Today, I'm going to show you a simple change I made that grew my revenue whenever I invited my newsletter subscribers to buy my art during an art launch.
Key points
- Tiered pricing strategy: Adopting a tiered pricing model based on the Goldilocks strategy (1x, 2.2x, 5x pricing tiers) can significantly increase revenue by appealing to a broad range of customers with options that feel “too little,” “too much,” and “just right.”
- The psychology of pricing: The tiered pricing approach not only caters to different customer segments but also psychologically encourages purchases of higher-tier products, with the top tier potentially accounting for 62% of total revenue.
- Accessibility and exclusivity balance: Implementing a tiered pricing strategy in art sales, with products ranging from standard prints to exclusive originals, can lead to a more effective balance between accessibility and exclusivity, enhancing both customer engagement and revenue.
The Goldilocks art pricing strategy
To optimize your art sales, integrate a well-established concept in pricing strategy, known as the Goldilocks strategy (good-better-best pricing). Also known as a tiered pricing model.
As soon as I started adopting this model, my revenue grew.
Gumroad, a platform widely used by creators to sell products, conducted a study involving thousands of its customers.
They analyzed various pricing strategies and found that the 1x, 2.2x, and 5x tiered pricing model was the most effective.
This is where you structure your prices in a specific ratio: 1x for the base tier, 2.2x for the mid-tier, and 5x for the top tier.
The idea is to offer options that are “too little,” “too much,” and “just right,” much like in the classic Goldilocks story.
This approach, consistently outperformed other pricing structures in maximizing revenue for their users.
The study's findings underscore the effectiveness of this model in appealing to a broad range of customers while maximizing sales and profits.
Implementing tiered pricing
For example, when applying this to art sales, consider your base price (1x) as the entry point – this could be your standard print.
Then, price your mid-tier (2.2x) – perhaps a signed print or a limited edition piece, at a rate that's slightly more than double the base price.
The top tier (5x), which could include your exclusive originals, should be priced at five times the base price.
If your standard print is priced at $50 (1x), your mid-tier could be around $110 (2.2x), and your exclusive original at $250 (5x).
Impact on Revenue
Why adopt this strategy?
This tiered pricing, can potentially bring in five times more revenue than single-tier pricing.
This is because it not only caters to different customer segments but also psychologically encourages purchases of higher-tier products due to the added value often included with higher tiers.
An interesting aspect of this strategy is the revenue distribution among the tiers. The top tier can account for a staggering 62% of your total revenue.
This means that while the base and mid-tiers are essential for inclusivity and choice, the top tier becomes your main revenue driver.
How to apply this to your art sales
Let's revisit my earlier strategy with this new approach:
- Base Tier (Standard Prints): $50 (1x)
- Mid Tier (Signed, Limited Edition Prints): $110 (2.2x)
- Top Tier (Original Art): $250 (5x)
Sales might look like this depending how many people are subscribed to your email list:
- Standard Prints: 37 sales, generating $1,850 in revenue.
- Signed, Limited Edition Prints: 25 sales, generating $2,750 in revenue.
- Original Art: 17 sales, generating $4,250 in revenue.
The total revenue is $8,850, coming from 79 sales. This demonstrates the effective impact of the tiered pricing strategy.
By integrating a tiered strategy into your art pricing, you not only offer a range of options to your customers but also significantly enhance the potential for higher revenue.
Get creative, your tiers can all be originals but offer different sizes. Anything goes.
This method respects the value of your art and the diversity of your audience, creating an effective balance between accessibility and exclusivity.
Remember, it's all about the connection and community you build through your newsletter.
I learned about this the hard way when 10,000 people visited this very website and I made no art sales.