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How To Value Your Own Product

Marketing, social media, advertising

sonny_1080

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I used to sell suits for over $1,000 dollars each. I was pretty good at it too. I've read sales books and even got my degree in Economics. Then I decide to learn Google Ads, joined a networking group, and sold my services anywhere from $300-$500 per month. And people bought, even though my skill-level was sub-par causing a very high turnover rate. So I decided to build a website and sell the advertising with some advanced features to a niche I was confident I could bring true value too.

Before we launched (about 3 months ago now), I called 100+ prospects, and gave them a choice between a free option, and a paid option. Everyone I spoke to took the time to sign up with the free option (positive market response now that I think about it), and only one person gave me $800 for an annual subscription. Since that time, he hasn't used the product at all, so I have to believe he forked out the money because he liked me, not because he saw value in the product.

My original offer was an annual subscription dependent on the average price of the product they were selling - confusing, I know.

So after 2 months of being launched, we got a lot of great feedback for how to make the website better. We're currently working on version 1.1 and I've decided to DRASTICALLY lower the price. The reason being I was originally pricing it at what I envisioned the product to be, not what it is in its current infancy.

I'm trying to decide between $29 a month and $49 a month. They look like the same number to me, but I don't think my audience will see it that way. Honestly, I believe my product to be a really nice tool to have. But I look at other digital products and I see how low-priced they are relative to the value they provide. For example, Elementor charges like $49 A YEAR! That's just crazy considering how awesome it is. And Life Alert, literally out here saving lives for like $90 a month. Or perhaps the best example, @MJ DeMarco charges $9/mo. for the INSIDERS subscription - crazy value at a low price.

Don't get me wrong, I'm a salesperson by trade. I'm all for selling higher-priced items. But it's different when the product I'm selling is something that I created that is unheard of in this particular market place.

I spent $17 on apples yesterday. ON APPLES!!! I'm selling advertising to a very niched market. If they get one customer because of my advertising then they just got a huge return on their investment. My Dad said I'd probably get the same amount of resistance for both $29 and $49, so I might as well charge the $49. Thinking about it, if someone doesn't see enough value in it to pay the additional $20 and they only based on price - do I even want them as a customer anyway?

I just learned about this study done where a company ran an experiment: they sold their product at 2 different price points. The result: they sold the same. People didn't buy more because it was cheaper.

I have a feeling the same thing would happen with my stuff. The people who don't buy at $49 a month, probably won't buy at $29 a month either. And the people who do buy at $29 a month, will probably see enough value in it to pay $49 a month.

Guess there's only one way to find out!
 
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100k

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You start by calculating how much money your product will make/save the user and then charge 10% of that.

For example if you have a billing application that saves them from spending 2 hours per day messing around with accounting, and the person in charge of accounting is paid $20 per hour.

Then you're saving them $20 x 2 = $40/day.... times 5 = $200/week.... times 50 = $10k/year.

$10k/year dived by 12 months = $833/month.

10% of $833 = $83.... so you could easily charge $79/month and justify it by explaining that it would save them $10k/year and 9-10 hours per week.
 

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Great question, I think (as 100K mentioned above) the proper answer starts with "how much value are you offering?" Then you can start there.

Or, how much convenience are you offering? Time saved? Money saved? What is the ROI from this purchase? If I join your service, what will be the net benefit?

Basically the price is in between the COST of NOT having your service, AND having it.
 

sonny_1080

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You start by calculating how much money your product will make/save the user and then charge 10% of that.

For example if you have a billing application that saves them from spending 2 hours per day messing around with accounting, and the person in charge of accounting is paid $20 per hour.

Then you're saving them $20 x 2 = $40/day.... times 5 = $200/week.... times 50 = $10k/year.

$10k/year dived by 12 months = $833/month.

10% of $833 = $83.... so you could easily charge $79/month and justify it by explaining that it would save them $10k/year and 9-10 hours per week.
Thank you @100k This is super helpful. It's difficult with my thing because it's advertising.

It would look like this: advertising that saves them from spending 5-10 minutes telling someone their availability and requirements, say they speak to 1 person a day - call it an hour per week, and the person in charge gets room and board plus $500 per week.

It's a 24/7 job so $500/168 hours per week = $3/hr. .... times 4 hrs. per month fielding phone calls ... $12 a month.

But that's not including their advertising, website, or SEO -> the difficult part is not every place uses these things. A lot of them rely strictly on referrals.

So not only is my solution getting them more leads without spending money on a website or SEO (which they may or may not be using), but it's also doing a lot of the talking/screening for them.

