YOOOO ROEZANITES UNITE… Lol
Today, we’ll be diving into a common mistake that I've been seeing that makes it incredibly difficult to run a profitable coaching business.
And that mistake my dear Roezanites… Is pricing your offer incorrectly & incongruently with their market.
You see, most people just choose a price at random, or they choose a price that they’ve “seen work well for other offers.”
First off, let me just say… Never set your price solely based on what you've seen in the market.
I’ve had multiple gurus try and sell me their info product business… To which I obviously respond “okay, send me your P&L & balance sheet”
Guess what… All those coaches that are showing off how much money they make… They ain't actually that profitable lmao it’s all a show.
SO… Don’t base pricing off of what you see others doing, it might not be profitable anyways.
“But Devin! If I don’t copy others, how will I know what to price my offer for maximum profits?”
I got a simple two step process for ya
#1: Go off your market size & customer sophistication level (will explain more)
#2: Once you’ve got something that’s selling… Keep increasing the price until it doesn’t.
Let me explain...
Million Dollar Pricing, Phase #1: Analyzing Your Market To Set A Proper Price
There’s a MASSIVE DIFFERENCE between selling a biz opp course to the mass market VS selling to a niche audience… for example sales training course to a business already doing 7-Figures per year.
Here's an example of the differences between two markets:
So… Why is it that so many businesses would price these products the same?
They’d sell the biz opp course for $2,000.
And then someone else sells the sales training course for 7-Fig businesses for $2,000.
Like we said earlier, the sales training coach justifies it because they see the $2,000 price working for the biz opp.
Can you see the immediate issue with this?
Let’s just google what % of businesses make over a million dollars in annual sales
According to small biz genius (no idea if this is reputable but it’ll do lmao) only 9% of businesses crack the million dollar per year point
SO… That means 91% of businesses would NOT be a good fit for this sales training.
Fun fact though… Not all businesses have sales teams either… Let’s be liberal and say 50% of companies don’t have sales teams.
That means in reality… around 96% of business owners wouldn’t be a good fit for the sales training course.
What’s that mean? Much higher cost per acquisition because your market is so much smaller.
You have to sift through way more people and deal with your ads being shown to prospects who aren’t good fits while it finds the small 5% of businesses who would be a good fit.
Is this a bad thing? No… There are a lot of HIGHLY SUCCESSFUL businesses who sell to these smaller niche markets.
How do they do that successfully?
By… You guessed it… Raising prices.
And guess what, with this sales training example you’re selling to established businesses.
Their budgets and price elasticity are WAY HIGHER.
Usually they want the best. They want their target issue solved (most businesses of this size don’t buy general courses, they buy courses to solve highly specific problems)
And they don’t want to waste time on what they perceive as “cheap” solutions because they know it’ll cost them more in the long run.
They’re willing to expend capital to solve their issue.
So while this course was originally priced at $2,000 which would have made it nearly IMPOSSIBLE TO BE PROFITABLE with the offer.
Instead, you can charge over $10,000+ for an offer to this market. And it’s entirely possible the new price provides more legitimacy and actually increases your conversion rate.
Funnel Format: VSL vs. Webinar
Another mistake coaches make is trying to sell these two different offers (the mass market biz opp VS sales example here) the same exact way. This is also a mistake.
A mass market biz opp consumer has a lot of free time so something like a 2-3 hour long webinar will work… A 7-Figure biz owner doesn’t typically have 2-3 hours to spend watching your webinar.
What About Low-Ticket Offers?
I see a lot of people promoting offers under $97 with paid traffic, even as low as $20. I used to do this and it worked really well…This can work for both mass market and for niche specific offers.
But there is one big caveat:
I’ve yet to meet a single person who is profitable with these without a MASSIVE back end offer and a large team of appointment setters though…. I’d love to be proven wrong, but that hasn’t been the case yet.
But that's all OK. Even with upsells on these low-ticket offers, the idea usually isn't to be profitable. The main goal should be to #1 help customers achieve a small result to gain trust, #2 reduce cost of acquisition.
In these cases, it’s even OK to go into the red on these, as this is more “lead gen” then trying to run a profitable campaign.
Pricing Vs. Market Specificity
If you’re selling to a smaller, more sophisticated and more targeted market…
The more targeted your offer, the more you can charge. I’d recommend no less than $5,000
Let me walk you through a “targeted offer pricing example”
As we get more niche specific, the training becomes more and more targeted which means it’s WAY more relevant to whoever might be buying it.
But again… We get the downside that we’re shrinking the market.
However, since it’s so targeted our prospect will believe “THIS IS THE PERFECT SOLUTION FOR ME!” and our price elasticity & conversion rate will increase.
Market shrinks, however the offer appears more valuable… And so we increase price.
Million Dollar Pricing, Phase #2: Once You’re Selling, Increase The Price Until It Doesn’t Sell
This section… Simple as can be haha.
Just because something is selling well doesn’t mean that you’ve actually found your “OSP” Optimal Selling Price.
It’s entirely possible that you can raise the price without affecting your conversion rate.
I’ve seen it MULTIPLE TIMES where we’ve raised price and even increased conversion rate.
You can do this in both the mass market business and the targeted business.
A good example is a webinar I was running for Skup, we sold it for two years @ $997
And recently in 2023 we decided 997 wasn’t profitable enough (ROAs were dropping over time as the webinar fatigued)
So we raised the price to $2,000 to see if we could increase ROAs
The result: Conversion rate stayed the same. AOV more than doubled!
(CLTV was higher too btw)
The strategy is simple…
When you find a price that works, split test price increments.
Track how it affects these metrics:
- ROAS (Return On Ad Spend)
- Conversion Rate
- AOV (Average Order Value)
- CLTV (Customer Lifetime Value)
- Lead LTV (You can track lead lifetime value if you’re running a funnel where you focus more on collecting leads and have a longer sales cycle. This is what I track for my autowebinars.)
- And of course… Just how it affects your profit overall
If it looks good, keep the new price and create another split test at another tier higher.
If it doesn’t look good… Well maybe ya already got your OSP.
If you can sell at a higher price it has a lot of benefits outside immediate ROI.
It can also help ascend more people to your back end because they’ve committed and spent more with your brand.
BOOM MIC DROP.
Look guys, if you want me and the rest of the Roezan team (we’ve done nearly $100,000,000 in sales online) to help scale your coaching business.
We’ll give you free advice and a free biz audit on the call.. And if we can work together we will.
If not… Hey… Ya got free advice.