The E-commerce Leader

[00:00:00] Jason: if you’re selling something where somebody’s gonna come back for a second purchase from you, then setting up a loyalty program, by itself is a reason to have a Shopify website.
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[00:01:14] Intro: Hey folks, welcome back to the eCommerce leader podcast. And today we are in the middle of discussing, aligning your pricing strategy and your business goals, pricing strategy turns out to be surprisingly powerful and important thing compared to the weight. Most of us give it. We spend a lot more time thinking about the sort of photographs that we’re gonna use.
[00:01:36] For the main product image, for example, in an Amazon listing or on a Shopify site than in most cases. Anyway, then we do about pricing and or we just research the competition and copy their pricing. And that’s potentially great and potentially terrible, but it’s certainly not a thought through.
[00:01:53] Strategic approach. So that’s what we’re gonna talk about today. Specifically, we’re gonna talk about how to get your first thousand dollars in monthly sales. And if you’re already an established eCommerce operator, then don’t start rolling your eyes and thinking this is irrelevant. Cuz of course, if you’re launching a new product line and trying to get your first thousand dollars in monthly sales on the new product line, guess what this stuff is all relevant and you have to think about pricing and that’s what we are discussing today.
[00:02:16] So stay tuned. Think about what you are. Listen. Two and how it can apply to your business and enjoy the show.
[00:02:24] Michael: Yeah. I like it a lot. I like the idea of, showing a kind of confidence slash integrity around the pricing.
[00:02:28] I think that is actually more important than people think. And, yeah, giving discrete pricing is that’s gotta be the way to go. And the thing is, it feels logical as a consumer, right? It makes sense to me that if I buy more from you or that I commit to you, and rather than your competition, that I get a bit of a discount.
[00:02:42] It doesn’t feel weird. Tell me about this average audit value piece. So I’ve got, had a client the other day. He was talking in the mastermind. He’s got a direct to consumer site. He’s getting about $20 cost of acquiring customers. So he is actually selling, I think it’s, he’s done a nice on branding.
[00:02:57] He’s actually getting about 3% conversion rate, which for me off, I think go, Google shopping ads. It’s pretty good. In fact, I said, look, I don’t know if that’s necessarily the problem. I did quote you and say that. What would Jason say? I, I think it’s the lifetime consumer, sorry, the lifetime customer value that you need to work on and the AOV, but he hasn’t got much of a catalog and I could kind.
[00:03:18] Hear him not taking this on board and going. Yeah. Yeah. But I just need to sell more stuff, more cheaply thinking like an Amazon seller in other words. So yeah. How do we deal with that if we don’t have much of a catalog of products yet? Yeah. Would you pop somebody else’s products in there as an affiliate link?
[00:03:32] Or how would you try and increase that?
[00:03:34] Jason: I wouldn’t do that. That’s more complicated than it might be worth. I would do that as a second or third idea. The first idea would be how do you get your, your existing product into a few different op modalities for your customer?
[00:03:46] And what do I mean by that? Russell Brunson is proven and he talks a lot about on click funnels. The number one up. is a two pack. This Hey, you wanna buy this thing? Yes, I do. Hey, do you wanna buy two of them? Oh, sure. It’s that’s a really easy upsell, that’s not, there’s no two products there.
[00:04:05] It’s just one product you’re just bun. It’s a bundling strategy. And you want to think through those types of upsell opportunities, the, the other thing that comes to my mind as you mentioned that client is, we’ve worked with clients before, who. Who are just getting their Shopify site going.
[00:04:21] And they’re in this discovery phase of who, how can they get traffic and how much does it cost? And, one of the things that we saw as a real breakthrough was a really powerful breakthrough with one of our clients, was he thought he was gonna sell direct to consumer on his Shopify site.
[00:04:37] And he was spending too much money trying to make that a reality. But then he started having restaurants buy from. And what he realized was it could be a B to B Shopify experience and really focus on not direct to consumer, but direct to business owners who will buy in pallets. Not in ones, and so literally that’s what our client did.
[00:05:02] He started selling pallet loads of product, not one item at a time. And trust me, that changes the average order value. Like in totality, it was like, it’s a whole different business cuz you realize, oh, there’s somebody who wants. 150 of these at one time. One transaction. Yes. And so those types of strategies are way more valuable to think through now that in that case, that wasn’t a pricing strategy.
[00:05:28] Although, if you work with a B2B customer, they, they might expect an escalation, where the more they buy, the more they save type. But, that’s some of the thing you wanna think through when you’re starting a new website, and it reallys pricing because again, just lowering your price is not the, and selling more, making it up on volume.
