Transcripts
1. Welcome and introduction : Welcome to this course
on monetization. My name is Alex in Dinick
and I'll be your instructor. In this video, I'll briefly tell you what to
expect from the course, how it's going to go a little
bit about my background, and we'll start right away. Well, in this course,
you'll learn about different pricing strategies,
monetization strategies, how to make the most money
in the short term and the long term while keeping clients happy. We're
also going to talk about pricing and various modernization
models that are common. The course is meant to be
taken in under one day, I would say in under one or
2 hours so that you can get that information
and quickly begin applying the strategies
to your business today. It's not a long marathon course, it's meant to be actionable
and immediately applicable. Regarding my background on this, I have 20 years of professional
experience, much of that, having started my own business and actually led
my own business, and I've also been a
business coach, meaning that I've had to think and
implement in practice many different
modernization strategies to make money in the long term and maximize my revenue
for my business, but also for hundreds
and hundreds of my coaching
clients with very, very different
kinds of business, ranging from mobile apps
to Vu B businesses to software to anything
else ranging online. So that's what the
course is like. That's my background.
And now let's begin.
2. How to maximize lifetime customer value (LTV): This video, let's
begin talking about your product pricing versus your LTV, lifetime
customer value. If you keep this in mind, it's going to help you plan for better revenue sources
and stronger revenue sources because a lot of people focus on price and price is very
apparent and vivid, but it can be a vanity metric. For many businesses, a more
important metric is LTV, lifetime customer
value, how much you make from that
client long term. The goal for most
businesses is to turn people into long
term customers for years, not just to sell to them
something now and forget about. And clients become long
term customers for years when they buy and
love the value they get. If they love the value they get, they're
going to come back. If they don't love, they're
not going to come back. And for you, you
can think of it, if a person buys once,
it's still pretty nice. But if they buy for new monthly, that's a 1,200%
increase annually. And if they buy something next year and next year monthly, that's a tremendous increase in revenue from the
very same client. And most first time
entrepreneurs, they focus on making more and more sales
from new customers. But often it's easier to sell
to existing customers and maximize the revenue
you get from them long term than to keep
finding new customers. So during the
planning, you really want to understand
how can I make the initial engagement easy and what can I upsell long term? And can I upsell long term? Not every business
is a fit for this. So let's talk about how to think about maximizing
your lifetime value. Ideally, you can combine
a situation where a potential client can have an easy entry into
your business. Some people call
that onboarding. Plus, what can they
consume or buy long term? Those are your back hand sales. That easy entry, the onboarding, that can be in form of something free or some kind of
a very cheap product. Online, you see
this commonly with the premium business model where people give away a
lot of free things often digital product because digital products have
no cost to reproduce. And if the client likes
the digital product, they might also buy
more expensive product. So when you're thinking about, what can I sell to
these people long term? Think about the possibility and likelihood of long
term purchases. It may be that this
is not possible. For some businesses, you just sell to clients
once, and that's it. In that case, you want
to maximize the price. But if you can sell long term, you want to think about, Okay, I can decrease initial
price by a certain amount, but what is the likelihood of people buying my second
item, my third item. For some businesses,
it's likely. For some businesses,
it's less likely. And every situation
is different. If you have historic data, like you've been in
business for a while, you can take a look at
your historic data and see how many people actually go on to buy a second and
third purchase from you so that you can calculate an actual percentage
of people who actually go on to buy your
second and third product. But if you're just
starting out, you can estimate this and track
it long term and anyway, always try to improve it. Whatever the historic data is, it doesn't mean that
that's going to be what it's going to
be in the future. In the future, you always
want to improve your upsell. Additional things to
consider are benefits. For example, even if you sell something for
a cheaper price, which might cut your
profit in the short term, it might even make
you unprofitable. You might lose money
in the short term, but if it gives you
better branding because people are actually
engaging with your product, if you are not losing
customers to your competitors, those are all benefits you can consider because even if you lose money with
the first purchase, you might make money
with the third, fourth and fifth sale
to those clients. Additionally, this is how
a lot of ads are run. A lot of ads, they are not necessarily profitable
in the first sale. But if the company
who's advertising can keep the clients
long term and has historic data on how
many clients on average they keep long term and how
much clients spend long term, then they know how much
money they can spend on ads, even if they lose money
on ads in the beginning. And of course, there's another
side benefit if you sell on platforms like Amazon, even UIM, like Etsy, sometimes having a lot of
sales and a lot of activity boost your ranking
on those platforms. And that's something to
consider when you're pricing your product because if you boost your ranking
on those platforms, you get more organic
sales which make up for the smaller profit margins
if you keep your prices low. This is something you
want to really keep in mind during the
planning because you want to think through what
kind of offerings can I create to upsell. Is it possible? So sometimes it's apparent
and sometimes you have to think outside the
box and always think about, well, at the end of the day, how does this work out financially? Because at some point you can no longer keep reducing price and you can't neglect
profitability too long. So there's all these
considerations. So these are all the things to keep in mind when
you're thinking about your product price and how to earn the most amount of money from your
client's long term, which is your lifetime
customer value, how to balance it all, how to get the best of both of those.
