Selling High Ticket Items For Big Profits
There are a huge number of opportunities available to start an Internet business.
The first steps that most people take are to research the types of business that can be started using the Internet and then buy a few courses on Internet marketing before progressing to developing a product to be sold online.
As many of the online products in high demand tend to be information products or software and scripts, these tend to be the typical first time products for new Internet businesses.
The most common strategy followed is to compete on price, as an online business reduces production costs to near zero and the aim is to attract a lot of customers.
Whilst this can work, there are some aspects of this business strategy that can make it more difficult for you, as a business owner, to build your business and achieve the results and profit that you are aiming for.
The first issue with this strategy is that if you only have a low priced product to offer to your customers, without a high ticket product to offer as an alternative or an upgrade, then you do not give your customers a reason to return to you.
Now if you don't give your customers a reason to return to you, you need to spend a much larger proportion of your advertising budget on new customer acquisition.
Your customers are likely to forget about your company and product once they finish using it, and are less likely to recommend your product to others, which means that you have more cost to generate further sales leads.
Another issue related to selling a low cost product is that you need to sell more of products to generate the volumes that translate to higher profits.
Again, your advertising costs will increase, as you have to reach out to a far greater number of customers.
By way of example, if you sell a $10 product, you need to sell 100,000 items to make a million dollars in revenue, yet if you have a $1000 dollar product, you can sell just 1000 items and make the same revenue, with a far lower advertising outlay and far lower marketing, establishment and distribution costs.
And if you can figure out a unique product which you can create at a high enough price point which is acceptable to a market large enough for it, you can also increase the price far beyond a thousand dollars to even twenty thousand and just sell fifty of these products to make a million dollars.
It is also worth noting that the profit margin on a high value product tends to be much higher, particularly on information products, and during the start up phase of your online business, if you can sell even one product you can survive.
However, if you sell a single low value product, the profit levels may not be enough to sustain your start up and advertising expenses.
There is also a further benefit to selling high ticket items, as high value customers are often less demanding and require less effort for customer care.
Also, with fewer customers you can devote more time to them to make sure that their customer experience is exceptional.
So whilst you can, and should, have low value products in your range, these should be used mainly for generating sales leads for a similar but better quality and higher value product.
You can use these entry point products to build up a customer database of people who have enough money to purchase your high value products.
To build this strategy into your business plan you can either develop your own high ticket products, by adding significant value to existing low value products, or seek out similar high priced products that are already in the market and negotiate with the product owners to either affiliate or joint venture with them for a large commission.
The first steps that most people take are to research the types of business that can be started using the Internet and then buy a few courses on Internet marketing before progressing to developing a product to be sold online.
As many of the online products in high demand tend to be information products or software and scripts, these tend to be the typical first time products for new Internet businesses.
The most common strategy followed is to compete on price, as an online business reduces production costs to near zero and the aim is to attract a lot of customers.
Whilst this can work, there are some aspects of this business strategy that can make it more difficult for you, as a business owner, to build your business and achieve the results and profit that you are aiming for.
The first issue with this strategy is that if you only have a low priced product to offer to your customers, without a high ticket product to offer as an alternative or an upgrade, then you do not give your customers a reason to return to you.
Now if you don't give your customers a reason to return to you, you need to spend a much larger proportion of your advertising budget on new customer acquisition.
Your customers are likely to forget about your company and product once they finish using it, and are less likely to recommend your product to others, which means that you have more cost to generate further sales leads.
Another issue related to selling a low cost product is that you need to sell more of products to generate the volumes that translate to higher profits.
Again, your advertising costs will increase, as you have to reach out to a far greater number of customers.
By way of example, if you sell a $10 product, you need to sell 100,000 items to make a million dollars in revenue, yet if you have a $1000 dollar product, you can sell just 1000 items and make the same revenue, with a far lower advertising outlay and far lower marketing, establishment and distribution costs.
And if you can figure out a unique product which you can create at a high enough price point which is acceptable to a market large enough for it, you can also increase the price far beyond a thousand dollars to even twenty thousand and just sell fifty of these products to make a million dollars.
It is also worth noting that the profit margin on a high value product tends to be much higher, particularly on information products, and during the start up phase of your online business, if you can sell even one product you can survive.
However, if you sell a single low value product, the profit levels may not be enough to sustain your start up and advertising expenses.
There is also a further benefit to selling high ticket items, as high value customers are often less demanding and require less effort for customer care.
Also, with fewer customers you can devote more time to them to make sure that their customer experience is exceptional.
So whilst you can, and should, have low value products in your range, these should be used mainly for generating sales leads for a similar but better quality and higher value product.
You can use these entry point products to build up a customer database of people who have enough money to purchase your high value products.
To build this strategy into your business plan you can either develop your own high ticket products, by adding significant value to existing low value products, or seek out similar high priced products that are already in the market and negotiate with the product owners to either affiliate or joint venture with them for a large commission.
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