I guess the right way to go about doing this would be to quantify how much money they would spend on average for a website and SEO, show them how my solution is more targeted and therefore more likely to convert.

And then include the $12 a month determined earlier on top of that.

Great question, I think (as 100K mentioned above) the proper answer starts with "how much value are you offering?" Then you can start there.

Or, how much convenience are you offering? Time saved? Money saved? What is the ROI from this purchase? If I join your service, what will be the net benefit?

Basically the price is in between the COST of NOT having your service, AND having it.

The cost of not having my service, and having it.

That clears things up.

Advantage #1: get more people aware of your business online
Cost of not having my service - > website & SEO - > probably gonna pay $800 a month and it won't be nearly as effective since my website is a search engine specifically for this niche

Advantage #2: screen leads before they call
Cost of not having my service -> answer the phone every time it rings to answer the same questions -> probably pay someone the figures explained in the beginning of this post -> $12 a month

$812 per month.... times 12 months.... $9,744/year

10% of $812...$81 per month... say I charge $49 per month... the difference in savings is $763 per month ($812/mo. - $49/mo.)

So the pitch is: save 4 hours a month and $9,000 a year getting more qualified phone calls.

What do you guys think?
 
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Kid

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I think your Dad is right - 29 or 49 probably doesn't matter as much as if the service does the job vs does not.

What prices do your clients typically operate with?
Do they contract things for 10k a month or 7 bucks a month.

If someone finds 7 bucks a month, for hosting, "a lot"
he would be sensitive to difference between 29 and 49.
 

sonny_1080

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What prices do your clients typically operate with?
Do they contract things for 10k a month or 7 bucks a month.
That's the thing. It varies significantly.
 

Kid

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That's the thing. It varies significantly.
Thing that comes to mind is to split the brand into two:
One for "retail" clients and one for richer clients.

This way you don't cut yourself from large market
but still can ask premium prices.
 
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100k

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Thank you @100k This is super helpful. It's difficult with my thing because it's advertising.

It would look like this: advertising that saves them from spending 5-10 minutes telling someone their availability and requirements, say they speak to 1 person a day - call it an hour per week, and the person in charge gets room and board plus $500 per week.

It's a 24/7 job so $500/168 hours per week = $3/hr. .... times 4 hrs. per month fielding phone calls ... $12 a month.

But that's not including their advertising, website, or SEO -> the difficult part is not every place uses these things. A lot of them rely strictly on referrals.

So not only is my solution getting them more leads without spending money on a website or SEO (which they may or may not be using), but it's also doing a lot of the talking/screening for them.

I guess the right way to go about doing this would be to quantify how much money they would spend on average for a website and SEO, show them how my solution is more targeted and therefore more likely to convert.

And then include the $12 a month determined earlier on top of that.



The cost of not having my service, and having it.

That clears things up.

Advantage #1: get more people aware of your business online
Cost of not having my service - > website & SEO - > probably gonna pay $800 a month and it won't be nearly as effective since my website is a search engine specifically for this niche

Advantage #2: screen leads before they call
Cost of not having my service -> answer the phone every time it rings to answer the same questions -> probably pay someone the figures explained in the beginning of this post -> $12 a month

$812 per month.... times 12 months.... $9,744/year

10% of $812...$81 per month... say I charge $49 per month... the difference in savings is $763 per month ($812/mo. - $49/mo.)

So the pitch is: save 4 hours a month and $9,000 a year getting more qualified phone calls.

What do you guys think?

I only understand half of what you wrote.
So not only is my solution getting them more leads without spending money on a website or SEO (which they may or may not be using), but it's also doing a lot of the talking/screening for them.
So you're offering a call screening service?
What exactly does mean in a sentence or two, please.

So a person calls up a business, but before they get connected there's a automated message informing people of the most important info like if X product is in stock, if the store is open, where the store is located ? Or did I misunderstand that part.

----------
Also, how exactly do you generate leads for them? Are you actively promoting their business for them somehow ? Maybe you should charge them for each lead you actually get them.

If for example on average it takes 10 leads to convert 1 into a sale, and each sale is worth on average $50 to a company (just random figures, you'll need to do your research and understand the people/companies you're going to serve). That means 10 leads is worth $50 to them, and you can charge them 10% of that; $5 aka $0.5 per lead.
 

sonny_1080

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I only understand half of what you wrote.

So you're offering a call screening service?
What exactly does mean in a sentence or two, please.

So a person calls up a business, but before they get connected there's a automated message informing people of the most important info like if X product is in stock, if the store is open, where the store is located ? Or did I misunderstand that part.

