165: Simple Steps to Price Your Programs Effectively

Melissa:

d pricing for our programs in: 2022

Melissa:

very specific profit plan for: 2022

Melissa:

planning and forecasting for: 2022

Melissa:

Okay? What is your profit goal for the year? Okay? And then if that is if you've got a number in mind, now you need to at least double it for it to be your revenue goal. So what do I mean by that? Those of us in the online space, it's up anywhere between 50 to 60%, you're going to deduct as the cost of business. Right? So you have your your revenue line, but then what you get to to keep is the profit line. Right? So you're gotta subtract your taxes, your operating expenses, what you're reinvesting back into your business. Right? So at the end of the day, this is one of those episodes you're probably gonna wanna if you're on the go, you're gonna wanna listen to this later where you've got pen and paper. You've got profit and you've got revenue. And you really need to think about, at the end of the year, what is the profit take home net net, right, that you want to bring home versus the revenue, right, and really being able to subtract that out. So let's let's play this out.

Melissa:

If you're looking at a 250 k ability to profit that and take that home for the year, then your revenue needs to be about 500 k or a little more depending on how you how lean you operate your business. Okay. So that is the first thing you have to do is figure out what is the profit that I want based off also the revenue, right? Now, we're gonna start reverse engineering. Okay? So if you have we're gonna use the number 500,000, and we're gonna run the math on that for the year. Because now let's say you have a $500,000 goal for revenue with a profit margin of 250 k. Okay? Now it's time to say, how do I reverse engineer the pricing of my product, my coaching, so that I hit that number by the end of the year. Okay? Well, first very simple question to ask yourself is how many clients do you need to gain to hit your revenue goal. Okay? How many clients do you need to gain to hit your revenue goal? This is where pricing gets really important.

Melissa:

I want you guys to think about this. If you're looking to hit 500 k in sales this year, if you price simple math, if you're pricing a program at 10 k per head, then you need 50 clients for the year. You need to find 50 clients to hit 500 k, right, at 10 k per head. Now if you have a smaller priced program, let's say it's 2 k, 2,000, but you want the 500,000 in revenue so that you get the 2.50 in profit. I'm talking a lot of numbers right now. Right? But if you're packaging your program at $2,000, then you're gonna need 250 clients to close the gap and hit the 500 k in revenue. Okay? So let me underscore this. Simple math, it's the obvious, but it's something to think about.

Melissa:

You can find 50 clients this year and price your services at 10 k a pop and hit your 500 k revenue goal, or you can price your program at 2,000 and you can find 250 clients to hit your 500 k revenue goal. So guys, this is where pricing is really important. I do this a lot with my 1 on 1 clients. We reverse engineer, okay, how much money do you wanna make this year? Instead of they'll come to me and say, how much should I price this at? And I say, no, no, no, no. How much do you wanna make this year? How many clients do you wanna take on? Now let's reverse engineer your pricing, right? Okay. Now many of you may have a hybrid of high and low ticket offerings, and that's where you're playing a little bit of Tetris in projections with each offering that you have. So we have our highest ticket program, which is our done for you LinkedIn agency. Right? And then we also have our high ticket mastermind.

Melissa:

And those are a different forecasting and number of clients that we need to hit revenue goals between 20 and 25 k per offering, then for instance, our academy, which is our lower ticket offering. Right? So the key is if you've got more than 1 offering is that you still know your end of year total revenue goal and then know what percentage of your different line items of business are going to contribute to the overall revenue. So we actually have a really healthy split. We look at half our revenue coming from our mastermind and half our revenue coming from our academy. So what does that mean? Well, our mastermind is a much higher ticket sale. So we're actually anticipating and recruiting less people into that program even though it produces the same amount of revenue as the academy, which is a lower ticket program, but brings in a lot more people, right? And we reverse engineer even further. So what do I mean by that? Okay, the next step you have to take, once you decide on pricing, once you decide on pricing and you recognize the number of clients you're going to need to bring into your business this year to hit the pricing to hit the revenue goal. Now you have to decide, how are you going to recruit these clients? Is it gonna be a free master class style? Are you running ads? Are you networking and doing the podcast, rodeo, I don't know.

Melissa:

I don't know how you're gaining clients. For this example, we're just gonna go with kind of a free master class which is a lot of what we do. Whatever route you're going, you need to know the conversion rates. So what do I mean by that? What are the conversion rates of exposure to people to your program to them actually purchasing? Right? So with the the free masterclass style, like we know from the data that's out, that conversion rates on a cold lead are about 3%. Okay? What do I mean by that? About 3% of people who opt in to a cold ad for a free workshop, about 3% of them actually purchase at the end of the presentation. Okay, that is really important information to know as a business owner. Right? Helps you anticipate the number of people in your audience that you need to be inviting in to your free workshops in order to recognize the conversion rate. Number 2 is warm leads.

Melissa:

The conversion rate for warm leads is actually significantly higher. It can be as high as 8%. What do I mean by warm leads? These are people that are in your organic network and not from a cold ad. This could even be people on your email list that have opted into being around you, and they have got some awareness of you. Right? And so what this means mathematically is that if you had a 100 people attend your webinar, your free master class, with a cold lead model, if those 100 people came from cold ads, 3 of them would purchase. If they came from an organic network and there was a 100 invited and opted in, 8 would purchase. So there's a very different ratio of conversion from organic, okay, to cold from warm to cold leads. This is important math to know as you are planning out your, conversion events.

