welcome to traffic stampede
How To Price For Success
Welcome to Day 6 of this huge free course.
We are only really getting started in our journey and still have so much to go.
Today we are going to talk money.
Yep, cash, coin, pounds shillings and pence, the mighty dollar......THE STUFF THAT WE NEED.
Money is not evil, it is essential.
And profit is what you need to survive in business.
We all have various views on money but we need to wipe the deck and start a fresh for success in the online world.
Because unless you earn enough money, you will fail in your quest of making your website profitable.
It Is Not What You Charge It Is What You Make
One of the key issues with a business is profit.
And like it or not while blogging, social media marketing and SEO is technically free it always comes at a cost.
That cost is time.
Time comes at a cost, the fact you could be spending it elsewhere.
The saying goes 'be careful how you spend your time'!
To explain this, let me tell you how I learned marketing.
I was a policeman (I joined when I was 18) but I had an issue.
The recession hit and the government introduced what we now know as austerity.
Here I was, with a great job but nearly broke due to my outgoings.
And to make matters worse my wife had just given birth to our first child.
Suddenly we were hit with a huge nursery bill and we could cope, but only just.
But then the government announced that my wages would drop, they changed the way my allowances and wages would be paid.
I lost hundreds a month in a split second.
So to try and get some money back a friend and I decided to set up our own Martial Arts club.
Each week I would try and gain more students and hardly any came.
I used adverts, a website, leaflets and spent a small fortune (money I couldn't afford to lose).
And still hardly anyone came.
At first I thought it was me.
Then I realised that 99% of the advice I was told about marketing and acquiring sales was utter horse piss.
So we closed the Martial Arts club down and I vowed never to open another one until I knew everything about marketing.
Over the next 5 years I would devour everything I could about online marketing and test it for myself.
I would do a noon shift for the police and finish at midnight and spend a few hours learning, writing, creating websites and testing out everything.
Each day I made sure I spent an hour learning or writing and success came, bit by bit.
But each hour came at a cost.
It was an hour not watching TV, an hour not asleep in bed.
It was an hour not out at the park with the kids.
And for you there will be an issue that you face.
Just what amount are you prepared to pay to grow your business online?
Because it will always cost you something.
But if you do it correctly there will be a pay off.
I now have a business that supports my lifestyle and pays the bills.
For you it might be an additional income, or perhaps it will help to fuel your business growth and gain you more clients.
And so we come to my main point, it is not what you charge, it is what you make that matters.
I know of people who grow incredible online businesses and they fail.
They fail because despite having thousands of readers each day, they can't make enough money to sustain the website and themselves.
So, lets say you spend 20 hours a month on your website.
And you do this for the next 12 months.
That is 20 hours x 12 = 240 hours.
30 solid days of 8 hour shifts, an entire month of work.
Now, that is a low estimate of the work required to grow a business online, but let me say this, if you think you are going to make the money back from that kind of time investment by selling £5 make up brushes you are wrong.
You have to have products that make your marketing time and or money worth spending.
The greatest secret in marketing is that it takes just as much effort to sell a £5 product as it does a £5000 product.
In fact I would say that selling a £5000 product is usually easier because it solves a larger problem.
So if you run a business and want to attract more customers to your business through online marketing, your pricing is key for success.
Which Wine Is Better?
Does the wine on the top shelf taste better than the cheap wine on the bottom?
People assume that price makes things better, because it does.
Blind taste tests have proven that people can't tell which wine is the most expensive one.
But tell them the price and people will often say that the most expensive one tastes better.
This is not because the wine changed, but rather we did when we knew the price in advance.
So, you need to think about your pricing in a similar fashion.
Because if you are going to spend time growing the traffic to your site you need that time/ money to pay off.
Be the expensive wine!
Charge By The Outcome And Not The Hour
One of the worst mistakes I made early on is charging by the hour.
Most people do the same, it doesn't matter if you are selling a child's handmade toy, they look at how long it took to make, give themselves an hourly rate and then voila you charge them something that equals more money.
This is not effective pricing because it fails to take into the account the costs of acquiring that customer.
You know all these hours you are going to spend online, the journey to the craft market, the day spent in the cold trying to sell your goods.
All that is a cost.
A cost that needs to be paid for!
And this is why people charge by the outcome and not by the hour.
Now there is always going to be a ceiling price with things.
No one is going to hand over £100 for nothing.
But if you are selling low priced goods and services you will find the pay off from marketing even tougher to achieve.
This is why I suggest every business to have products and services that differ in value, from low cost products to high tier items and services.
You need to have things that maximise your profit margins.
Let's look at some examples:
The Old Furniture
Some time ago I met a business owner who was buying old furniture and renovating it to sell at craft stalls.
They wanted to sell online too but were struggling.
The issue they had was that the items were second hand furniture and it had a ceiling price that was less than it costs brand new.
They knew this.
The result was that no matter how nice the furniture was they were still faced with an issue, they had spent hours on this furniture and they weren't making enough.
Immediately I told them to raise their prices.
And then I told them to name their furniture, give it a birth certificate, make a book showing the furniture as it was and the stages of renovation.
And then when you sell the furniture you give the customer it all.
Why? Because they would go from selling furniture to selling a story.
That furniture will have personality, a name, a history and give the customer something to talk about.
And for that they can charge more and people will pay!
That extra profit will compound when their online business gets more traffic, because let us say that due to the new marketing they can sell an item for £300 more and they then sell an extra 100 items per year they will make an extra £30,000.
Now, before you all jump up with outrage and say that just naming something doesn't add value check this T shirt out.
And now compare it to this one:
One white T shirt is £1.85 and one is £16.
All because one has the Nike logo on it.
That is the power of branding and also the power of pricing.
As humans we equate price to quality and there is no point denying this.
Homework: Start Playing With Pricing
Your homework for tonight is to start to play with your pricing.
Can you charge more? Are there more people charging more for the same thing? How do they get away with it?
Can you add more products or services at a higher price?
Can you change the product or service, perhaps package it differently.
Remember people pay for the outcome, not the amount of hours you spent on something, but you need to maximise your profit to make all of this extra marketing pay off.
So today, simply make a list of your products or services and look at your profit margins.
Next play around with adding higher priced items or services.
You must have a way to make more money through your business and pricing is a key part of this.
Tomorrow we are going to look at search volume before we head into the real meat of the course in week 2, how to rapidly increase your website traffic.
See you tomorrow.