May '24 (edited) • 💬 Chat
Pricing
I recently watched a video from Ted about pricing.
I started to think.
Some pricing models are misplaced.
Why?
When the AppStore came out, apps came into existence.
There were the paid and free versions.
Ads were shown and in-app purchases came to increase revenue.
A one-time fee for an app which is used always is a mismatch.
The developer needs to find a way to keep getting revenue to keep working and maintaining the app.
All software belongs to this category.
All software needs to be sold on a monthly or yearly payment.
The software needs to be used all the time and improved all the time.
Products are best fit for a one-time fee.
Streaming services are all monthly payments, there is no other way to do it.
How about services?
The standard model for a service is a one-time fee or a monthly fee (which is recurring).
It depends on what kind of service.
The deal with Michael Jordan comes to mind.
His mom requested (at least based on the movie AIR) that he gets a revenue share.
I assume it was like 10%, which means his contract was paying him $250k a year, but he sold $122M worth of goods which made him $12.2M, even if it is just 1%, he got more.
Low ticket and hight ticket offers are misplaced in pricing too.
High ticket offers are cheap and low ticket offers are too expensive.
Let me explain.
If I sell a high ticket offer where I setup a system for someone to get leads on autopilot and I get paid $10,000 for it.
It is a great business for the business and it is not good business for me.
Because my system visibly contributes to the bottom line of the business.
I can assign the exact monetary value I bring for that business.
And because of that to be trully compensate for the exact monetary value is through revenue share.
We setup, maintain and get 10% from everything we bring it.
Same goes for the low ticket offer.
We offer them to get people who have little or no money to pay us something and it is still too expensive.
The better way to target people with no money is to make them money so they can pay you.
Setup a system, they will maintain it and pay 10% of everything they make.
Revenue share is the best option for people who have the money and at the same time,
it is the only option for people who have no money, to get really paid properly.
This pricing model clicked in my mind only few weeks ago and the more I'm thinking about it, the more I like it.
I don't want to serve people with money (with high ticket offers), they have enough.
If I would serve them, only as revenue share where I get properly compensated.
I wish to serve people with no money, but I need income.
Which means the only way to serve people with no money is to do the work with them and when they start making money, let them start paying.
Simply remove the barrier of entry.
I'm curious to hear your thoughts about this.
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Pricing
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