215: Reverse Engineering Your Business

Melissa [: 00:00:00

Have you ever wondered how I've been able to predictably calculate the success of my conversion events and predictably calculate the revenue in my business year over year. You guys, I did a workshop a couple of weeks ago and I'm bringing it to you guys here and my podcast for you to learn how to specifically calculate your offer and reverse engineer it to your revenue goals in your business this year. Now, you're going to want to get the downloadable worksheet that goes with this. So you may wanna stop, go to the show notes, and make sure you download the worksheet before you go forward. Need some effective tactical advice that actually helps you get results and makes a real difference in your life and business? You've come to the right place. If you're finding yourself here today, it means you're getting ready to gain serious traction in your business, rapidly multiply your income and impact, and you're ready to make it happen while living all out. Guys, I'm Melissa Henault, your trustworthy corporate dropout turned 6 figure business burnout turned happy and healthy CEO of a multimillion dollar online business. And you're listening to the Burnout to All Out podcast.

Melissa [: 00:01:22

On this show, we're serving up innovative growth strategies, simple implementation methods to put them into practice, and action stimulating inspiration tailored specifically for the modern entrepreneur. Let's dive in. Today, we're gonna talk about pricing. But I also want you to understand that there is no conversion if we don't have an audience to sell to. We must grow our traffic in order to convert sales. Now we're gonna get into how to map, plan a conversion event that is predictable and desirable in your business. And this is where I'm gonna share with you guys the back end of our business. Okay? Because I love just showing you guys under the hood.

Melissa [: 00:02:13

This is 2022 to 2023. The bolded numbers here are recurring revenue. Okay? So you'll see in July of 2022, our recurring revenue was ebbing and flowing between, you know, anywhere in the 100 to the 42,000. Right? This was in 2022 to 2023. Okay? Now this is the next year. So this is going from 2023 to 2024. How do we go from 43 k a month in July of 2022, 42 k a month in 2023? Most months, we didn't hit we didn't go over a 100,000. We had 2 months the entire year we went over the the 100,000 threshold.

Melissa [: 00:02:56

We got a $300,000 month and a $300,000 month there. Okay? These I'm just showing you guys. Right? So what's applicable is the build, grow, scale. Right? We built, we grew, we scaled. We scaled layer upon layer upon layer to create recurring revenue. When you come into 2023, what you're finding is there's not a single month where we dipped below a 100,000. Not only did we not dip below a 100,000, we actually have 3 months where we were nearly right at almost a half a $1,000,000 a month. So some of you can relate to being 3 fucking feet from gold where I was like, I wasn't even making $50,000, and I had a big vision of where I was going.

Melissa [: 00:03:40

And I say only. Like, I know it's it's comparable to where you are and where I am. But when you look at my numbers, there's not a lot of time between July 2022 making $42,000 to September of 2023 making $422,000. I'm showing this to you guys because I want you to lean in to what I'm about to share with you. Okay? How have we been able to make such astronomical swings that have compounded themselves? The bottom line is we have a strong foundation, and it's about setting financial goals and then stacking them with recurring revenue month over month over month, so that we stack, stack, stack. Right? Okay. So let's get into pricing. What I have is I know my recurring revenue for the rest of the year if I didn't sell another thing.

Melissa [: 00:04:37

And then underneath it, I have calculations of what my recurring revenue will be based on what I plan on selling at what price point and exactly how many I need to sell in order to hit that recurring revenue goal. Does that make sense? Basically, I know my numbers and they're not a guess. So the first thing I want you guys to do is I want you to write down what your year end total revenue goal is. Right? So what is your year end total revenue goal? And then the next thing I want you to fill in is how many and what types of conversion events do you want to do? So number 1, if you're doing evergreen and you're selling every day, then you're gonna say daily. Right? And if you're one that likes to do more of a launch conversion style event or a mixture of both, you're gonna take this exercise through that I'll walk you through twice. You're gonna take it through with the launch calculation, and you're gonna take it through with the evergreen calculation. Does that make sense? Okay. The reason I wanna ask you how many conversion events you wanna do, because it's very important.

Melissa [: 00:05:49

Some of you are in a, like, hustle mode year with audacious goals, and you'll do anything to go through a brick wall to make those numbers work. Some of you are in that state of mind. And then some of you are like, you know what? This year is more of a lifestyle CEO year. I don't wanna burn myself into the ground. If you run launches, you know how intense they are. And so this is a reality check. If you're in a in the launch world, how many launches are you willing to commit to to meet your revenue goals? Because it's going to be important. Because you can actually choose as many or as much as you want, then you just have to reverse engineer the number of eyeballs that need to get on it to make the sales.

