On Pricing, Testing and Viability
Do you ever think, “Hey… why don’t I just sell loads of expensive stuff as opposed to affordable stuff? I’ll make more profits and have to deal with fewer customers!”
If you have thought this, then you’ve found the right article for you.
Selling High Ticket Items Is The Same As Selling Low Ticket Items
The end goal is to sell a lot of high ticket items. That’s the middle-ground way to get rich and the most feasible.
If you want to be a millionaire, there are three paths:
- You sell one million $1 products
- You sell 1000 $1000 products
- Or you sell 1 $1,000,000 product
That’s in simple terms.
The easiest and most achievable is the middle ground, and so that’s what all the business advice tells you to do.
But there’s a catch, isn’t there? Especially with online business, where all the business advice tells you “high ticket, high margins, low overheads!”
Testing Is Easier With Low Ticket Items
I was on Twitter earlier, and this is where I got the topic idea. Someone asked James Holt about selling high ticket items (priced around $300) as opposed to low ticket items.
My response (I know – jumping in the conversation like a rude person):
- If you’re a beginner, don’t try this.
- If you’re starting a new store, don’t try this.
Here’s why:
If you’re a beginner, then you are going to run ads and set up your store and it’s going to be difficult. You’ll probably get stuff wrong. The biggest issue is that you won’t know you’re doing it wrong.
You have no frame of reference.
Now… when you start a new store, you want to test the market’s viability. So you throw traffic at your offers and then test away.
If you’re selling $300 products, then you are going to have to throw a lot of traffic at that offer before you know whether it’s a success.
Friend of the blog Kenneth Turnbull recently said that a rule of thumb he used when running ads for offers was a 3x spending rule.
In other words, to test out a product, you spend 3x the profit from a sale (or cost, I don’t know which) in order to test how viable it is.
If you break even or make a profit, then you’re free to scale.
Here’s the thing: Do you have $500 or so to test on a single product in order to test the viability of the market itself?
If not, then you shouldn’t be testing a $300 product.
The Alternative Mathematics
Here’s what you should do instead when you’re new or you have a new store.
Pick ten products (more or less depending on your budget.)
You’re going to run ads for those at $5 a day. So your budget is $50 a day over all, and you’re going to run your ads for four days.
That’s a $200 ad spend, and by the end of the test:
- You’ll know if the market is viable (if you get no clicks, no sales on anything – no go)
- You’ll have a couple of winning products (hopefully)
- Sales and profits will trickle in
- You’ll have a list of buyers for more accurate targeting
There’s also the chance you’ll have a runaway winner, in which case you can increase your ad spend.
At the very worst, you will have lost $200 and have some sort-of valuable insight, even if that’s “This niche isn’t right for me” or “I don’t know how to write a Facebook Ad to save my life.”
Compare this with the $300 product scenario. You could spend twice as much money and have less data to show for it. You’re also making assumptions on one product versus ten, which means it might be the niche, the product or your ads that are rubbish – and you won’t know.
Pivot To High Ticket
Does this condemn you to selling $5 items forever?
No… but you should be smarter than the average bear.
Start with low-ticket. Build your targeting list. Separate it for higher ticket orders. Build the list.
Wait until you have customers you buy upsells and then target folks from the list you’ve built and build a lookalike audience from that.
For longer term stuff, build your store out and use SEO, social media and other longer term, brand-based marketing methods to get people to invest more.
This is a smarter approach and allows you to pivot whilst still getting the income and data from lower ticket items.
It also allows you to concentrate on higher ticket offers in niches which you’ve already tested as viable. You don’t want to shoot in the dark.
Final Thoughts
A lot of the early stages of online business – especially when you’re running PPC ads – are shooting in the dark. You’re making assumptions, taking risks and hoping you’ll find diamonds amongst the coals.
That’s good and part of the cost of doing business, but you don’t want to make it harder or more expensive on yourself.
Trying to sell high ticket stuff with no track record and no experience is tough enough. It’s tougher when you’re limiting the information you give yourself and stretching out the tests you need to run to be more expensive and longer in duration.
I’ve given you the basic blueprint for testing a market for less than $200 in less than a week, and it’ll serve 99% of purposes much better than trying to do something more difficult.