3. Revenue models like the subscription model, catalog model, and others: This video, let's
go over a number of ways to extend your
customer lifetime value. And it all starts with trust. Without trust, you have nothing because quality of your
product is everything. You can make one
sale to somebody. You can kind of trick them.
They can make a mistake. But once they use your
product or service, they'll tell the real quality. They love the quality, if they get a lot of value, then you can make more sales. They will come back.
Happy customers return. Lukewarm or unhappy customers
mostly do not return. So the quality is where you get to extend your lifetime value, and only after quality, that's the first
thing to focus on, but only after equality, all these other things
become available. Quality is a relative term. A lot of people will
say, Of course, my service or product
is high quality, but it can always be better. Keep pushing, keep pushing, keep pushing to make your
service or product better. We are all somewhere on
the spectrum of quality, and we all need to push, push, push to the best of our abilities to make our
products and services better. Having done that, once you
have happy engaged clients, you can begin to think of
what to sell long term. The first thing we're going
to cover is subscriptions. If you already engaging those clients long why
not just offer them, Hey, you don't have to buy
again and again and again, subscribe and we'll
bill you regularly. This is how gyms work. This is how magazines used to work through a subscription. And subscriptions are great because they can go on forever. The issue with
subscriptions is that not everyone really wants to stay with your
business forever. Some people are skeptical that, if I subscribe, I'm going
to forget to unsubscribe. So maybe I just won't
subscribe then, and then they don't subscribe. So it is a hard sale to make. There's portion
of the population who actually want
to be subscribed. But there are some portion of the population that
are the skeptics. They're worried that they're going to keep
getting overcharged, even if they stop
consuming the service, like going to the gym, a lot of people stop going to the
gym, still pay for the gym. So let's talk about
how to solve that. The solution to the
subscription skeptics is consumable products. These are products that people don't have to subscribe to. They just consume them
all the time, anyway. Food is a fantastic example. You went to the store, you
bought some food, you ate it. You need to consume more food. You need to buy more
food all the time. The same is true for clothing just on a less regular basis. The same is true for
a lot of services like long care or cleaning. If you provide a good service, the person who's
hiring you is going to want to consume again
and again and again. For some businesses, it's very natural, obviously, like food. For some businesses,
it's not natural. For example, like me,
if I'm selling a book, once a person buys a book, they're not going to consume
that same book again. So in some situations, consumables are not an option. We'll talk about the counter
to that in the second. But the more you can align
during the business planning for how you can
create a product or service or a suite of
products and services, some of which are consumables. That's fantastic. Because people will come back
because they want to, and they're not going
to have the turnt of the subscription. They're not going to
be afraid of, well, what if I forget to unsubscribe? That's why consumables
are great. You see consumables also a lot in mobile apps and
digital products. A lot of digital products you would buy on mobile
apps are like points, extra lives, extra weapons. That's in mobile app games
or something like that so that people can keep
buying and buying and buying. And the mobile app developer doesn't have to spend any more money creating those products. So it's very prevalent in the online and digital
world as well. Now I mentioned a book cannot get sold
again. That's fine. The same book cannot
get sold again, but you can write another
