How much do you charge for your products or services?
It’s an perfect time to start an online business. The barriers to entry are lower than ever, you can do almost everything yourself, you can get so many services for free but how do you get customers online? How do you get them to start paying you actual $$?
Now that you’ve decided to start a business, one of the first questions you’ll probably ask yourself is how to get your first customers.
Getting customers is probably one of the biggest questions you’ll be asking yourself, or you have been asking yourself without having a solid answer yet.
More customers = more money in the bank right?
This is valid, and a necessary part of business but there’s another side to this coin, and that’s deciding how much to charge for your prodcuts or services.
Say for example you have one product, it’s a $100 e-course teaching people how to grow hydroponic tomatoes in their apartment (for example.)
Here’s what that looks like when you break it down into your monthly sales.
Let’s say your monthly expenses are $3000. In order to sell enough units of your course to break even (cover your living and business expenses of $3000) you’ll need about 1500 new leads per month to sell 30 units if your product is $100. This is based on the industry standard conversion rate of 2% of leads converting to sales. So 2% of 1500 is 30.
Now let’s look at another scenario.
Say for example your product is $400. Your living and business expenses are $3000. You need 7.5 sales per month. So you’ll need 375 new leads each month in order to break even. Because 2% of 375 = the 7.5 sales you’ll need per month, 7.5 sales x $400 = $3000.
Now let’s compare the two scenarios.
The biggest difference you can see between the two scenario’s is that you’ll need to reach more leads if your product is at a lower price point. Acquiring leads can also cost varying amounts of money, if you know your target market really well you can generally bring this cost down because the people who you are advertising to want your product, and you won’t need to pay to serve your ad to more people.
Say for example each new lead costs you $2 to acquire. In Scenario 1, that would make it 1500 leads at $2 per lead = $3000. From there, you should sell 30 units (2% of your leads) of your product that is $100, making $3000 – you haven’t even made enough to cover any of your expenses.
If the lead costs the same to acquire in Scenario 2, it will be 375 leads x $2 = $750. If 7.5 people buy your product of $400 you will make $3000. Sales – customer acquisition = $2250.
Can you see how it would be much easier to reach less people if your product costs more? If your product is good, and I’m assuming it is, you should be able to charge more if it’s really important to your customers.
How to actually get those customers? Here’s a very brief look at how that might work
- You have a Lead magnet (which is your enticing free offer for potential customers)
- Then you serve that lead magnet up on Facebook, using Facebook ads (or Instagram, Twitter, Youtube, whatever platform your customers spend more time on. I tend to stick with Facebook & Instagram.)
- Then you lead that customer on a journey, helping them and nurturing those leads with your email newsletters. Eventually, over time your audience will begin to trust you and will feel comfortable buying from you, and as much as you can you want to automate this process – so it can free up time for you to work on your business strategy, your products, and your processes.
Do you want fast track your growth and implement some helpful strategic actions to get those customers and build your business?