A Word of Advice to Those Offering "Marketing" to Small Businesses.

That is good advice. I have packages but only use them internally for my sales process. When I am talking to clients, it's always a custom solution built loosely around the package in my head. I never thought of it the way you say here but it makes sense.

Your story is inspirational. Nice going.

Sure. The moment you offer package pricing like this you seriously risk commoditizing what you offer.

Prior to moving to the US, I generally had two jobs. One would be my high-paying corporate Mon-Fri gig, and the other Sat/Sun evening for a few hours, usually in a restaurant. I like restaurants. I like restaurant people. The last restaurant I worked in was a one-of-a-kind pizza place. I mean the kind of place where you could easily pay $40 for a large pie. I did prep cook work, washed dishes, and very profitably delivered the pizzas (man did that lead to some good laughs when I rolled up in my convertible...they knew I was doing something else...and never be unwilling to do "menial work"--it's good for ya. I could easily make $30/hr for a 3 or 4 hour shift with that job).

If you wanted a coke along with your order, it was a buck, and later $1.25 a can. I remember Peter, the owner, telling a phone-in order customer in very clear terms, "No sir, we do no do 'free six-pack of two-liters" with every order. This is not Domino's."

He didn't have to throw in sodas. His pizzas (and dough...haven't had anything like it since) were unique, so he didn't have to. You either wanted his pizza and were willing to pay the price, or you weren't.

Worthwhile lesson.

This is one of my selling points - we don't offer packages because everyone is different, but what we do offer is "starting prices..."

This way they get an idea of what they will have to pay minimum.

Good post.

If you want to charge premium fees you need to offer
customized solutions to each client.

Iironically it may be
exactly the same service you offer other clients just
worded differently but that process of talking to prospects,
really getting to know them and their business, making
suggestions until they get excited about some of them
and then customizing a solution and establishing the potential
value of that solution...that's what gets you paid the
serious fees.


I think I should mention that some consultants do have some
great success having three different price levels when they
get to offering a customized solution...the good solution,
the deluxe solution and the platinum solution.

Most businesses will choose the deluxe solution if you do this
(it's actually more of a sales technique).

And 10% to 20% will choose the "platinum" solution simply
because they always go for the premium service.


But if you want premium fees the process should really be
starting with you getting to know the business and what's
important to them.

Kindest regards,
Andrew Cavanagh

This is always the topic where I offer a bit of devil's advocate.

Charging a lot and personalizing can make you a lot of money if you are good. But the point is that it makes "you" a lot of money. It's a consultant's way of thinking. Which isn't a bad thing. It may be how you get rich but it's not how you "build empires" to use the term you used.

You can get very rich. People like Alan Weiss are very rich and make a lot of money as consultants.


But the big money will always be in the largest and most powerful of companies. And rather they sell products or services they have a few things in common.

• Prices Targeting the Masses
• Multiple Price Points & Product Offerings
• Systems in Place to Standardize
• Large & Relatively Low Paid Staff

This is true even of the "personal brand" empires like Tony Robbins & Oprah.

So why do the true "empires" do this? Let's look at each of the four points I found in common and figure out why.

Prices Targeting the Masses: As a car guy I like to use the car world to illustrate this. There is a reason that supercar companies like Lamborghini & Rolls Royce are no longer independently owned. There simply is not enough money selling to the rich. So Toyota and Ford can make a lot more money by selling a lot more cars that are cheaper to the masses.

So if you price out the vast majority of potential customers you risk leaving your customer pool too small. Sure the margins are great. And if all you want to be is a one man show with a bit of support staff like Alan Weiss then by all means target the biggest companies and get the best prices you possibly can. But "empires" want more. They want the kind of income that can only come by targeting the masses.

Targeting the masses doesn't mean you can't target the higher dollars as well. After all Toyota did make the LFA and VW owns Lamborghini and they sell a lot more cars now that VW is running the show.

Multiple Price Points & Product Offerings: There will always be a place for customized solutions. But the "empires" have learned to make money with multiple price points and product offerings.

To keep this one along similar lines to people here let's use Tony Robbins (or insert the guru of your choice). Does Tony customize his offering for each customer? Of course not that would take too much time. He offers everything from books to customized in person training & consulting.

