if it has unique features that are not commonly found in the market or within the industry.

When analyzing competitors, it’s easy to assume that you’re also analyzing the target audience to some extent.

If the prices set by competitors are being well received, then a similar price for your product would likely be accepted as well.

However, in cases where your product differs, it’s worth diving deeper into your target audience. Maybe you want to know what would happen if you charged more for a more in-depth digital product.

Or perhaps you want to charge less for a simpler digital product with more aggressive marketing. What does your target audience think?

And since we’re talking about pricing:

Expected Average Ticket

Another important factor to consider is the expected average ticket from your sales.

This is also influenced by the very nature of the digital product itself.

Simpler digital products that require less post-sale effort are usually quite affordable. The goal here is to have a lower average ticket but a higher sales volume due to the price and a greater margin due to the low production effort.

At the same time, complex digital products are quite the opposite. This strategy prioritizes a higher average ticket, but with a greater investment in product structure and development.

It all depends on your goals. Typically, this analysis is done even before starting product development, during the ideation phase.

The Calculation for Pricing a Digital Product

There are several pricing formulas that work well for both digital and physical products.

The key is understanding which calculation makes the most sense for your situation.

I’ve provided some examples here to add more variety to your research, but the most common pricing formula is quite simple:

P = Fixed Costs + Variable Costs + Profit Margin

This simple formula considers all expenses incurred to create the product and then adds the profit margin at the end.

Since digital products—especially online courses—are relatively straightforward to sell, you don’t need to go much beyond this formula to understand how to price them.

However, it’s still essential to understand exactly how each of these variables behaves within the formula—and even to explore other formulas that can shape these indicators.

Let’s take a closer look at these points below. Follow along with me:

Formula for Calculating Fixed Costs per Unit

Fixed costs should be distributed across the expected sales volume. The formula is:

Unit Fixed Cost (UFC) = Total Fixed Costs ÷ Planned Product Quantity

For example, if the total fixed costs are R$10,000 and you plan to sell 1,000 units:

UFC = R$10,000 ÷ 1,000 = R$10.00 per unit.

Formula for Calculating Variable Costs per Unit

Variable costs are calculated by summing all expenses directly related to producing each unit. The formula is:

Unit Variable Cost (UVC) = Sum of Direct Variable Costs

For example:

Platform fee per sale: R$2.00
Affiliate commissions: R$5.00
Total: R$7.00 per unit.

Formula for Calculating Profit Margin

The profit margin can be set as a fixed value or a percentage applied over total costs (fixed + variable). The most common formula is:

Final Price = (Fixed Costs + Variable Costs) × (1 + Profit Margin %)

Example with a 30% profit margin:

Final Price = (R$10.00 + R$7.00) × 1.30 = R$22.10 per unit.

These formulas provide a foundation for adjusting your pricing to different scenarios and sales volumes.

So, did our pricing formulas help you? I hope they did!

But we have one last piece of advice—if you sell your digital product on a website, having a chatbot is essential for customer support and lead generation.

Try Leadster.AI for free today by clicking the banner below.

It uses the power of Generative Artificial Intelligence to assist your customers in real time and help you generate more leads.

I’ll be waiting for you, okay? Thanks for reading, and see you in the next article!

How to Price a Digital Product?