What do you consider high ticket if you’re selling something? Ten grand? One hundred grand? Half a million dollars?
It really depends on your comfort level. Some people might say $3,000 is their comfort level.
What I’m going to share with you today applies from as little as $3000 to as much as a million. The strategies and tactics for selling high-ticket products and services still apply to this entire price range. Some of the reasons for these tactics are ones that you might not be aware of.
High-Ticket Means More Profit, Less Hassle
First, reason number one is more profit and less hassle. When you sell a high ticket item you make higher profit margins. Most of your competitors are probably not comfortable selling at a high price or they don’t know how.
Selling low ticket might be easier. Stores selling low margin products have been around a long time, such as Walmart. But if you notice, before Walmart there was K-mart. And where’s K-mart? Gone. Before that there was Sears. Where’s Sears? Gone.
What happens is when you are selling at a low price to the general public, the problem is this: it’s not a sustainable advantage in business. It’s very easy for someone to come in to your space and charge less than you. So if you’re barely making a profit, how can they afford to charge even less than you?
Well a lot of companies go into the marketplace using their capital to grab market share. They acquire customers at a loss just to put you out of business. When you are gone then they become the game in the marketplace and that’s when they jack up their prices again. There’s also more hassle.
Serving more clients at a low price requires more complex infrastructure, such as more customer service, bigger offices, more staff, more shipping and handling.
Personally, I like to keep my business lean, mean and simple. If I can hit my financial goal with 1000 customers versus 10,000, I prefer 1000 customers. If I can hit my goal with 100 customers, I prefer 100 customers over 1000 customers. More profits, less hassle.
Business Is A Game Of Margins, Not VolumeEven if you’re doing half a million now, and your margin is X, even if you make three million, you can’t bet on your margin going up. That’s because business is a game of margins, not volume. Click To Tweet
I was watching a show called The Profit. On one of the episodes, Marcus, the CEO of Camping World, a billion dollar company, went to this meat-packing business to see if he could turn it around. This meat business has been around for 75 years, if I remember right.
Each year, they’re doing 50 million dollars in sales and 400 thousand in losses. They’re also four million dollars in debt and have $30 thousand in cash at the bank. To say that the business is in trouble is an understatement.
This is why business is a game of margins, not volume. The meat business was weeks away from bankruptcy. This means, size matters.
Transaction size matters. To make a million dollars, you need 40,000 customers to buy a $25 product. You need 10,000 customers if you are selling a $100 product. Or, you can sell a $10,000 product and make a million with only 100 customers. Now you might be wondering if it takes more effort to sell a higher priced product.
It doesn’t. With the $100 product you still need money to acquire the 10,000 customers. Even if you get 80 customers with a $10,000 product, you still need marketing.
So look at your business and where you’re at. If you increase your price, how would it affect your business? Just think about that for a little bit.