He has a sales funnel basically. Some people may only buy one book. But others will buy his DVDs and Audios and others still will go to one of his live events. As you see much of his funnel is full of product offerings he doesn't have to directly be involved with. His company can sell those. So he works one time but continues to get value from it.

You can do the same with services (which is what most here sell). It's actually quite simply and touches on using the next two points and we will cover it under those.

But before we get to that let's talk about the "psychology of packages". There is a reason that every single large company I can think of sells packages or multiple price points of the same/similar products.

It all has to do with anchoring. When you offer two or more packages you can use the price of the higher items to justify the cost of all the packages. Maybe no one will buy your $20,000 package. But when anchoring is used properly it can help you sell more of the $6,000 package. Now anchoring is huge topic and not one I can easily touch on fully here (even in my relatively long posts). But even when a company is only offering one item they can use it. Why do you think so many signs at Wal-Mart have "was" prices on them?

Systems in Place to Standardize: By this point you have created and sold your products & services priced to the masses. Now it is time to make sure that you have processes in place to minimize the time needed to sell, implement, and provide customer service for your companies offerings.

You do this for a number of reason. First even if you never hire a single employee (bad business owner, sit, good dog) you still want to make your processes as efficient as possible to maximize your revenue per hour. You didn't start a business to work, did you?

Oh crap I touched on a sore point, didn't I? Opps!

Second if you are going to hire people to take over the doing so you can start the enjoying part of owning a business you have to have processes in place for them to follow and for you to train them with. And speaking of staff...

Large & Relatively Low Paid Staff: You want to scale your business. And the best way to scale your business is hire people. You want to make things easy thus why you created processes because you want to be able to hire a large and relatively low paid staff so you can maximize their value per hour to you.

Sure you could make $10,000 an hour for personally working and I am sure guys like Tony Robbins make that or more. But wouldn't it be more fun to have a staff of 10,000 and be able to make $10 per hour from them? You might even get to the point where you don't have to actually work much. Maybe have one of those 4 Hour Work Weeks that Tim Ferris talks about.

But before you can scale and become an "empire" you have to make sure you have products and services that are priced to target the most potential customers possible. You need to make sure you properly use multiple offerings and anchoring to maximize profit and to capture more of the market. Once you have those in place you need to create systems and processes that can be easily trained to employees so you can scale the business up.

You can make a boat load of money as a high paid consultant. But if you are good enough to do that you are leaving a boat load of money on the table. There is a reason Alan Weiss isn't a household name and Tony Robbins is. Which do you think made more money last year. They are about the same age and both of them are among the best at what they do.

Alan preaches what the OP here just preached.
Tony followed a path more like the one I laid out.

Will any of us ever get as big as those two? Who knows. But what works at the macro also works at the micro. The kind of business you build is up to you. But personally I think the argument has been won time and time again by those who followed the four points I presented. Rather that be Tony Robbins vs. Alan Weiss or Walmart vs. Nordstrom. You build from the Niche but scale to the masses.

EDIT: I want to make it clear that I believe that customized solutions have a place but they are part of a completely business system that includes a lot of set prices & packages.

Great post Aaron. My first mental response is that you can do it both ways at the same time.

So...Let's do a little statistical price analysis....

Let's say over a year your organization makes 1,000 pitches. (That's two salesmen making two pitches per day for 50 weeks). The product is worth $2,000. Their closing ratio is %30.

300 sales X $2000 each = $600,000 revenue.

From this we can deduce how many additional sales would have been made at different price points.

At $1000 - 650 people would have bought - Revenue = $650,000
At $2000 - 300 people bought - Revenue = $600,000
At $3000 - 190 people would have bought - Revenue = $570,000
At $4000 - 125 people would have bought - Revenue = $500,000
At $5000 - 100 people would have bought - Revenue = $500,000
At $10,000 - 50 people would have bought - Revenue = $500,000

From this you might deduce that selling at $1,000 would be the way to go. Not so fast. You have more than doubled your number of customers and only increased your revenue by $50,000. Unless you can eliminate a good deal of costs, your profit was slashed in half.

The goal would be to maximize the number of sales you make at different price points.

So, you keep your $2,000 price point and $600,000 in sales. You add in a $1,000 price point to capture another $350,000 in sales because now you grabbed the other 350 people who can't pay $2000 but they can pay $1000.

