I participate in a few online marketing discussion groups. It’s not at all uncommon for the topic of email marketing, autoresponders, etc… to come up and sometimes the conversations can really be enlightening.
Sometimes, though, I see a thread that just makes me scratch my head.
As an example, someone recently started a discussion about looking for an alternative autoresponder to one they had been using because their current solution charges over $792 a month for a list of 100,000. When they saw the example of our own unlimited pricing structure, they asked the question (which makes perfect sense to me), “Why would I pay $792 per month when I can get it for less than $20?”.
The answers …. well …. were just silly.
Essentially, this person was being told they should pay more simply because they can!
The most common reasoning I found was something like this:
“Well, suppose your list is 100,000+. You should be making a LOT of money from that list which means you should be able to easily afford the $792 monthly fee charged by [competitor].”
They then gave a demonstration that went like this:
“Suppose you market an offer to your list of 100,000 and your offer costs $2. You sell 2,000 units giving you an income of $4,000. You should easily be able to afford the $792 monthly fee.”
Ok. Now let’s do some business math using the above example:
Sell 2,000 units of whatever it is at $2 each.
Generate $4,000 in gross sales.
Deduct $792 from your gross sales.
That leaves you with a gross profit of $3,208.
Not bad, at all!
Now, suppose you are able to do that same thing each month for a full year.
Your annual gross sales would be $48,000.
Your annual cost for your autoresponder would be $9,504.
Your gross profits (before any other expenses) for the year would be $38,496.
Now let’s run those same numbers using our own pricing model of $17.95 in place of the $792 model.
Your annual gross sales would still be $48,000.
Your annual cost for your autoresponder would be $215.40.
Your gross profits (before any other expenses) for the year would be $47,784.60.
THAT’S A COST DIFFERENCE OF $9,288.60!!!
HOW DOES SOMEONE KEEP A STRAIGHT FACE WHEN THEY TELL YOU THAT YOU SHOULD GIVE THEM OVER $9,000 JUST BECAUSE YOU SHOULD BE ABLE TO AFFORD IT?!?!?!
Don’t fall for the nonsense. You shouldn’t pay more for any service “just because you can”.
Basic business sense and math will show you that it makes more sense to reduce your expenses, increasing your profit margins, and keeping that money YOU earned in your own pocket or putting it back in to your business!