I run an online service based business. Currently, I charge $1,000/mo and make roughly a 65% gross margin.
However, I'm now doing 3 important NEW things:
1) Hiring a Commission-Only Closer to close my deals for me for 20%-25% commission for all upfront deal value (eg. he closes a 6 month $6,000 package, he makes $1,200).
2) Increasing my pricing to $1,500/mo to pay the closer and make a better margin
3) Introducing 2 multi-month packages which are for 3 months and 6 months where the client pays everything upfront.
At $1,500/mo without a multi-month package, my gross margin would be 54% (including after paying the closer).
*As for net expenses to pay with the gross profit, they are very low currently at around $400/mo, as 1 client alone would still have me net profitable.
I've never provided multi-month packages before, so it feels kind of crappy losing my margin if I provide a 6 month package due to a discount. However, I understand the value of getting paid lots upfront VS a client being month-to-month. With that said, I don't even know how much to discount.
My question: How much do you typically discount multi-month packages compared to a 1 month package and any advice regarding this situation?
However, I'm now doing 3 important NEW things:
1) Hiring a Commission-Only Closer to close my deals for me for 20%-25% commission for all upfront deal value (eg. he closes a 6 month $6,000 package, he makes $1,200).
2) Increasing my pricing to $1,500/mo to pay the closer and make a better margin
3) Introducing 2 multi-month packages which are for 3 months and 6 months where the client pays everything upfront.
At $1,500/mo without a multi-month package, my gross margin would be 54% (including after paying the closer).
*As for net expenses to pay with the gross profit, they are very low currently at around $400/mo, as 1 client alone would still have me net profitable.
I've never provided multi-month packages before, so it feels kind of crappy losing my margin if I provide a 6 month package due to a discount. However, I understand the value of getting paid lots upfront VS a client being month-to-month. With that said, I don't even know how much to discount.
My question: How much do you typically discount multi-month packages compared to a 1 month package and any advice regarding this situation?
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