Melissa:

So for instance, our most recent launch, 6 of our sales came from ads. Out of the $100,000 in sales we did, 6 came from ads and about 16 came from organic warm leads aka a lot of LinkedIn messaging. We just enrolled someone today from LinkedIn. We enrolled someone yesterday from LinkedIn. They just keep coming in because these people are warm, they're connected to us. There's more no love and trust than a random cold ad. Right? So it's really important that you know the conversion rates of how you're bringing an audience in to sell. Okay, now that you know conversion rates, okay, now that you have come up with, identified pricing for your program, now you have to decide you're gonna have to decide on how many attendees you need to show up in order to hit your conversion rates and hit your sales number.

Melissa:

So I wanna take you back to our $500,000 goal sale, like, our goal for the year. Right? I'm just gonna use that for an example. Okay. So let's say we go with the 10 k package per client to hit your 500 k revenue for the year. Okay? In that case, you need, again, 50 clients over the period of a year. So the question is the question is, how frequently do you wanna host conversion events to hit the 500 k in sales and or the 50 clients that you need to recruit into your business to hit your number. Okay, this is important. Let's say you're committed to quarterly conversion events.

Melissa:

Okay? If you're committed to quarterly conversion events once per quarter and you know you need 50 total for the year at a price of 10 k per person, if you do the math on that, divide 50 by 4, you need 13 clients to opt in with each conversion event. Okay? With each conversion event, right? In order to meet your sales numbers. Okay? I know this is like some of y'all are like, this is way too much math, but I want you thinking like real business owners. This is where like my corporate days have made it beneficial for me running an online business. Okay? Because it's not just Hocus Pocus magic, it's math. Right? It's math. Okay. So now let's say we know you need 13 registrants that actually purchase, right, each launch in order for you to hit your revenue goal.

Melissa:

Now you need a reverse engineer from there. If you need 13 to convert, and we know conversion rates run anywhere from 2 to 8%, right? What we love to do in our business is just run an average of 5, 5%. If we need a 5% conversion rate to hit 13 clients for the event, now you can do the math. You need at least 260 registrants. You need at least 260 registrants to convert 13 into a sale. Guys, I know this is a lot of math, but it's important that you stand that there is a method to calculating pricing, frequency of launching, reach number for registrations. You guys see what I'm saying? There is there is a method to all of the madness. Okay? So at the end of the day, some things to think about when you're working through pricing.

Melissa:

Okay? Just to tie it out in a little bow, this is like heavy business today. But number 1, how many conversion events do you really want to host this year? Right? And then you're gonna have to you're gonna have to then reverse engineer what you need in each one of those conversion events to generate the sales needed for the properly priced program that you're putting out. Number 2, how are you generating your leads? How are you generating your leads? Is it through organic networking? Is it through Facebook ads, Google ads, YouTube, is it a mixture? Is it organic leads on LinkedIn like we coach? Right? And then the other thing is how much can you realistically price your program at without out pricing your client. Right? So we do have to be conscious of not out pricing the demographic that you serve. Right? And if you're starting to out price, then you need to do the checks and balances and make sure your price is appropriate and look at the expectation of recruiting more people into your conversion event versus raising the price. Right? You don't wanna out price the people that you're wanting to bring in. Okay. So I hope this is helpful.

Melissa:

So in summary, set your revenue and profit goals. Right, those are different numbers. And then really assess your your package and pricing, right, based off of those revenue goals and the number of transactions, conversions, how many sales are you gonna need throughout the year to hit that number, we call them conversion events. Right? Basically, how many conversion events do you wanna do? How much money do you wanna make this year? How much are you pricing your program at? And that's gonna help you do the math to the number of registrants that you need in each event to give you the conversion rates to project about how much money you're gonna make so that it's never a surprise at the end of your launch. It's never a surprise. Right? And so I hope I hope this has been helpful for some of my newer entrepreneurs who are out there trying to figure out pricing and projections, but you absolutely can create quarterly goals for yourself and you can track them. I have we have ours right here. If you're listening to the podcast recording later, you're not gonna be able to see it, but we have January, February, March, all the way through the year.

Melissa:

We have our goals set out for us, and we know exactly the conversion rate, exactly the number of people that need to convert, the exact number of people we need to register, the exact pricing it needs to be at in order to estimate to estimate landing that revenue goal. If you guys love this, it's maybe a little business heavy, but you're like, gosh, this is what I needed. You guys do not wanna miss out in a couple of weeks. February 22nd, 23rd, and 24th, I am gonna be hosting a master class for entrepreneurs who are launching businesses in the online space. I'm gonna be giving you guys the cliff notes version of some of the stuff I wish I had known before I launched my online business. So I hope you guys, are able to come join me. If you found this episode helpful for some of you scratching your heads with pricing seeing and forecasting for the year in your businesses, be sure to share this with those in your network. Hope you guys have a great day.

Melissa:

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Melissa:

Come find me over on Instagram, LinkedIn, Facebook, wherever you like to hang. Cannot wait to hear how you are enjoying and applying what you're learning. You guys reach out to me over on social because I love hearing what's resonating with you, when you reach out to me and you send me those personal DMs, they really do impact the content I continue to bring forward to you. So, again, come find me, melissa_hinalt over on Instagram, Melissa Hinault over on LinkedIn and Facebook. Can't wait to see you guys over there.