book and another book. Like, I have a number
of books on Amazon, and I have a number
of courses on Utomi. There's a reason for
that because a lot of people buy more courses. If they love the first
course they buy from me, they may buy another one. That's the entire goal is for me to make
courses that are so amazing that people will
want more of my courses. That's my goal. And you
see this all the time. If you go to a grocery store, you buy yogurt, guess what? There's blueberry yogurt,
there's cherry yogurt, there's vanilla yogurt,
there's chocolate yogurt, and they get me on
this all the time. I leave the store, and I'm like, I got four different yogurts because all of them
looked pretty good. And that's the counter to not
having consumable products, you can have a large catalog
of different products. And, of course, yogurts are a catalog and they're
consumable. So they're really. This can be great if your
business can fit this, but it's not for every business because sometimes
you just want to sell something once,
and that's it. Let's say you sell
something to tourists, they leave, they
never come back, so you have to make sure you get the highest upfront
price if there is no upsells or if there
are a few upsells. That's when you focus on making
the upfront price higher. That's where negotiation might come in and so on and so on. But I just wanted to give an
example that the consumables and large catalog and subscriptions is not
always available. There are some situations
where it's not, or there are some situations where the second sale
might happen many, many, many years later, for
example, you're buying a car. I mean, the next
time you buy a car is maybe five or
ten years from now. Of course, they're going to sell you accessories, of course, they're going to
sell you maintenance to make you spend
regularly with them. But the car itself, you buy very rarely. Now, what happens if, let's say you've
exhausted your books? Let's say, everybody has
bought all your books. Even I have over ten
books on Amazon. What happens if a consumer
bought all my books and wants more of
what I have to offer. Let me introduce a
solution for that. You can cross services,
products and affiliates. Let me explain to
you what that means. For example, I coach people
on how to start a business. During my coaching, sometimes
people need a website. I don't create the
website for them. I don't sell the
hosting to them. But I promote an affiliate
hosting company, so I can collect a commission
if my client buys that. And I partner with like a WordPress developer who gives me a commission if
I refer their services. And during the coaching, I might sell some
books to the client. I might sell services that
I do offer, SEO services. I might sell courses and
books and services. You see? So I can sell many, many types of things, more of my services, more of my products,
different products. And if I cannot offer
something of my own, like hosting, I
don't provide that. Then I use an affiliate, so I can still earn revenue even though I
cannot sell it directly. So how do you do this
for your business? Whatever your business is, the answer to coming up with all the things
you can sell to your clients is what can
be next that they need. That can be the next
thing that you sell. So think of their
lifetime journey. Let's say they're
learning how to cook. They need supplies.
They need training. They need constant ingredients. They might benefit from
being in a community. They might benefit
from going to events. These are all things
you can sell. So as long as you think
about the customer journey, what they might
need at any time, then you'll be ready to
sell that not on day one, because it's not that easy to come up with all
those offerings, especially, you have to make sure that the
offerings are good. If they're not good, you're
going to lose the customer. As soon as they
buy something they don't like, they're
going to go away. But as long as they keep
buying something they love, it's the best of both worlds. They're getting
really great value. You're getting a long
term customer. Fantastic.
