π‘ The Big Idea
The Barbell Strategy ποΈββοΈ
I was on a call with my friend Dan Mall, designer extraordinaire and all-around great guy. We were talking about his product strategy and high-end consulting. He's a sought-after strategist, consultant, and designer for top brands, but he wants to start rebalancing his income to have more digital product sales.
The Barbell Strategy for pricing is to focus on the most and least expensive offers in your product portfolio. On one end, you can pitch very high-priced services to dream clients while consistently generating revenue from very low-priced digital products to a large audience.
For example you'd have 1-2 clients paying you $10K month while selling 100 courses at $100 to the bigger audience. Nice little balanced business there on 2 sides of the spectrum.
Here's the thing: services are the fastest way to make money and the best way to make a lot of money on one transaction. You only need 1 person or business to pay you $5,000. That's actually a lot easier than finding 50 people to pay you $100 to make the same $5,000. That's where Dan has been.
But over time, digital products offer more time freedom and financial upside. You just need a large audience to keep up enough customers to buy your courses, templates, books, etc. That's what a lot of people miss on the "Justin Welsh" pricing tier of $100-150. You need a lot of sales volume, i.e. new subscribers, to make it pay off (literally).
I have a hunch the middle class of creator products is going away, i.e. the $500 range. I'm running an experiment with a couple of our clients to see the difference in sales between a $150 offer and a $500 offer for a similar course. You might think "the $150 offer will sell more!" That's true, but we need to over 3x sales to hit the same number. If the $500 product has a 2% conversion rate, would the $150 product convert at 7% and net more sales?
In the past I would have said "why not both?" The $150 product is for new people and then they upgrade later to the $500 product with more resources, lessons, and maybe a live call. But at that point, why not just charge $1,000 or more and call it a twice a year cohort?
There's a lot more to discuss and think about here. But I think this applies to more than just products. I think at companies will pay their top performers even more and hire offshore talent to make other roles even cheaper. Say you have a $100k month in payroll budget, you might pay 5 top performers $15k each then contract or go offshore to pay the other 20 the remaining $25k.
Creator Resource π
One quick thing to tell you about. My friend Louis Nicholls put together a HUGE resource list of newsletter landing pages. There are over 300 examples, complete with screenshots, conversion rates, and filtering by topic.
βClick here to view everything β it's an incredible resource and Louis has a lot more planned to help creators have the tools they need to succeed. As the Founder of Sparkloop, he has his finger on the pulse of what works!