[00:05:46] That’s like the kindergarten version of this stuff. It is not a good idea, yeah. Yeah.
[00:05:50] Michael: And I guess the difference between that and the kind of common response is that you are, if you sell a pallet load, as opposed to, ones or twos, then obviously there’s an extremely solid reason for a discount while still making good profits.
[00:06:04] Yeah. Yeah, that makes. A huge amount of sense. And tell me a bit more about the discrete pricing angle. I was saying before, it feels to me like that links the sort of integrity of pricing, cuz it makes sense to me psychologically, but tell me what the other sort of implications and upsides are of that one.
[00:06:19] Jason: Yeah, there’s so much value there and just, like if somebody said to me, Hey, what’s the value proposition for setting up a Shopify site? I would say if you have any type of customer, who’s gonna buy an item from you more than one. If it’s a one time, like you’re selling caskets to, somebody, then it’s a final close out deal, to use the bad poem there.
[00:06:38] But, but if you’re selling something where somebody’s gonna come back for a second purchase from you, then setting up a loyalty program, by itself is a reason to have a Shopify website. It just, it just is a, it’s a service to the pro to the customer. And so I, I would say that’s a huge, value proposition.
[00:06:55] We use S loyalty as the app to empower our, loyalty program. And, and then the exercise there really is pretty straightforward. Get new people to your site, convert them to loyalty members. And, and there’s whole systems and strategies and process for that. And then in the loyalty, programming, you basically give them the opportunity to earn their own discounts by their shopping behavior.
[00:07:21] And every. The thing about every customer knows this customers love this. There’s a reason Starbucks does this, that Starbucks did not get protests out in front of their headquarters when they kicked us off. They, it like people don’t object to loyalty pricing and VIP, custom pricing. So Starbucks has pioneered this and it works Amazon prime obvious.
[00:07:43] You could have your own prime day if you have your own loyalty program. That’s what I, my reflection on prime day that just happened recently was I said to cinnamon, we need to have our own prime day set of deals for our loyalty program members on our website. And we’ve never done that. We offer them strategic coupons, Hey, spend, spend, X amount and you get this kind of dis coupon.
[00:08:04] We’ve never gone. In 12 years of doing business and said, Hey, we’ve got 42 special deals just for our loyalty program members. Like, why haven’t I ever done that before? But, anyway, so those types of strategies are all in play. When when you, have a Shopify site and sell direct to consumer and they’re all pricing related, ideas and concepts.
[00:08:26] Michael: nice. I guess what you’re saying is you are using special pricing as a reward for the behavior that will make you money, but also as a reward in the consumer, which is why it’s a win-win, which is why they’re not getting Veed at you. Whereas yeah, I would say Amazon prime day, the experience I’ve had with Amazon prime day personally, but more with my clients and friends is that.
[00:08:43] Every year, the response to prime day is more and more muted. Pretty much nobody discusses it anymore. Are you doing anything for prime day? No. And the reason why is because they’ve discovered you can give a lot of discounts and you make a heck of a lot more sales, but you make less money than if you’ve done no discounts in the first place, talking of profit versus revenue.
[00:09:00] It really is that, that simple these days really. Yeah, I
[00:09:03] totally
[00:09:04] Jason: agree. But so here’s the thing, because, once you ring the dinner bell 42 times in a row, it’s like, how many times did we wanna do this before it gets old? So I think prime day may have run its course. But, there is a whole different tactic that I love to work with people on.
[00:09:16] And we have worked on with coaching clients and that’s a V I P program and Costco. Is the quintessential example of this customers will pay you cash money up front for a discount. Now, just think through that for a minute, okay, wait, I need to lower my prices. No you don’t. Why don’t you ask people to pay you money before you lower the price?
[00:09:41] Like what that would work. That’s what Costco does. That’s you know, and Sam’s club. And and. Jim. Sinegal the guy who really scaled that concept was the founder of Costco. And I tell this example in every other podcast, so apologize if you’ve heard a million times, but, I listened to him a lecture one time at Northwest university up in sad area where he, he’s close by there, their headquarters.
[00:10:04] And somebody asked him why he doesn’t sell a 50 count bottle of aspirin. And he said, because customers would buy it. And his that’s a pricing strategy comment. And what did he mean by that? He meant he sells 500 count bottles. For a lot more money and that’s the only thing he offers. But on top of that, people have paid him money to walk through the front door.