Melissa [: 00:06:37

And that's what we're gonna walk through in a second. Then you can decide on pricing and what you wanna charge. Okay? So let's start with that. Right? And I'll just underscore last year was a lifestyle CEO year for me. It was pretty much, I don't wanna say cakewalk, but we were delivering and refining and launching something we knew we were really good at. And it was a lot of vacation time for me. This year, I've got huge goals and I committed to it before the year started, and I knew my calendar was gonna be hefty with a lot of work. And I'm okay with that this year because I signed up for it.

Melissa [: 00:07:14

These are reality checks that you have to check-in. Is my soul and my body willing to commit to what these numbers tell me I need to do? And if not, there's levers you can pull to make sure you actually still hit those revenue goals. And I'll show you how by pricing and cadence. Right? Okay. So this is where I'm gonna lose some of you over lunch that don't like math, but it's really important. So, a, list out your offers and revenue goals for each offer. Right? So I'm using 500 k as an example. And for those of you guys who are business to business and you're selling product daily, you need to look at monthly revenue.

Melissa [: 00:07:55

You need to look at daily and monthly sales. We'll talk about this, but it's all analogous. I'm just using the launch style right now as my example, but I'll walk you through how to do it if it's daily or weekly or monthly revenue. Even if it's product based, you know how much money you wanna make off of it revenue wise per year. Whether it's a physical product or a digital product or a service. If it's a service, you still know how much revenue you wanna make, right, for that particular offer. Okay? And then the question is, if it's conversion event, how often are you willing to sell it? Right? How often are you willing to sell it? So let's say from a conversion event perspective, to make the math really easy here, you're willing to sell it 4 times a year. You're willing to sell it 4 times a year in a conversion launch style method.

Melissa [: 00:08:40

If you're evergreen, just write evergreen here. It's just gonna be 365 days a year. Now we're gonna get to c. So we've committed to how often you're willing to do it. And now what is the anticipated price? And you can do this for each offer. What is your anticipated price? And this is where you're gonna have levers, and I'm gonna walk you through c, d, and e and how you can pull levers to meet your goals in just a second. So for example, you can set your price for an offer. I'm doing this because actually it's a really great example for us.

Melissa [: 00:09:13

Last year, our academy was 4,000. This year, it's 5,000. Actually, I should say 2 years ago, it's 4,000. We raised the price last January. Guess what? Why do we raise the price? Because I wanted to be a lifestyle CEO last year, and I didn't wanna work so hard. So I just raised the price and did less launches and got the same revenue. Right? There's other factors that went into that, but I just wanna share with you that there's levers that you can play with to meet your revenue goal and your lifestyle goal. So instead of launching 5 times a year or 6 times a year, maybe you want 4 or 5 times a year, and so you change your price.

Melissa [: 00:09:53

Makes sense? To meet your revenue goal. And you also need to be cognizant that you don't out price your market. So be realistic with what you're charging. Like, if you're like, well, I only wanna do one launch, but I wanna make $3,000,000 So I'm gonna price my offer at $50,000 and the market rate is like 5, like, that's not gonna happen. Right? So we have to be somewhat realistic. For me, what I've learned the threshold is 5,000 for my offer. I am willing to lose some of those people between the $45,000 price point for the gain of the $1,000 differential for the number of sales I actually get. That make sense? So you you gotta play with it a little bit.

Melissa [: 00:10:32

When you start seeing a diminished return, you you gotta decide at what point you're out pricing your product. Okay. So that's a moving target. So let's get to d. So then the next question is, based off the frequency that you want to promote, how much needs to be collected per month? And this is if it's a conversion event or if it's monthly revenue from a product or service that you provide. You're gonna take that total revenue goal, And if you're a product or service that sells every month, no conversion events that we're talking about, you're just gonna divide it by 12 and get your monthly revenue goal. You're just gonna get your monthly revenue goal. If you're launch style, you're gonna take, for instance, in this example, the 500,000, and you're gonna divide it by the 4 times you're gonna sell it.

Melissa [: 00:11:20

And then you do know that you need $125,000 every time you're going to do a launch. Alright. So next, we're gonna see how many people need to be sold into to get that goal, right? So whether it's a conversion event or it's evergreen in your service based, even if you took this number and you divided by 12, you've got a monthly revenue goal over here. Now based off that monthly revenue goal and the price for your product, you're now gonna be able to calculate exactly how many people you need to sell in that time frame. Either that month because you're selling every day, or per launch if you're selling on a launch basis. Okay. I'm almost done with the math, I promise, but it's really important so that you're a consciously confident business owner. Right? Let's talk about levers pulled.

Melissa [: 00:12:10

If I charge 5,000 for my offer instead of 4,000, humor me this, there's 25 less people I have to sell my offer to in the year to meet my goal. These are the levers I'm talking about you get to play with. You guys write this down. These are your levers, pricing and frequency to sell. Those are your levers. Okay? Now, E is how many do you need to sell each month or per conversion event? If we need to make a 125,000 per launch, then that is basically a 125,000 divided by 5,000 for the price point. So you're gonna take your revenue goal for that launch or that month, and you're going to divide it by the offer and get the number of clients you need. You can do this for a service based bricks and mortar.