4. Introduction To Finding Your Ideal Price: With this video, let's begin our conversation
about how to find the ideal price for your product no matter what
your product or service is. So, the first thing
you should ever do is even before you create your product
during the planning, you have to research your
competition naturally. Who gets into a business without knowing
their competition. Now, when you research
your competition, you will understand what
the market prices are. Of course, there's
the high end sellers. There's the low end sellers. You have to understand
where you fit. Now, of course, you will
see your offering as better than it actually is
because you're not objective. It's yours. You're always more optimistic about
what you're selling than your buyers are because
they're totally subjective, they're
totally objective. And not only that,
they actually are a little critical because they just paid money for it, right? So they actually want to get not exactly
what they paid for. Bargain. They want to get paid
better what they paid for. So there's a disconnect
of how you would see your product versus how your
consumers would see it. So understanding what
the market pricing is helps you gauge what your
initial price should be. Generally speaking, when
you enter a market, most entrepreneurs
think they are great. But again, there's a
lot of blind spots. So generally
speaking, you want to enter in the price at the
low end of the market, so you can be competitive
because if I, let's say, make a competitor to
some existing business and I'm priced the same
or higher, and I'm new, but that existing business
has a reputation, then consumers will go to the
business that's reputable. So even at the same price, if all else being equal,
and even if I say, I'm so great, customers will
go to where the trust is. To win the customer over, you have to lower the
price a little bit, which is very dangerous. You don't want to
stay with lower, lower prices all the time
because that's going to cause market erosion because your competitors will see, Oh, there's a new a
competitor in the market, you would lower prices so that that person now has
to lower their price. And then suddenly now
you're the same price, but your strategy
was to lower price, so you lower priced it,
then they lower price. And there's a race
to the bottom, which is bad actually
for businesses. And in the short term, it's
bad it's good for consumers. But in the long term, it's
also bad for consumers because both of such businesses
will go out of business, and consumers will
have fewer options. So the equilibrium
of all is ideal. An equilibrium means that the companies will stay with
prices that are ideal for them that they can stay
profitable and stay in business and pay their
employees, all that. And at the same time, consumers aren't
spending too much money as a part of their
overall income. That equilibrium is
ideal because in that, you can have long
term stability and growth and have customer
happiness and business growth. So the equilibrium. Now, when
you do that price erosion, the race to the bottom,
you lose that equilibrium. So you cannot have that as
your strategy long term. Just in the short term, you have to be, generally
speaking, most of the time, new entrants into
the market price low as their offering becomes
better, it gets improved. They start to price
higher because now they start to have that
little bit of reputation. They're also a little
more reputable, but also the product
is getting better. They know how to sell better, and so they start fitting
into the market somewhere. Then, in general, no longer
the lowest of the market, they are somewhere in between, and so the pricing will naturally fall
somewhere in between. A lot of times, people think, I'm going to, you know, come up with a price
for my product, but it's actually that you fall somewhere
within a market. The market will
dictate the price, and the markets already set prices for so many
of your competitors, you kind of just have
to see where you fit. Then you can go a little up and down, a
little up and down, but the level of
variation is actually surprisingly low in most cases. Now, if you're struggling
to gain traction, to get customers, then you want to stay low and stay affordable. This is why you see
a lot of startups. They sacrifice
revenue for growth. As soon as you start charging, you naturally have fewer
customers and users. When you keep your
service or product free, you have as many people who can try your product
service as possible. Now, if you have investors,
you can do that. But if you don't have investors and you're paying
out of your pocket, then you have to start charging, but just cheaply enough so
that you get the growth. Then ultimately what
you want to do is find the ideal price to
demand ratio, right? A price where the demand is the biggest while you're
making the most per customer, so that your profit is largest. That of course, augmented with how does competition
play into this? How does customer
happiness play into this? How does this get
reflected in your reviews? So in a theoretical setting, there is an ideal price to
demand, right, demand, price. But in the real world, every business has many additional unique
factors that are unique specifically to
their situation that will augment the price slightly, and you just have to roll
with the punches a little bit then eventually come
up with the ideal price. Even though throughout
the course, we're going to add
additional layers of complexity into how you
should price your product. Let's let this be
the ideal set of theoretical foundation for
finding your ideal price.