[00:10:25] So he’s playing it. Like he’s playing it like. Hyper chess level and most people are playing at checkers. So he’s gotten paid for people to come buy his overly priced expensive, technically compared to a 50 count bottle, big, huge bottle. So you get the idea, but a VIP program, every Shopify store owner can do a V IP program model.
[00:10:48] It could be a whole course. It could be a whole, big ticket training and all that. We do this with our coaching clients where we walk them through how to get a VIP program, established people, pay you monthly or annually for the right to buy your items, or get them at a discount, and so that’s a little bit of what goes into this whole idea of loyalty and, discreet. Selling of your items rather than just having it, bam, on your homepage, over your Shopify site for $10 instead of $20, you just, you can’t do it that naively or, simply.
[00:11:20] Michael: Yeah. I love this. This is I love the passion you’ve got about this. And also what strikes me is you are articulating. Almost a business model. At least it’s very powerful for your cash flow and profitability but it’s very much a pricing strategy. Isn’t it? Cuz ultimately you are it’s price and consumer behavior and how you reward behavior rather than you, being constantly the person to move first and lower your price.
[00:11:41] You’re saying, if you want lower prices come over here and you can have it, but you gotta pay me first. , it’s kind of genius. I have to say, but
[00:11:47] Jason: people do it too, which is the crazy part is it is like sometimes in life you just gotta go with the flow. And you don’t have to beat your head against the wall and try to make people do something.
[00:11:56] They don’t wanna do people like loyalty programs, people like VIP programs. And so if they want, if the customers like it, do it, if it’s beneficial to you, why wouldn’t you?
[00:12:08] Michael: Yeah, I think also the psychology that I love about this is that you are really creating something a bit exclusive and something can only be exclusive if there is clearly.
[00:12:19] And consistently a difference between what you get behind the velvet Kern and what everyone else gets. Either you don’t get to enter the store Costco style, or you get your widgets for $20 as opposed to $15 plus some extra thing, and, I really like the psychology of that because I. That appeals pretty university, actually.
[00:12:37] It’s just sort of them and us it’s a bit like, business class on the plane, it’s the same flipping plane, isn’t it. It’s not really that much different, but they charge 10 times as much. I’m sure that’s where the only profit in any airline, if it is at any point profitable, most airlines, aren’t, I’m sure that’s where their profits come from.
[00:12:51] It’s that exclusivity. Yeah. I love that. And
[00:12:53] Jason: It’s a pricing strategy then. Is it? And a little bit of the, there’s a whole bunch of elements to first class in an airplane. But in general you’re right. It starts with justifying the high price.
[00:13:02] Michael: You’re sitting in a Cardi, a sort of aluminum Sadine can with everyone else.
[00:13:07] Right. it always, absolutely blows my mind how much the airlines get for,
[00:13:10] Jason: although those you, those Emirates, first class seats, man. They, if you have been on a big international flight on Emirates lately, those things are like an amazing, you get your own cocoon of awesomeness, anyway. All right.
[00:13:24] That’s off. But let’s keep going. You wanna do another one? Do we have time to do? Yeah,
[00:13:27] Michael: I’ve not been on Emirates. I obviously do lots of cheap little hops around Europe. I not done the Emirates thing yet, but might maybe one day. Yeah, let’s talk about, that, what interests me the most with the people that I work with these days is trying to take, We could talk survival, but that’s a bit depressing.
[00:13:41] Let’s talk about taking market off bigger competitors, cuz that’s really what the big, the feisty competers out there really wanna do. I’ve just been listening to, shoe dog by Phil Knight, the founder of Nike, absolutely riveting. I’ve been really looking forward to listening to it while I’m, when I’ve been out running ironically enough.
[00:13:57] And, he was obsessed with taking marketure off Aus or Adidas. However you say it. Yeah. That mirrors some of the eCommerce operators. I know they’re very C. Competing. So how do we actually do that with
[00:14:07] pricing?
[00:14:08] Jason: I think that’s a whole different PO I think that’s a big podcast conversation.
[00:14:11] What if we do what? Okay. I’ll counter your proposal. What if we do, getting your first thousand dollars in sales? Okay. Yeah. Is that okay?
[00:14:19] Michael: Tell us about that. Yeah. Yeah, let’s do that. That’s pretty common as well.
[00:14:21] Jason: I think it, cuz it serves. It serves entry, new sellers, entry, entrance into the market.