Melissa [: 00:12:59

It doesn't matter what your business is. If your monthly revenue that you need to bring in to create a profit margin and pay your overhead is $15,000 a month, you need to calculate between all of your offers how that revenue is going to happen. Maybe you have 3 or 4 offers. You need to reverse engineer how the sum total of those offers being sold per month are gonna meet that goal. And when you have a finite number that you can attach, meaning I have to sell this many widgets, this many digital courses, this many x y z's to meet my revenue goal, you become a consciously competent business owner. You're no longer flying by the seat of your pants. Right? I'm not saying all of you guys are, but I'm saying I used to. So maybe I'm talking to myself.

Melissa [: 00:13:44

So in this example, 125 k divided by 5 k, 25 clients per launch is what you need to bring in. Okay? Well, it doesn't stop there. It's like, okay, so I just need to find 25 people in a month. Well, how are you gonna convert them in? How are you gonna bring them in? We're not gonna get into that today, but let's talk about industry standards for conversion. So for instance, in the industry of launching, which many of you guys just went through one of my master classes, the industry standard for conversion is around 2%. So if I'm going to run a workshop and it's valuable and people find value in it, about 2% of my audience is gonna invest at that given time, if I've done a good job. This is where you don't need to guess what your sales are gonna be. You can actually estimate what your sales are gonna be.

Melissa [: 00:14:37

We came into this launch and I said, we'll probably make between 700,000 a1000000. That's a big swing, but it's actually a pretty narrow swing whenever I know based on conversion where we're going to land, right? And it looks like we're going to land right at the 700 mark, which doesn't surprise me given the economy, but we doubled down and we got the market share that we could. So when you know that it's a 2% conversion, then the question is, in order to sell 25 clients, how many eyeballs, AKA traffic, need you to get in front of your offer? This is the reality most people don't understand. You need 1,250 eyeballs or registrants to see that offer in order for 2% of them, which would be 25, to actually purchase your offer. So what I see and what we coach to inside of Build, Grow, Scale is we'll have clients come in and they've got a great offer and they're like, it's not selling. I just need to burn it down. I need to change the offer. I'm like, woah, woah, woah, woah, woah, woah.

Melissa [: 00:15:48

How many people were in your last webinar? And they're like 15. And I'm like, what's 2% of 15? You can't burn something to the ground before you have a large enough net aggregate group. But you've got to get back to the traffic. You got to get back to the build phase. Make sense? Now there's a lot of strategies back up in that build phase to get that traffic, to get those eyeballs to see the offer to convert to 2%. So working through that offer sheet, whether you're selling every day, whether you're bricks and mortar, whether you do conversion events and workshops, I tried to articulate to the math to you in a way that is all encompassing. Right? If you have more than one offer, we have more than one offer. What I do in my business goals, outside of the spreadsheet, I start with a big revenue goal.

Melissa [: 00:16:40

Do you know where that big revenue goal comes from? My personal dream budget of what I wanna accomplish that year. I'm building a really expensive mountain house right now. My total revenue goal for this business starts outside of the business, and that's a whole another topic. Like, what's driving you to do this in the first place? And instead of, like, like licking your finger and guessing in a revenue goal, can you attach it to something? And then I say, okay, back to the drawing board. How do I create $6,000,000 in this business with a 20 to 30% profit margin? And then when I take taxes out, I know exactly how much cash the business generates. And then I say, okay, if I want to do 6,000,000, maybe for you at 600,000, maybe it's 60,000. You come back and you say, okay, total of 60,000, 600,000, 6,000,000, you name it. How do I find $6,000,000 in the four offers I have? How do I find $6,000,000 in the x number of things that I have? And how often am I willing to sell it? See how you start reverse engineering it? So our number one revenue generator is the Lead Gen Academy.

Melissa [: 00:17:47

It'll bring in about $4,000,000 this year. That's one of our line items. Our Elevate 360 is about 750,000. We only offer it once a year. I know exactly what we price it at. I know exactly how many people come in at that price to create the $750,000. So you can literally go line by line by line, stack, stack, stack, or maybe you're just with one thing and that's awesome. Maybe that's where you're starting and I don't wanna blow your head up.

Melissa [: 00:18:13

Alright, guys. Have a good afternoon. Bye bye. Thanks, guys, so much for listening in on today's podcast episode. And I can't wait for you to see my upcoming guest in the next episode. You are going to love this keynote speaker. Hey, here's the deal. If you like this, please subscribe and leave a review.

Melissa [: 00:18:35

And you want the latest online business growth strategies and exclusive LinkedIn pro tips sent straight to your phone? Text the word update to 704 318-2285. That is text the word update to 704 318-2285. Can't wait to see you guys. 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_henault over on Instagram, melissahanault over on LinkedIn and Facebook.

Melissa [: 00:19:30

Can't wait to see you guys over there.