Here’s why I love selling ROI-oriented products…
When you’re selling something that will help the client make money, the price is completely disconnected from the actual cost of goods sold.
Take copywriting, for example. If I’m creating an ad campaign for a client, it doesn’t matter how many hours go into it. What matters is the results. If it generates $1 million, it doesn’t matter if I spent 50 or 500 hours doing it. What matters is the value created for the client, which is that $1 million. And that drives the fee I can charge.
Likewise, let’s say I’m selling lead generation services. If I’m selling lead generation services to someone who mows lawns, let’s say their average house is $20/week. And that’s good for about 30 weeks per year. Which means each new client is worth $600 per year. Not too shabby.
But let’s say it takes the same amount of work to sell lead generation services to a business whose average client value is $10,000 each year. And they’re capable of handling the same volume of work. The same amount of work is worth over 16-times as much to this client. Which means my fees can justifiably be bigger for the same amount of work.
There’s a business in town here that does interior refurbishment of private jets. Let’s say you own a $2 million aircraft, but the interior is feeling dated and a little shabby. You might pay $450,000 or more to have the cabin gutted and refurnished to your specifications. What’s the value of that lead to a business like that?
When you can point to VALUE, the work deliverable becomes secondary…
And this is a HUGE secret to selling any service that either generates measurable revenue increases or cost savings.
You’re essentially selling money at a discount.
And if you do sell that way, cost justification becomes immensely easier.
Let’s say, for example, that I am selling an investment newsletter. The editor of the newsletter has picked multiple stocks that have taken off to deliver gains of 200%, 300%, or more.
And the current stock they’re recommending has all the potential of any one of those gains, if not more.
Do the math. If you invest just $1,000 in a stock that delivers 200% gains, that’s $2,000 in total profits, on that one recommendation. A $5,000 would turn into $15,000 — for $10,000 take-home profits.
What is that one recommendation worth? Some would pay $5,000 to put a $5,000 investment in that stock. Others would be more than happy to get the recommendation for $1,000, to invest $1,000. But what if you got this recommendation as part of a risk-free trial of your first year’s subscription, for just $49?
I slipped into copy there, but you get the point.
When the ROI is potentially that high, it’s really easy to justify what is, in terms of deliverables, little more than you’re getting for free as part of this daily newsletter.
After all, what are most investment newsletters besides some emails and a website containing some information? There are millions of free websites and email lists. But if the ROI is there, it’s worth paying $49 for. And, for other services, as much as $999 or even more.
This breaks all the rules of retail…
If you’re selling products in a retail channel, you’ll quickly learn some formulas.
For example, in a lot of retail, the markup is 100% — or 2X. You take the actual cost of goods sold, and you sell it for twice that.
Certain segments of retail might have a bigger or smaller multiple. But in general, there’s a multiple. And it’s usually based on the base price of getting the product to the retailer.
You can bend that multiple a little bit.
Some retailer might be able to sell a certain brand of jeans at 3X cost, when other retailers have the same jeans at 2X cost — based on the different feel of the different stores.
But if you try to sell most pairs of jeans for 10X the cost of production, you’re not likely to have very many buyers.
Compare that to the cost of goods sold on an online investment research publication. The actual incremental cost of delivering an online newsletter is maybe $0.50 per year, per subscriber. That is, you probably have a bunch of base costs, but to add one more subscriber may cost just 50 cents. And this is pretty much the same whether you are selling a $50 introductory newsletter, or a $5,000 high-end trading service. It’s not that everything else is JUST profit, but when you divorce the price from cost of goods sold, there’s a lot more room for margin there.
Your challenge, should you choose to accept it…
… Is to seriously consider the VALUE you provide to clients.
When the client gets the result you promise, what’s that worth to them? It’s easiest, of course, if there’s a direct ROI component.
But let’s imagine you sell a fitness program.
What’s the ROI in maintaining good health and fitness?
What’s it worth to have the strength and vigor and mobility to keep performing at work, and not be sidelined a decade early due to failing health?
What’s it worth to NOT get diagnosed with diabetes, or heart disease, or other conditions that are preventable in through fitness in many cases?
Or what if you’re selling some outsourced services that would otherwise require a staff member to complete?
Even if your service itself isn’t directly the same as a front-line employee, what’s it worth to not have another person on payroll at $30,000 per year, just to do the tasks you cover? And beyond that, to not have to train and manage that other person?
And in the world of “time is money,” you can probably make a good case for a lot of products that don’t seem to have that same ROI component.
Let’s imagine that lawn mowing service above. Let’s imagine they promote in a more affluent neighborhood, where the average person makes $150,000 per year. Based on working 40 hours per week, 50 weeks per year, that means that person is worth $75 per hour. What if they distributed a flyer in that neighborhood that said, “If you make $150,000 per year, your time is worth $75/hour. Would you rather spend an hour mowing your lawn, or have us do an even more thorough job for $50 per mowing?”
Suddenly there’s a value case being made beyond lawn mowing. It’s about how your time is worth more than we’re asking to do your mowing for you. And as a result, raising their fee by 2.5X doesn’t seem ludicrous at all. Sure, the lawns are probably bigger, but even if the lawn is 2.5X bigger it probably doesn’t take 2.5X the setup time, expenses, etc. And depending on the lawn, the fee could even be $75 or more.
Don’t think about dollar signs, think about ROI…
That should be your takeaway. What’s the ROI value (both direct and indirect) that you give to clients or customers?
How can you dramatize that and make it feel real to your prospects?
And then how does that justify your fees — either the fee you charge now, or the higher fee you can charge using these methods?
Yours for bigger breakthroughs,
Roy Furr