----------
Also, how exactly do you generate leads for them? Are you actively promoting their business for them somehow ? Maybe you should charge them for each lead you actually get them.

If for example on average it takes 10 leads to convert 1 into a sale, and each sale is worth on average $50 to a company (just random figures, you'll need to do your research and understand the people/companies you're going to serve). That means 10 leads is worth $50 to them, and you can charge them 10% of that; $5 aka $0.5 per lead.
I thought about PPL but it’s not a good look for the industry Im in.

I’m promoting there business on my website by giving them listing space for free and then they can pay a monthly subscription for advanced features.

The advanced features are showing things like specific availability, requirements for service, etc. basically answering a lot of the questions that my client would normally have to deal with manually.
 

100k

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I thought about PPL but it’s not a good look for the industry Im in.

I’m promoting there business on my website by giving them listing space for free and then they can pay a monthly subscription for advanced features.

The advanced features are showing things like specific availability, requirements for service, etc. basically answering a lot of the questions that my client would normally have to deal with manually.

Not a good look. Hmm ok.

Can you track visitors and charge them X per 100 visitors maybe.

Maybe you should offer the listing for free, and charge them $250-$2500 per month for you to send extra traffic to their listing (through PPC). You could have a small $250 package, a $1000 package and a big ol' $2500 month package for the big boyz.

The thing is people prefer to pay for results, not "hope" and maybe. I know I'd prefer to pay X amount for X leads rather than paying and hoping I maybe get 1 lead if I am lucky.
 
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sonny_1080

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Not a good look. Hmm ok.

Can you track visitors and charge them X per 100 visitors maybe.

Maybe you should offer the listing for free, and charge them $250-$2500 per month for you to send extra traffic to their listing (through PPC). You could have a small $250 package, a $1000 package and a big ol' $2500 month package for the big boyz.

The thing is people prefer to pay for results, not "hope" and maybe. I know I'd prefer to pay X amount for X leads rather than paying and hoping I maybe get 1 lead if I am lucky.
Thats a great point. I love this idea, but I'm sure you understand this: we are launching our new update this week, so it is too late to make such a significant change like this.

My prospects are residential homes that offer a unique service - so their revenue stream is capped with how many beds they fill (unless they open another house). Common practice for these people is to rely strictly on referrals, which works most of the time, but the turn-over rate is high and they are rarely ever completely full 100% of the time.

Here's the way I see it, and please I'm open to any criticism: Although a listing is more of a risk proposition that PPC, it's better than relying strictly on referrals. I figure losing out on x amount of dollars from having an empty bed every month is worth the $49/mo. for the extra advertising.

For those prospects that don't rely strictly on referrals, they most likely pay for SEO. My website is a search engine for people actively looking for the services that my prospects provide. If someone pays me $49 a month, their listing goes at the top of the search results (so they're seen first) and they have a top spot in the directory page. So I see it as not only guaranteed ranking, but its specific to their target audience aggregated on my website, at way less money.

And since a lot of these homes are very peculiar about who they will and will not accept, they field hours of phone calls each month, answering the same questions about availability, requirements, etc... the way I see it, is I'm giving them a way to save them that time. In the first 2 months I launched I had like 10 people reach out to me directly to ask about bed availability in their area. I felt obliged to help them, so I called the different places for them that matched the basic criteria of what the people reaching out to me needed. This was a bitch. The phone tag was ridiculous. I called 10 places and not one of the homes (my prospects) answered. When I finally got 1 guy on the phone who had availability, I told the person I was calling for to schedule a tour. The guy gets there, takes 1 look at the room at leaves. The way the situation currently is chaotic.

My point is, you mentioned paying for results. My prospects (the homes) are paying to get phone calls from people that already know what's available because they're paying to post this information and be ranked 1st on a website that aggregates people actively looking for them.

<Begin rant, not directed at @100k >

For $49/mo. is it worth it?

That depends.

If I'm a home that has 1 open bed causing me to lose out on $700 a month - it should be worth it, unless I just don't care about losing money.

If I'm a home that's full but I know that 1 of these beds could go vacant at any time - and I can just adjust my availability with the click of a button on a website where people are looking for me - maybe not, but close.

If I'm a home paying $800/mo. on SEO and I STILL have an empty bed - imo it would be stupid to not pay $49/mo. to reach a more qualified audience.

If I'm a home that has no problems with beds being filled; they're probably too stressed out and busy to spend the time answering the phone, so to post their availability to avoid useless phone calls sounds good to me for $49/mo.

