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So when I discovered this, it became clear to me that option B is the fastest and easiest way to run profitable advertising. But what is this? How did I discover it? And how can you use it to do the same in your business? It’s story time…
Years ago, I was writing copy and writing ads for clients and they were going pretty well. So I started thinking about ways that I could help more people with the knowledge and expertise that I was developing. And the first thing I thought about was growing agency and getting more one-to-one clients. But the thought of building a team of expensive people never really appealed to me, right? It always felt like this drag and never was something that I was really excited about doing. I also thought about packaging it up into e-books or inexpensive courses that people could buy. And some of you might know, before I was in marketing, I worked in the golf business and I played a ton of golf. And at one point I even aspired to be a professional. And when I was in the golf business, I put together inexpensive $19 eBooks, $47 courses. And I sold a few, but I was never able to scale it with advertising because the problem was all of the money was going to Facebook and Google. And it was really hard to be profitable with a $19 ebook or $47 course.
Then I remembered a conversation I had with Clay Collins. This was before he founded a software company, LeadPages, and Clay was telling me about how he was helping coaches and consultants and experts get $4,000 or $5,000 for training programs that they were putting together with their knowledge and expertise. Now, it might sound hard to believe that you could get that much for a program that’s based solely on your knowledge and expertise, but if you’re like me, then you believe if other people are doing it, so can you. So I went with that belief. So I organized the program. I put a $3,000 price tag on it, and I fired up an ad campaign to start booking calls with people that might be interested in working with me.
It was amazing because within a matter of hours of turning on the ads, I had applications hitting my inbox from people who were interested in working with me. A couple of days later, I remember an application came in from a guy named Ryan who is based in Wisconsin. He submitted his application on December 14th and he scheduled to have a call with me on December 21st. So on December 21st, I showed up for the call and I went through this really simple process, right? I asked Ryan about his situation, asked him about what problems he was having, asked him about what goals he wanted to achieve. And after having that conversation, it seemed like he might be a fit. So I told him about what I was doing and the program and the price tag. And at the end of our one and only 25 minute phone call, Ryan was giving me his credit card to give me $3,000 to join the program.
It was amazing. So that’s when two things hit me, the first is that I now knew how to run profitable advertising with a premium offer, which was amazing. The second was that I realized in that moment that selling something at a higher price was just as easy, if not easier than selling something at a low price. A the mind blowing part of this and what I really hope you take from this is that the economics of an ad campaign, when you’re selling something at a premium price are much better than when you’re selling something at a low price. So let’s head to my studio where I can walk you through the numbers and show you exactly what I mean.
Let’s take a look at the economics of offering a low price versus a high price product and running an ad campaign for it. So let’s assume the same ad spend for both campaigns, right? So we’ll assume a $7,500 ads to do that. Now, using the campaigns that we’ve run the campaigns that we’ve run in the past, we’d estimate on a product that costs $47, a $7,500 ad spend, could get us about a hundred sales. So that’s about $75 per sale. Get about a hundred sales for $47. So what does that give you in revenue? That gives you $4,700 in sales, which calculates out to a net loss of $2,800. That means you need to do some work on the backend and recoup that. Now let’s assume $7,500 ad spend on a $3,000 product. And in our experience in the campaigns that we run a reasonable estimate or reasonable benchmark, and the number of sales that you can make would be 10. So that’s about $750 per, right? And it looks like, oh, that’s only a 10th of the sales, but because it’s a premium product, you do 10 sales times $3,000, that gives you $30,000 in sales. You subtract your ad spend from that. And that gives you $22,000 plus in profit-you’re in the black, right? Same ad spend higher cost per sale, but because of the premium product, you’re in the black.
So this gives you the opportunity for two things. First is it gives you the opportunity to reinvest this into more ad spend. So you can speed up and grow a lot faster, right? It gives you the advantage of speed. Whereas this, you make these sales again, all of the upfront work to make these cells on other side in our experience is the same undertaking, right? The strategy is a little bit different, but in terms of actual effort and work and resources necessary to make it happen, it’s pretty even right? Yet this one nets out to a $2,800 loss. This one nets out to a $22,000 profit. This one needed to do more work to recoup your ad spend. This one, you’ve got cash to quickly reinvest into more ad spend, right?
So you can grow a lot faster. You have speed on your side and it gives you an advantage in the market simply because you’re offering a premium product at a premium price to do that, right? That’s the only variable that we’re tweaking here and it’s influencing some of the other pieces. The second thing that this gives you is because you’re selling a premium product, it gives you more margin for error. You can adjust… let’s say your cost per sale doubles, right? So instead of paying $750 per sale, it’s $1,500 per sale, and you only make five sales, right? Well, that’s still nets out to $15,000 and $11,000 in profit, or excuse me, um, that’s still nets out to $15,000 and $7,500 in profit, right? Like you still made a profit while you’re figuring it out. And so your margin of error of where you want to start to get it dialed in is much wider.
You have a much wider margin of error when you’re selling high ticket, as opposed to low ticket, right? Like if you do this well, you’re only losing $2,800, but if you make mistakes in the learning process and you’re trying to iterate and improve and optimize, you might lose four grand, five grand, right? So the margin of error is much wider when you’re selling high ticket, which gives you an advantage. So after I figured this out, it finally became crystal clear that the fastest and easiest way to run profitable advertising is to offer a premium price. Now, there are plenty of people that will tell you to just increase the price on what you’re already offering. And like, I don’t want to tell you what you can and can’t do, but logic would dictate that if you’re going to charge more, you need to put together something that provides more value. But like I was at that time, you might be undervaluing what you have to offer. So what I want to do is invite you to take a look at your knowledge, take a look at your expertise and what you have to offer and think-is there an opportunity for me to package it up into a premium offer that could increase the profitability of my advertising campaigns? Because like I said, after analyzing $30.2 million in digital advertising, the fastest and easiest way to run profitable advertising is to offer a premium product. Go get it.