5. HighVsLowPrices: There seems to be an
endless debate about whether you should charge
high prices or low prices. So in this video,
let's talk about the philosophy of pricing because this debate is a little overwhelming
because a lot of people, they love to say, I
charge high prices, premium prices,
high ticket prices. I want to earn more. I
want to charge more. I want to charge
high ticket prices. There's a never ending, it seems like number of terms people use for
charging more because, you know, they want to make
more money. It makes sense. On the other hand, you see many big businesses,
Amazon, Walmart, many websites where you can start as a consumer and
buy very, very cheaply. And so the debate
is always like, Well, you have a widget. Should you sell this
widget for a high price, make it a premium item, add some features to
it, make it glossy, add nice packaging, premium. Or should you make it
ubiquitous so that, okay, maybe you cut corners a
little bit on the pricing, the cost of the packaging and the cost of everything else. And some of the materials
won't be as good, but that price can be
three times cheaper, and suddenly the entire
world can buy it. So I want to offer you
some pros and cons and how and when to go premium, when to not go premium. Of course, you will quickly
recognize that, okay, Amazon, biggest
store in the world, known for low prices. Same with Walmart,
another very low store. If you want to look
at real examples from successful
companies online, other than Amazon, you look at Frelighting sites
five. Start with $5. Okay, really, really,
really discounted. And you can find such
examples across the board, and you'll very often,
most of the time, map a correlation that
biggest by market share is the company that charges low prices because they're able to have
a bigger market, a bigger addressable
market of people. More people can just
buy it and try it. Even if you're a rich person, sometimes you got rich by being smart with your
money and not wasting it. So you still want to
try the cheaper or, you know, more affordable item. And if there's a
better version of it, you might be happy
to buy it after, you know, if the quality is good, so you want
to try something. This is one of the core
interesting things. You want to let people try
something easy, cheap. You can have premium options. But it's important to
also have that option to give the option to
potential customers to try for free or cheaply, just so they can see instead of having to trust you
because, you know, you live long enough
and you've been burned long enough by,
trust me, it's good. And then it's not good,
right? So as a consumer, you learn to be
careful, and this is what you want to
account for as a business. Like the caution of the
consumer, let them try. Now, there are some times where high ticket
products are good. When you don't have
a huge market, I have something that I sell, for example, I sell to companies courses that I can
make for them custom create or license existing
courses that I have. But there's not unlimited
amount of such clients. It's a BOB situation. And so my goal is to add polish, show that I'm the best course
creator in this space, show that the courses come with all kinds of benefits like updates and other things, right? And so I want to dress
up the product so that it stands head and shoulders above in
perceived value that people will be
like, Oh, the buyers. They'll be like, Oh, this is really the only game in town. Got to go with the good option. And then suddenly you
have the boutique option, the Boutique meaning
the higher end. But I also have an option for just in case an individual
who comes to me and, you know, from a couple
of exchanged emails, I see that they're not
going to be able to afford a really expensive item. I also have some options
for them that are cheaper, so they don't lose on that sale, but that's a small option, really that kind of small
market niche thing, high end. But if you have an
opportunity to go worldwide, high growth, kind of ubiquitous, like, you know, something that everybody can buy or something
used across the world, like a freelancing or
products on Amazon, something widely
consumed like that. Then actually lower prices,
it's not my opinion. It's something that's
observable time and time. And again, they are
the better option. So this is how you want to think about,
okay, not just like, I like the sound
of higher prices, but when does each
option make sense?
6. Real Example Of Cheap Consultations: In this video, I want to share
with you a real case study from my own practical experience
of when I had to decide, should I charge higher
prices or lower prices and how to work within
the gray areas of it. So a long time ago, I was part of what I was doing
was marketing, consulting. I was going to companies and helping them with
their consulting. Sometimes I would
do their marketing, sometimes I would just create
their strategies, whatever. And my fee for the initial session was
something like $50, then I raised it to $100, which for a company that's low. So it sends a signal, like, Hey, kind of low value, right? Cheap, low value. This
person is not good. But really, is this
actually was for me. This initial hour, the rest of my services
weren't that cheap. But this initial first hour, that for me was actually
a sales situation. The other person thought, Hmm, well, I'll try for
an hour, $50 or 100. It's not a big deal
for a company. They have, you know, tens of thousands or hundreds
of thousands of people on their pay they're paying up to millions of dollars
in staff salaries. So $100 here is really
nothing for them. And so it was easy
to try for them, and they get a lot of value. When I came to their office, I didn't care if
it was $50 because really sales people do
this for $0, right? If you work for a
company, you do sales, you do the same thing the first
15 minutes or 30 minutes. If it's a high value client,
they do this for free. So I found a way
to charge for it, even though it wasn't
much, you know, for an individual business
owner, it's something. At least, you kind of don't
feel like you're wasting your time because when you're
a small business owner, if you're wasting
your time, well, that's a really valuable
expensive time, a few other things
are moving forward. So you see, they thought they're getting
consultation, and they were, and they were getting a best the best possible consultation
they can give them because it's far
stronger to tell them, Hey, you know, here's your
entire marketing strategy. I've done the work,
I've preplanned it, I've thought about
your industry. Here's how it's going to work. Compared to a salesperson going in and saying, Here's
what we'll do. Here's what else we'll do. I've already done
that work, right? So I came in stronger
because I wanted them to hire me for the long
term, a big contract. This 50 or $100, it's irrelevant and negligible. It's better to take it
from you, of course. But people would tell me,
Hey, why do you charge? Not my clients, not me, but my friends, I would
tell them about this. They're like, A, you lowballing yourself. You're
charging so low. And yes, if that's
all I was doing, I would be missing an
opportunity because bigger companies or
even midsized companies or small companies,
they can pay more. That's that wasn't
my strategy, right? I had a long term strategy or at least a mid term strategy. I wasn't just thinking,
like, transactionally, where a lot of people will put that pressure on you,
charge higher prices. No, it's really what works within your entire
ecosystem of your sales cycle? If I had found that the $50 or $100 consultation wasn't effective, I
would have stopped that. I would have been
doing it for free. The reason for it, actually, was to decrease people who wanted everything for free
and who would never pay. That's why you charge
the nominal fee. So you save your time.