[00:14:26] Pretty good. So let’s do that one. Let’s do that one. Okay. So let’s pretend you that what you wanna make your first thousand dollars a month in sales, and you’re launching yourself on a marketplace, maybe it’s Etsy. Maybe it’s eBay, maybe it’s Amazon, maybe who, who knows maybe it’s Craig’s list, whatever it might be.
[00:14:43] Let me mention two or three strategies. So the first thing that you want to do when you’re a new entrant into a marketplace is first of all, you realize you don’t know. What’s out there you look, there’s so many things you don’t know, you don’t know who’s out there. Com competition wise, you don’t know what the customer will pay.
[00:15:01] You don’t know if there’s a low cost leader that has a strategic vantage that you don’t understand. Like maybe they own the , you know what, whatever it is, they own the gold mine, or they own the oil. Or they own the, their father-in-law owns the entire forest of Teakwood in the Amazon.
[00:15:18] And you didn’t know that and you don’t have that strategic advantage or, there’s something you don’t know there about the low price person. Maybe there’s something you don’t know about the, the prestige pricers. Or maybe you don’t even know, Hey, I don’t even know if there’s a prestige pricer in this market.
[00:15:31] So there’s so many things you don’t know when you’re going into, a new market where it’s a new product. I would always suggest people enter that market with me too pricing. So we’ve already talked about the, the three kind of general, pricing strata. So me too pricing is that middle safe, just, similar to everyone else.
[00:15:50] If you do that, if you do me too pricing, you know that you’re operating in a zone of plausible profit, similar to the other operators that are in business, they haven’t gone bankrupt. And, but they’re not doing anything special per se and you two can join them. Now, what do you do in that space then?
[00:16:09] You’ve gotta figure out in that space, how to differentiate yourself on something other than price. And so the first step is to differentiate yourself on something other than price. And what could that be? Maybe it’s speed. Maybe it’s, beauty of the packaging, maybe it’s, there’s some kind of howto educational content bonus.
[00:16:28] Maybe there’s some different, structure of the product itself that makes it more valuable. There’s a whole list of things. Geek out over about how to differentiate yourself. And then once you find that point of differentiation, okay, no one is doing this for, in this. With this color palette, for this certain type of pro customer, you find your point of differentiation.
[00:16:48] You really have to hammer that home and lean into that in everything you do, copywriting, the brand concept, the presentation, the videos, the social media handles everything you do. You have to lean into that advantage or differentiation. And so that’s step two, step three then would be to begin to explore.
[00:17:07] Either the penetration pricing or the prestige pricing, tactics and strategies, because you’ll know more, you’ll get to that point where you say, okay, I’m, I’m getting to the thousand dollars, a month in sales and you achieve that milestone. You’ll start to see who else is in the competitive space.
[00:17:23] And you’ll really start to understand, is there a prestige pricer in this space? And I’ll just say that, all things being equal. If you enter some niche and there’s so many out there, this is a true situation. You could enter a niche and there’s no prestige pricer. And if you enter a niche and there’s no prestige pricer, you have a massive opportunity to be the prestige pricer.
[00:17:47] Now will the customer allow for there to be a prestige pricer? Maybe not. Maybe it’s a commodity and no one’s gonna pay you a penny more. Than what they could see everywhere else. Maybe they just don’t care. Maybe there’s no brand prestige objectification of the item to, in the mind of the consumer to the degree, to which they’ll pay for it to be, nicer than anyone else’s.
[00:18:12] But maybe there is. And you just don’t know it. So these are the things you have to learn. So anyway, so as I would approach a first entry into the market, this is what I would do. And we did this when we started on eBay in 2007, the first thing we did once we did a thousand dollars a month and we didn’t do, anything special.
[00:18:30] We, we, in fact, we listed our auctions back then for a starting price of one penny. And we let there be no, no presale amount, no, no minimum amount that the item would sell for and we let the market dictate the price. And so anyway, so this is how I would approach it. And I think that gives you a lot of optionality and it lets you learn, which is the most important thing as you’re beginning to sell the new product, for new price.
[00:18:56] So hopefully that helps a.
[00:18:58] Michael: Yeah, very interesting. couple of reflections, first of all, the last thing first, I think the fact. You sold on eBay, which is an auction is a more brutal, analysis of what the market really values any individual item app. And so that’s something that’s harder to emulate.
[00:19:14] Cause I guess you are making dolls one at a time, right? Handmade. Whereas the typical Amazon private labels seller has the opposite problem where they have to. Import at least a thousand from China. And then they’re sitting there and to the person with a hammer, everything looks like an nail. So the person with a product, times a thousand in your garage, or , in an Amazon warehouse, everything looks like you, but it get rid of it right away.