(300 X $2000) + (350 X 1000) = $950,000 in revenue!

Don't stop there:

As you raise your price, you lose some of the lower end purchasers - but you make more from each.

So let's say you have a $1,000 - $2,000 - $5,000 and $10,000 price point.

You would sell:
350 @ $1,000 = $350,000
200 @ $2,000 = $400,000
50 @ $5,000 = $250,000
50 @ $10,000 = $500,000

Your revenue now = $1.5 million

Now, this is certainly not exact and would bring you to a 65% close ratio at $1000 or more. The actual numbers will probably be a bit lower. This is a mathematical abstraction after all.

The point is, you can more than double your revenue by offering many different price points to capture the outliers. If you are pitching to people who can and will pay $10,000 you want to offer them something without alienating the people who will not pay that much. If you only keep your $2,000 price point, you are missing out on 50 sales at $10,000 each.

This exercise also requires that you are only pitching well qualified buyers. 1,000 pitches to random people who are not qualified first is worth much, much less.

I hope my math isn't wrong. I rather enjoyed doing it and have quite a few new ideas for my business.

Aaron,

I enjoy reading your posts more and more and it really shows you have great thoughts and experience. What are you doing on the side right now? I know you work at the RV place, but when are you going to launch your own thing? You obviously have the knowledge.

A friend of mine recently started a digital media outfit with a friend of his. I had to have a similar exhaustive exchange with them about how their strategy of taking on small local companies offering them SEO for £100-200 a month is just stupid.

They couldn't get their head around the concept that one £2,000 a month client was far better than ten £200 a month clients. To me it's just simple common sense, but it seems some people don't see the problems and hassles that going for the smaller clients entail.

BBC News - Ferrari sales and profits surge to record highs
Ford Motor Company Financial Earning Reports & SEC Filings for Ford Investors

I will leave these here and I guess agree to disagree.

There is always a place for customized solutions and the more customized the more revenue & profit on a per item or client basis you will make. But nothing can make up for pure good old volume. Both can make you money. Both as a business model can be great.

But which would you rather own Ferrari or Ford? (company not cars but the Ford GT rocks) That is my point. You can build one way or the other from day one. And all the truly big players do it the way I suggested. It doesn't mean my way is the right fit for your business. But it does mean that to be a true "empire" you likely need to follow their path because that is what the evidence is showing.

Why can't companies make money or receive value from buying a package? For example if you are selling SMS services some clients will need more texts than others. So you have different package levels that allow people to save more when using a higher volume of text. The service is less valuable to them because they are purchasing a package that fits their needs? When I had my company logo designed I chose a package that included what I needed. It was not any less valuable to me.

Either way, potatoes poh-tah-toes. You can do whatever you are more comfortable with and makes you feel good about the services you offer, etc. as that will give you the best relationship with your client and really that's all that matters.

MouseandMice your story is inspirational.


Just to illustrate a point, using your Ferrari analogy, even Ferrari sells in packages(models). Each package(model) appeals to different customers with different needs, at different prices. They currently have 5 models(packages) available – for example, the Ferrari FF appeals to the customer who wants a sporty vehicle, which seats four; the F12 Berlinetta appeals to the customer who wants the raw power of a Ferrari and only seats two.


Now once you chose one of their packages(models) you may then customize your package(model) to suit your specific needs even further.


So yes, packages are a good way to market and grow an empire, while allowing for customization of those packages is just good business.

I don't see why you guys believe it has to be either/or.

You can have some lower end packages for the small fries - and work up custom gigs for the larger clients.

Best of both worlds! I'm just bummed that no one likes my incredible math.

There were two groups that started acts in Las Vegas. Both became extremely successful and made a lot of money.

The first was a two person magic show. It was based on the personality and magic of the stars and their tigers. They were hugely successful in Las Vegas but only performed in Las Vegas. When they needed to take time off the show could not go on. One day one of the magicians was mauled by one of the tigers. The show was forced to end.

The second group was based on a musical type show. But instead of basing the show around the performers they hid behind blue costumes making the entertainers completely interchangeable. Because of this they were able to expand the show to various locations around the world at the same time. The founders were able to take time off with the show still continuing and step out of their performer roles to manage the business when they chose to.

Siegfried and Roy and the Blue Man Group.