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Pricing Strategies for Start ups

Jul 14, 2015 | tips | 0 comments

I’ve been speaking with a few new start up business owners recently and was asked my opinion on what was a low cost way to promote their business online. The business model was to sell low ticket price products/services. There were two business owners I spoke to who had a similar dilemma of having heaps of time but very low funds available to invest. This blog posts explores what are the best options available for a new start-up with little funds.

The first new start up had built his own website so was looking for a way to get his name out there on a little to no budget. His target earnings were just £600 per month and he had worked out that he needed to sell 10 units of his service to make £600 per month.

The second was also a startup whose focus was to start by selling a low cost ‘taster’ product online and wanted to know what low-cost way could she sell her product online.  The low-cost item related to her higher ticket price consultative type service which was her eventual aim.

Here’s the thing.

Experience tells me that it takes the same amount of marketing effort to sell one product or service, regardless of what the ticket price is. It takes the same amount of time in planning, implementation of marketing systems, to attract the right kinds of prospects and time and effort to convert them into paying clients, regardless of whether the ticket price is £10, £60, £600 or £6000.

It also costs money to have a professionally built website (minimum £2,000). Even if you use a subscription based web tool and you do it yourself, there’s still your learning time involved in learning new skills from learning the tool, learning what makes websites work successfully and learning web copy writing and learning how best to frame your message so that people buy in to you.

On the surface it might seem quite achievable to sell 10 units of a product/service that costs £60, but actually it’s no different if the ticket price was £600 or £6,000.  You still have to persuade the prospect that it’s worth spending their hard-earned money on. That they’re going to get value out of their purchase.

Let’s suppose it takes 50 hours of your time to attract 100 prospects into your pipeline, 10 of those are validated and 1 turns into a client. That’s a 1% conversion rate. So in the first example, where he needed to sell 10 units to make his target earning of £600, he would need 10 x 50 hours to attract and convert 6 customers to achieve his goal of £600 per month. 500 hours! That’s a lot of hours to earn just £600. It works out at £1.20 per hour – quite a bit lower than the minimum wage! And that’s before you’ve even delivered the service!

Here’s another thought. If the ticket price is low, what kind of client does that attract and what is their perception of your service? People who have little money to spend and think £60 is too much? Or people who do have money to spend but think that £60 is too cheap and perceive it can’t be any good?

If the ticket price was £600 (or more), it immediately filters out prospects who don’t have money to spend (therefore aren’t ideal clients) and only becomes attractive to those who do have the money and because it’s a high ticket price the perception is it must be good! It also means that you only need to make 1 successful sale a month which takes the pressure off from trying to attract hundreds of possible prospects to convert 10 of them. If he converts at 2%, then boom, he’s doubled his target!  And then he would have the money available to invest in building his business and paying for experts (like me) to build a professional site that could sell one to many taster product at a low ticket price tag.

Isn’t that a better position to be in?

As a start up, the priority has to be getting clients, but not just at any ticket price: they should be at the top level price tag. The service that gives you the most perceived value to a client and profit to you. That way you’re leveraging your marketing efforts and will achieve your financial targets sooner and be able to invest in better systems that save time and give a better customer experience as well as make it simpler and easier for you, the business owner.


6 Simple Tweaks to Increasing Website Conversions WITHOUT Increasing Traffic

Inside this FREE GUIDE 6 Simple Tweaks to Increasing Website Conversions WITHOUT Increasing Traffic, you will discover my 6-step process to:

  • Stop website visitors from clicking off/bouncing with these simple client focused tweaks in your header area, so that they know they’re in the right place and stay longer on your site.
  • Get clients flocking to buy your offerings when you know how to use the right website images to excite their aspirations and desires that you fulfil with your products and/or services.
  • Learn what elements to include (and remove) so that your web copy is compelling and flows in a way that visitors take the action you want them to take (e.g. click here, sign up, buy, phone etc)


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