And if none of that works, these people got into the business to help people. For $49/mo. they can untangle the chaotic shop-ability problem the community has with finding the right home for them.

If I talk to 100 of these people and NONE of them buy. Then its back to the drawing board.

<End rant>
 

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Thats a great point. I love this idea, but I'm sure you understand this: we are launching our new update this week, so it is too late to make such a significant change like this.

My prospects are residential homes that offer a unique service - so their revenue stream is capped with how many beds they fill (unless they open another house). Common practice for these people is to rely strictly on referrals, which works most of the time, but the turn-over rate is high and they are rarely ever completely full 100% of the time.

Here's the way I see it, and please I'm open to any criticism: Although a listing is more of a risk proposition that PPC, it's better than relying strictly on referrals. I figure losing out on x amount of dollars from having an empty bed every month is worth the $49/mo. for the extra advertising.

For those prospects that don't rely strictly on referrals, they most likely pay for SEO. My website is a search engine for people actively looking for the services that my prospects provide. If someone pays me $49 a month, their listing goes at the top of the search results (so they're seen first) and they have a top spot in the directory page. So I see it as not only guaranteed ranking, but its specific to their target audience aggregated on my website, at way less money.

And since a lot of these homes are very peculiar about who they will and will not accept, they field hours of phone calls each month, answering the same questions about availability, requirements, etc... the way I see it, is I'm giving them a way to save them that time. In the first 2 months I launched I had like 10 people reach out to me directly to ask about bed availability in their area. I felt obliged to help them, so I called the different places for them that matched the basic criteria of what the people reaching out to me needed. This was a bitch. The phone tag was ridiculous. I called 10 places and not one of the homes (my prospects) answered. When I finally got 1 guy on the phone who had availability, I told the person I was calling for to schedule a tour. The guy gets there, takes 1 look at the room at leaves. The way the situation currently is chaotic.

My point is, you mentioned paying for results. My prospects (the homes) are paying to get phone calls from people that already know what's available because they're paying to post this information and be ranked 1st on a website that aggregates people actively looking for them.

<Begin rant, not directed at @100k >

For $49/mo. is it worth it?

That depends.

If I'm a home that has 1 open bed causing me to lose out on $700 a month - it should be worth it, unless I just don't care about losing money.

If I'm a home that's full but I know that 1 of these beds could go vacant at any time - and I can just adjust my availability with the click of a button on a website where people are looking for me - maybe not, but close.

If I'm a home paying $800/mo. on SEO and I STILL have an empty bed - imo it would be stupid to not pay $49/mo. to reach a more qualified audience.

If I'm a home that has no problems with beds being filled; they're probably too stressed out and busy to spend the time answering the phone, so to post their availability to avoid useless phone calls sounds good to me for $49/mo.

And if none of that works, these people got into the business to help people. For $49/mo. they can untangle the chaotic shop-ability problem the community has with finding the right home for them.

If I talk to 100 of these people and NONE of them buy. Then its back to the drawing board.

<End rant>

Sounds like you're trying to be another Air'B'n'B.

What is AirBnb doing that you could do better.

Does it cost people $49/month to list on AirBnB ?

I do know that AirBnB takes professional photos of the rooms/spaces for rent and of course allow people to book on their platform and make payment and cancel and get a refund through their website if the host is messed up.

They are offering a LOT of value. How does your website HONESTLY compare to them to warrant your $49/month price.

Another idea for you; maybe you should consider becoming a airbnb management company ?

You basically utilize all the amazing services offered by AirBnB (like taking bookings, taking professional photos, bringing in customers etc.) and you deal with the listings, email & telephone customer support, ensuring cleaners do their job (affiliate commission?), welcoming guests, list the rooms on local classified sites & CraigsList (maybe even your site) and funnel traffic to their AirBnB listing etc.

Now THAT would be worth $100 (if I am getting $1k/month from renting on AirBnB).

Then you can systematize things, create Standard Operating Procedures and hire assistants to replace you.
 
Last edited:

sonny_1080

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Sounds like you're trying to be another Air'B'n'B.

What is AirBnb doing that you could do better.

Does it cost people $49/month to list on AirBnB ?

I do know that AirBnB takes professional photos of the rooms/spaces for rent and of course allow people to book on their platform and make payment and cancel and get a refund through their website if the host is messed up.

They are offering a LOT of value. How does your website HONESTLY compare to them to warrant your $49/month price.

Another idea for you; maybe you should consider becoming a airbnb management company ?