As a salesperson, you don't need to do it as much because you get, you
know, lead vetting. There's much more of a
process within a company. You still waste your time with some people who
would never buy. But for a small business,
this is a bigger risk, and the consequences
of this are bigger. So you have to kind of
be a little defensive. But really, you see, I wasn't caring that
much about, like, if it's a high value
potential client, whatever happens in
the first consultation doesn't even matter in
terms of revenue for me. It's the first consultation
is really a sales situation, and you want to impress
as much as possible. That's sort of the gray area of it is that you can
kind of play this game. However you want to slice it, however makes sense for
your unique situation. If the consultation,
like I mentioned, wouldn't work for
you, don't use it. And a lot of it is from
intuition and experience, but also trial and error. A lot of experiments
are easy to make. You know, you offer ten
touch consultations. You see the uptake. Then you go, don't offer consultations and
you see how it works and what you get a lot of
bad potential meetings that don't result in anything. You also see, Hey, you
know, you kind of sit in there better to sit there
for $100 than for free. Your behavior changes,
even though it maybe shouldn't you're human.
It kind of does. And so all these little elements are at play in the real world. So experiment and don't listen too much to external sources who don't know your
real situation, but experiment a lot and get to know your sales process
intimately so that you can understand exactly which
levers and which elements from different strategies to
pull and use for your case.
7. The freemium business model: In this video, I want
to introduce you to a strategy of using either the premium
business model or parts of the premium
business model. It's a very popular
business model online, which is used very prevalently, and I'm sure you use it all the time when you're a consumer, you get something for free, either free website, free app, free something, and then you
get upsold something else. The reason it's common
online is because it's free to give away digital goods, articles, videos, essentially
nearly free or free. Brick and mortar companies
or service companies, it's a lot harder to give
something away because it cost them money to create that
and manufacture that. But in any case, if you cannot use the premium model purely, which means giving something away and then charging
for something else, you can use parts of the
premium model and then upsell. So the idea of the
premium model can always stay and can be
used in any kind of business because the great thing about it is that when you
give away something for free, even something little, but
it has to be something good. People can get a
glimpse of the quality of what they'd be getting
because otherwise, consumers, you
don't realize this, but they are shopping blind. If they have to
pay for something and they don't know
what they're getting, you're immediately decreasing
the conversion rate because they don't know
what they're getting. A lot of them don't
buy for that reason, and they don't take
the first step because they have to spend money to know what
they're getting. So when you're able to
give away a little bit of something to give them a
sense of what they'll get, and if they are impressed, this is very important
because a lot of people cut the
corner here and say, Well, I'm just going to
give away something bad. Don't give away something
bad or low quality because they're going to get a view of your business
that it's low quality. Give away something that actually represents
your business amazingly and shows quality, and then people will
be much more likely to want more and to buy
what you're having. Another benefit of this is that because you're offering
something for free, you're going to be able to get all the traffic compared
to some paid competitor, that suffocates the competitors. Of course, this is harder
because you can't even service a very large number of people if you have a
physical product or a brick and mortar business because there are just
physical constraints. But it is possible to increase your current
customer flow by doing something free. It's just that you
have to be a lot more careful about what you do because if you do give away
something that costs money, you have to do it
at a tiny loss, so you got to be really careful. But if you can figure
out what you can give away for free or
extremely cheap, then you can reap the benefits
of this freemium model. And even if people
don't buy there are actual benefits from them because they
bring their friends. They might recommend
your business. They might remember it. It helps with your
branding overtime, and all that activity
helps you in indirect ways and takes away that activity
from your competitors. So using elements from
the streaming model can really help in a number
of very strong ways.
