Why You Shouldn’t Create A Scalable Business (Until AFTER You’re Profitable)

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Hello everyone, my name is Clay Collins, and welcome to today’s episode of the Marketing Show. So here’s today’s weekly marketing quiz. In the last Halloween, approximately how many dollars worth of Halloween candy were sold? Was it $500 million, $1 billion, or $2 billion? We’ll answer that at the end of this episode.

So today, I want to talk about how to really get started online if you are just starting an information product business or a coaching or consulting kind of business. So here are the facts. If you have a product that is $7, if you want to get to a million dollars in revenue, you have to sell over 142,000 units of your $7-product to get to a million. If your product is $97, in order to get to a million, you need to sell over 10,000 copies. If your product is $297, about 3,000. If your product is $2,000, you’ll only have to sell 500 units, and if you want to make a million dollars at a $10,000 price point, you only have to sell 100 units, not including any kind of affiliate payouts that might be coming out of that million dollars.

So here’s the deal. Although these items here are more scalable and they appeal to the masses a hell of a lot more than these more expensive items, these more expensive items are what are going to make you profitable at the beginning. It takes a lot of money to support 142,000 people at a $7 price points or 10,000 at a $97 price point. It takes a hell of a lot of infrastructure to distribute a product, to accept payment at this level when you’re doing this many transactions even if it’s just a downloadable e-book. If you sell 10,000 units, that is a hell of a lot of customer support. That’s a hell of a lot of automation that you have to create, and it’s frankly something that most people can’t do when they’re just getting started, yet most people start out charging very little when they first start.

So let’s say this $7 item is an e-book. This $97 item is maybe a series of videos. This $297 product is a series of videos with maybe some group coaching. This $2,000 product is maybe one-on-one coaching, and this $10,000 product is perhaps a mastermind or something of that nature if you’re a coach or consultant or expert, or something like that. What I’m saying to you is that when you are first getting started, you need to start out with the most expensive product that you can sell if you don’t want to go out of business. So many businesses fall flat. They never get off the ground because they start on this end. And I’m saying that you need to start with the most expensive thing that you possibly can.

So here’s the bottom line. When you’re first starting out, sell the most expensive product that you ethically can, and it’s this sort of truism, this truth that’s going to keep you in business initially, and it’s why in the marketing program, we focus very heavily on teaching people who are just getting started online, who are just getting started in their fields how to sell high-ticket items like coaching, masterminds, you know, lifetime membership things of that nature.

So the take-home message is when you’re first getting started, start out selling the most expensive products that you ethically can. Maybe that means that you sell just a handful of $1000 coaching packages. You’re going to be profitable in a much shorter amount of time with much fewer customers and a much smaller list if you start out with a higher-priced item.

Anyway, in conclusion, the answer to the weekly marketing quiz is $2 billion. In the most recent Halloween season approximately $2 billion worth of candy was sold.

My name is Clay Collins, and thank you so much for watching the Marketing Show. I’ll talk to you next week.

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  • Katrina M Harrell

    (screaming and wailing arms in arm semi frantically) I LOVE THIS! I’ve been working on this for myself and teaching others to not stay in the $7 trap. Again, thanks for this (ok the end of the frantic arms and screaming)

    • Katrina! I’m glad I’m not the only one who gets worked up over this kind of thing.

  • Katrina Padron

    It’s expensive because it’s not scalable.  I believe that the more people we connect, the more people get involved.  I help businesses create communities of raving fans who love what they do and share it with their friends.  My service is a custom one on one program where everything is done for them – strategy, execution, staff training and resources to keep it going. It’s honestly more comprehensive than anything I’ve seen.

    • Nice.  And it sounds like charging more allows you to actually get customers amazing results.  Which also feels good as well.

  • SO awesome. thanks for the reality check. this is a great information / perspective especially since i am preparing my coaching business re-launch RIGHT NOW.  thanks for the gem Clay!

    • Absolutely.  Providing reality checks is what the marketing show is all about.  Best of luck on your re-launch.

  • When I was launching my business, everything online said sell an ebook and do a group coaching program. So if that was the advice that everyone was giving, I decided to the go the other direction. I had 10-15 visits a day to my website and it was probably the same people. I was not going to be able to convert all of those people into a group coaching program,  but I felt I could convert 1 into a a decent paying client. A little over 2 years later, a number of 1 to 1 coaching clients, being paid to speak in 35 cities this year, I’m now finally launching that group program.

    Thank you Clay for giving the advice that is not always the most popular, but is always the most applicable.

    • A pretty reliable way of getting success is doing the opposite of what most people say to do.  Unfortunately.

  • Veronique Link

    Great information! BIG Thanks to Katrina Harrell for sharing this with me! Question Clay….how do you feel about creating the small items as residual income items and concentrate on the big ticket when doing major marketing campaigns? I have done a major rebranding of my business and recently started shifting my product line to the large ticketed items, but I have clients who aren’t able to afford these upscale products, so I’ve incorporated a sort of ala carte list of items that I have already created (no extra work) that I can offer to those clients. No extra work, no worries, if I sell 1 or 1000 a day, I don’t concentrate on those, but it’s nice to see when I check my account and see that I was able to provide information even to those who can’t afford my $3900 Program Development product.

  • I love this too, I’ve been there. They don’t teach you this stuff in school, everyone just thinks “oh, lower price is easier/better/etc.”

    Knowing this single piece of wisdom is a serious leg up to create a successful business.

    Rock on, fantastic value + video, Clay.