You basically utilize all the amazing services offered by AirBnB (like taking bookings, taking professional photos, bringing in customers etc.) and you deal with the listings, email & telephone customer support, ensuring cleaners do their job (affiliate commission?), welcoming guests, list the rooms on local classified sites & CraigsList (maybe even your site) and funnel traffic to their AirBnB listing etc.

Now THAT would be worth $100 (if I am getting $1k/month from renting on AirBnB).

Then you can systematize things, create Standard Operating Procedures and hire assistants to replace you.
The market I serve is vastly different than that of an air bnb. The people these homes are serving are not only living here instead of visiting, but the variability in their length of stay literally varies from a day to years; and the way the money works is iffy, lots of sketchy stuff going on with insurance - which is something that I want to stay away from completely because thats where laws get broken often in this sector; so booking a reservation for a planned stay, processing/handling refunds, etc. just doesn't fit with what I'm doing. The photos idea is for update 1.4 though.

I've been thinking about this conversation and the only way I could guarantee a result is if I made a CRM that tracked the length of stay of the people received from my website and then charged the homes accordingly. This is not gonna make it in update 1.1 lol. That's a genius idea though. The kicker is how to do it without giving the operators more work because that's the last thing they want lol.

In the end of the day, it's advertising. This is what's happening:

Let's say the average home rents a bed out for $1,000 a month. Most of these homes RARELY stay completely full. They have at least 1-2 beds open in an average month. Reason being, they don't pay for advertising and strictly rely on referrals. So say they're losing $1,000 a month.

This causes some of them to pay like $500-800 in SEO each month. And they STILL have empty beds.

For $49/mo. they can get primo advertising on a search engine that aggregates their target audience. If they got the equivalent of 1 person to stay for 6 months in a year, they paid $588 to get $6,000, that they would've otherwise gone without. Or would've had to pay enormous SEO fees.

Am I stupid? Does that not sound like its worth getting on board with?
 
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The market I serve is vastly different than that of an air bnb. The people these homes are serving are not only living here instead of visiting, but the variability in their length of stay literally varies from a day to years; and the way the money works is iffy, lots of sketchy stuff going on with insurance - which is something that I want to stay away from completely because thats where laws get broken often in this sector; so booking a reservation for a planned stay, processing/handling refunds, etc. just doesn't fit with what I'm doing. The photos idea is for update 1.4 though.

I've been thinking about this conversation and the only way I could guarantee a result is if I made a CRM that tracked the length of stay of the people received from my website and then charged the homes accordingly. This is not gonna make it in update 1.1 lol. That's a genius idea though. The kicker is how to do it without giving the operators more work because that's the last thing they want lol.

In the end of the day, it's advertising. This is what's happening:

Let's say the average home rents a bed out for $1,000 a month. Most of these homes RARELY stay completely full. They have at least 1-2 beds open in an average month. Reason being, they don't pay for advertising and strictly rely on referrals. So say they're losing $1,000 a month.

This causes some of them to pay like $500-800 in SEO each month. And they STILL have empty beds.

For $49/mo. they can get primo advertising on a search engine that aggregates their target audience. If they got the equivalent of 1 person to stay for 6 months in a year, they paid $588 to get $6,000, that they would've otherwise gone without. Or would've had to pay enormous SEO fees.

Am I stupid? Does that not sound like its worth getting on board with?
Hmmm... I get what you're saying. Only thing for me is, how do I know your website will actually bring me the leads. Now if you'd be willing to let me list for free and then when you brought me a lead, you'd charge me $500 then OK. Because I know I am paying for results and I will make back my $500 after 1-2 months and I am ONLY charge it if I rent the room.

Regarding CRM; you can find those on websites like this one; Rent Plugins, Code & Scripts from CodeCanyon
 

sonny_1080

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Yeah thats awesome. We launched the new update last Friday. I called 10 providers to see what they thought about the changes in the offer (lower price, flat rate, rearranged listing layout, ranking, and preferred directory space).

The majority of the feedback was they had open beds and liked the idea and the price. A few would be interested, but the biggest thing obviously was how do they know it will get results.

I'm thinking about doing the pay-per-result thing even though I'm a little afraid of what some people will think and how the competition will try to say it's unethical since it's in the healthcare industry.

Apparently it's illegal to replace the listings phone numbers with my own without a written contract.

So I'm just gonna do both and see what works better. Advanced listing for $49 a month or get the advanced listing for free but sign this contract so I get the phone call and they pay 75% of the referral's first payment (it's a monthly service). Don't get anyone, they don't pay anything.
 
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