8. Charging high vs. low prices: There seems to be an
endless debate about whether you should charge
high prices or low prices. So in this video,
let's talk about the philosophy of pricing because this debate is a little overwhelming
because a lot of people, they love to say, I
charge high prices, premium prices,
high ticket prices. I want to earn more. I
want to charge more. I want to charge
high ticket prices. There's a never ending, it seems like number of terms people use for
charging more because, you know, they want to make
more money. It makes sense. On the other hand, you see many big businesses,
Amazon, Walmart, many websites where you can start as a consumer and
buy very, very cheaply. And so the debate
is always like, Well, you have a widget. Should you sell this
widget for a high price, make it a premium item, add some features to
it, make it glossy, add nice packaging, premium. Or should you make it
ubiquitous so that, okay, maybe you cut corners a
little bit on the pricing, the cost of the packaging and the cost of everything else. And some of the materials
won't be as good, but the price can be
three times cheaper, and suddenly the entire
world can buy it. So I want to offer you
some pros and cons and how and when to go premium, when to not go premium. Of course, you will quickly
recognize that, okay, Amazon, biggest
store in the world, known for low prices. Same with Walmart,
another very low store. If you want to look
at real examples from successful
companies online, other than Amazon, you look at Frelighting sites
five. Start with $5. Okay, really, really,
really discounted. And you can find such
examples across the board, and you'll very often,
most of the time, map a correlation that
biggest by market share is the company that charges low prices because they're able to have
a bigger market, a bigger addressable
market of people. More people can just
buy it and try it. Even if you're a rich person, sometimes you got rich by being smart with your
money and not wasting it. So you still want to
try the cheaper or, you know, more affordable item. And if there's a
better version of it, you might be happy
to buy it after, you know, if the quality is good, so you want
to try something. This is one of the core
interesting things. You want to let people try
something easy, cheap. You can have premium options. But it's important to
give the option to potential customers to
try for free or cheaply, just so they can see instead of having to trust you
because, you know, you live long enough
and you've been burned long enough by,
trust me, it's good. And then it's not good,
right? So as a consumer, you learn to be
careful, and this is what you want to
account for as a business. Like the caution of the
consumer, let them try. Now, there are some times where high ticket
products are good. When you don't have
a huge market, I have something that I sell, for example, I sell to companies courses that I can
make for them custom create or license existing
courses that I have. But there's not unlimited
amount of such clients. It's a BOB situation. And so my goal is to add polish, show that I'm the best course
creator in this space, show that the courses come with all kinds of benefits like updates and other things, right? And so I want to dress
up the product so that it stands head and shoulders above in
perceived value that people will be
like, Oh, the buyers. They'll be like, Oh, this is really the only game in town. I got to go with
the good option. And then, suddenly, you
have the Boutique option. The Boutique meaning
the higher end. But I also have an option for just in case an individual
who comes to me and, you know, from a couple
of exchanged emails, I see that they're not
going to be able to afford a really expensive item. I also have some options
for them that are cheaper, so they don't lose on that sale, but that's a small option, really that kind of small
market niche thing, high end. But if you have an
opportunity to go worldwide, high growth, kind of ubiquitous, like, you know, something that everybody can buy or something
used across the world, like a freelancing or
products on Amazon, something widely
consumed like that. Then actually lower
prices is not my opinion. It's something that's
observable time and time. And again, they are
the better option. So this is how you want to think about, okay,
not just, like, I like the sound
of higher prices, but when does each
option make sense?
Alex Genadinik
