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If you can only sell 100 products in a year, look at the different just the price makes:
100 products at $2 each = $200
100 products at $20 each = $2,000
100 products at $200 each = $20,000
100 products at $2,000 each = $200,000
100 products at $20,000 each = $2,000,000
100 products at $200,000 each = $20,000,000
100 products at $2,000,000 each = $200,000,000
100 products at $20,000,000 each = $2,000,000,000
100 products at $200,000,000 each = $20,000,000,000
100 products at $2,000,000,000 each = $200,000,000,000
If you sell 100 units in a year, at different prices you’d make different money:
Sell a pack of gum for $2
Sell a car for $20,000
Sell a condo for $2,000,000
Sell a Boeing 747 for $200,000,000
Sell a cloud contract for $2,000,000,000
When I used to own a rave company called HouseOfRave in high school, I was selling high-end glow sticks online at $1.65/piece:
If I stick my bulk cost ($0.75) in a Gross Profit Calculator I get:
So even if I sell 10,000 of these glow sticks, I would only make $9,000. Also if I sell LOTS of glow sticks at one time, I’d have to give bulk discounts which means even less profit.
HOWEVER…..something cool started happening when I began selling disco balls (and became one of the top sellers of disco balls online).
I got a super-big margin on these items.
My cost was ~$45/each, selling them at $105.95, so my gross profit was $60.95!
So if I sold around 150 of these disco balls, I’d make far more profit than selling glow sticks!
This was beneficial because:
- I had to deal with less orders.
- Margins were high, so providing extra love and support for disco ball buyers was easy (vs a person sending me $1.80 in profit on a glow stick order).
- I wasn’t competing on an easily-available product like glow sticks.
- The customers order 2 glow sticks would often cause the most hassle, whereas people buying 10 disco balls at once were often the easiest.
This was my first taste of selling stuff for a high margin.
So instead of handing a massive amount of orders to make the same money, I would only have to make a few.
The Rise of “High Ticket Selling”:
There’s been this enormous push for people to teach high ticket selling. And it’s a very attractive pitch.
If you sell products/services for $10,000/each or more, then you can bring in one million dollars with just 100 sales.
It’s a tempting offer.
This is a Birkin Bag. It’s just a purse.
But look at the prices and they START around $13,000+ and go up!
This is a purse that looks like a Birkin Bag. It cost only $69.
Why does one bag get $15,950
while the other gets $69.99?
We are now entering the world of Luxury Marketing.
This is how you get a far higher price for a similar product.
If you view the bag on it’s technical merits, the Birkin Bag is pretty much the same thing:
Viewed simply as a purse:
- It holds stuff.
- It’s made out of leather.
- In has a handle.
- It has a clasp.
- It has a zipper.
- It’s made in China.
Viewed as a piece of art:
- It is rare.
- It is a classic.
- It is all crafted by hand in Italy.
- It is exclusive, only a few sold per year.
- It is expensive, so owning one makes you look wealthy.
- Most people can’t have one.
- It makes a statement.
- They historically appreciate in value.
- They are a collectors item.
- It’s like owning a fine piece of art.
- It was created by Jean-Louis Dumas (I don’t know who that is but the name sounds fancy).
- Loom how Birkin Bags are marketed: https://www.hermes.com/us/en/story/106191-birkin/
They are not simply selling a simple purse. They are selling an exclusive piece of art.
They are selling the concept not the product:
What is actually being sold:
– Exclusivity –
Very few people can have these.
– Desire to Belong –
When you own a Birkin Bag you’re part of an elite club.
– Desire to Collect –
This is an item that often appreciates in value.
– Exclusivity, Rareness, Uniqueness –
If they were selling the Birkin Bag on its merits as just a bag, they would only be charging a few hundred dollars at most.
However, since this is positioned as a unique piece of art, and that it elevates your status, it can be sold for 100X more.
“So how do I sell stuff for more expensive??”
There’s a lot of ways you can charge more money for your product/service:
Features that allow you to charge higher prices:
- Organic: It costs more money to produce.
- Gluten Free: It costs more money to use gluten substitutes.
- Rarity: Only a few will be made, like small batch vodka.
- Exclusivity: If an old product is discontinued. Like classic cars.
- Handmade: Harder and longer to make things by hand.
- Fame: If the person/thing is famous and well known.
- Security: If you provide services that need to be protected. Like a bank.
- Art: If you claim something is “art” there’s technically no price ceiling for it.
- Punctuality: If it always delivers on time.
- Speed: If your product is faster than others.
- High Quality: There’s always a market for high quality. Like Ikea vs West Elm.
- More Features: If your product can do more things that are useful.
- Less Features: Simplifying a product for the user can add value too. Like Apple.
- Trust: If your product/company are more trustworthy than others.
- Talent: Some services just have better people.
- Brand Recognition: If your product has cache. Like Gucci or Louis Vuitton.
- History: If there is some historical value to the product.
- Just Charging More: Sometimes you can simply just charge more.
- Convenience: Just being in the right place at the right time. Like an airport store.
- Service: Some products require time-sensitive service. Like web hosting.
- Monopoly: If you’re the only game in town you can keep prices high.
You can combine many of these features together to create a “Premium” product for the luxury market.
Let’s say you build websites. You want to charge $10,000 for building a website.
However I can find a gang of people willing to build me a website for $5 on Fiverr:
All these people will build me a website for $5
So why would someone pay YOU $10,000 for this?
How would we position YOUR website service to a company so they will pay you $10,000 instead of $5?
Well an easy way to figure out what to offer is to build a list of the downsides of hiring a $5 person to build the website:
Downsides of hiring a $5 person:
- Don’t know them personally.
- Don’t trust them.
- No experience with larger clients.
- They can disappear with no recourse.
- They can steal your logins.
- You don’t know if they are honest.
- No long term support.
- No room to grow.
- Not sure if they are using the best services for your needs.
First of all only go after clients that can afford $10,000. No chumps.
Track record of previous clients.
Track record of high end clients. Sandwich Video example.
Examples of Luxury Products:
Obviously stuff like expensive handbags are “luxury” items, but here’s some examples of non-traditional luxuries I personal spend on (none of these are paid advertisements by the way):
I pay 10X more for web hosting with WPEngine:
I can easily pay much less, but then every 6 months my WordPress site gets hacked. With WPEngine I’ve had 4+ years of uninterrupted service. If I call them at 4am with an obscure technical question, I’ll get an engineer on the phone in seconds.
People pay more for new Apple phones:
You can get cheaper phones, but many people prefer Apple for a wide variety of reasons.
Features: [Brand Recognition] + [More Features] + [Trust] + [High Quality] + [Service]
People pay more for new fashion trends:
Whenever there’s a new fashion trend some people will pay more money to be part of it.
Features: [Rarity] + [Exclusivity] + [Art] + [Fame] + [Brand Recognition]