rockcrunch
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@Andy Black Thank you for your detailed reply 
I've studied Nathan Barry's three tiered model in detail and here is what I have been thinking about it, how do you optimize the pricing for the lower tiers?
A giant sum of $14,400 comes from the first two tiers comprising of (800+160) = 960 customers. Now lets say bumping the price of $10 to $15 and $40 to $50 brings no change to the number of sales, then its possibly a profit of $20000 which is leaving around 5.5k on the table. So how you fine tune your pricing without A/B testing is what I am asking?
Obviously the sales are calculated for a thousand customers so it doesnt make a difference. But lets say we sell to 10,000 or 100,000 customers, it makes a huge huge difference.
I'm in a similar boat at the minute... I'm a consultant with clients. I don't even consider myself a very good consultant and could make a lot more money doing just that, but I've already decided to try and "switch lanes".
Below is something I posted into my insider progress thread.
I think consultants leave money on the table by not having the low touch revenue streams (I've bolded that part).
For me, the low touch product/service that I'm creating is a support forum, similar to TheFastLaneForum, but much smaller obviously. Clients can post questions that I'll answer, but it's in a forum environment so everyone else can get to see the answer. I'll also put in tutorials etc.
What I hope to gain from it, is a better insight into paying customers, even one's who'll only pay $49/month, and it's also the starting level where my other 1-2-1 clients might come from.
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I read "80/20 Sales and Marketing" by Perry Marshall last year and picked up this rule of thumb from Perry that:
"A fifth of your customers will pay 4 times as much"
So if I had 1,000 people on my list paying me $10 per month
Then 20% (200) will likely spend $40 per month.
And 20% of that 200 (40) will likely spend $160 per month.
And 8 will likely spend $640 per month.
And 2 will likely spend $2560 per month.
Mileage will vary obviously!
Here's what that would mean:
So if I didn't have higher price points, then I'd be leaving $18k on the table.
It works the other way too: if I only had the top price point of 2 clients paying me $2,560/month to work full-time for them, then I'd be making $5,120/month. If I didn't have the lower, less hands-on tiers, I'd be leaving even more on the table.
I've studied Nathan Barry's three tiered model in detail and here is what I have been thinking about it, how do you optimize the pricing for the lower tiers?
A giant sum of $14,400 comes from the first two tiers comprising of (800+160) = 960 customers. Now lets say bumping the price of $10 to $15 and $40 to $50 brings no change to the number of sales, then its possibly a profit of $20000 which is leaving around 5.5k on the table. So how you fine tune your pricing without A/B testing is what I am asking?
Obviously the sales are calculated for a thousand customers so it doesnt make a difference. But lets say we sell to 10,000 or 100,000 customers, it makes a huge huge difference.
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