[00:19:33] Yes,
[00:19:33] Jason: but can I just give you one pricing tactic for that, please. Example, and this, okay, so everybody should just go get pricing, power book ebook, and read the whole thing, because what I’ll tell you is. About this topic for today, but it’s in the pricing power book. If you have a thousand items that you’ve imported, what you can powerfully do is pre-sell those and do a Dutch auction, which, is everyone collectively gets to help you set the price.
[00:20:00] And you sell on the fact that you only have a thousand. You use scarcity as a technique for selling those items. If you just dump ’em on Amazon. You don’t tell people how many you have, and there’s no sense of urgency. It’s just like another commodity, oh, how many do you have? As many as are needed, but you really only have a thousand.
[00:20:20] Then you gotta use these tools of what you’ve got. You’ve gotta use in your pricing strategy, I guess is my commentary there. So a Dutch auction on eBay actually for many items, no one does that. Literally. No one that I know of does the Dutch auction strategy style, where you say, Hey, I’ve got a 500 of these and you all get to choose, to buy one, but it ramps up cost wise.
[00:20:43] But in the current market conditions where containers are taking six months to get, and many items are sold out, man, that would be an interesting thing for people to play around. If you’ve got a limited supply of something. So anyway, sorry to interject that, but it’s a whole different, whole different
[00:20:58] Michael: conversation.
[00:20:59] Oh, I love that. I, we, cuz it does reflect reality. Tell me about the Dutch auction. How would that work on EBA? Because I’ve never sold on eBay really. I mean I’ve used Joe list to, to take products from Amazon, but it didn’t work very well. So yeah. So instead of me an eBay ranked newbie, how does that work?
[00:21:11] Yeah.
[00:21:11] Jason: So you get a couple D. Auction strategy styles and the one in, eBay that almost everyone uses called the victory auction, but there’s other auction styles that are just really not popular but so go research this on your own, cuz I’m not an expert at, Dutch auction, but victory auction is the standard when everyone uses, which is here’s an item.
[00:21:33] Start bidding, it’s and that’s victory auction. So like I bid $10. I bid at 11, I bid 12, I bid 13 and you end up in a victory auction, which is a standard style with, let’s say, let’s say five people bidding and oh my camera just freaked out. Sorry, five people bidding. And, one person’s gonna win the item.
[00:21:50] That’s one item being auction. What if you’ve got 10 of the items or a hundred of the items, then you can do a different format and the format is more like people raise their hands and they say, what they’re willing to pay for this is more, this is some of the detail of the duck traction, but go research this cuz I’m again, thinking through this, on, on my feet, but in general, the way you do it is you say, I’ve got, let’s say a hundred of these items.
[00:22:15] And, and I don’t know what they’re worth and neither to you guys, because man, it took me six months to import ’em and prices have radically changed since. Tried to get ’em and no one else can ha has ’em. And let’s just put ’em out there and you guys tell me what you’re willing to pay and the best hundred bidders are gonna get one of these items.
[00:22:36] And so then what happens is people start setting a floor, I’m willing to pay $10 and so were 99 other people. The floor just became $10. Then, a hundred and first person who comes in and is dang it. I, if I want one of these, I gotta pay $10 I, or more so I’m gonna bid, $11.
[00:22:54] And what happens is it escalates the entire cohort of. Prospective buyers. And if you run those properly, you’ll end up having a market clearing price that everyone collectively has agreed to. And as the seller you get to say to yourself, I didn’t set the price. I’m not price gouging. I had a hundred, I put it on eBay.
[00:23:16] A collectively, a hundred people told me that they were all willing to pay $82 and 50 cents. That’s awesome. So that’s more of the Dutch, I believe now go, fact check me on all that. But, yeah, that, that is a whole different way to construct a pricing strategy, which this gets back to our eBay work originally in 2007.
[00:23:35] And I love this stuff because what I could say in eBay, when I set my price to a. But my item went for $500 and people would get mad. Like, how could how could you sell that for $500? That’s so unfair. I’m like, I didn’t set the price. I set the price for a penny. I didn’t know what the price was.
[00:23:52] This is more like how you sell art or, how you sell a scarce commodity and you get to say to the community, I’m just selling it for what the market says. It’s worth. And you seed control of the pricing strategy to the community. It’s a, there’s a huge power in that because you can say honestly, I’m being, I’m operating with integrity.
[00:24:12] I’m not trying to gouge anybody. I’m just trying to move my item and, or my a hundred items in a fair way. Now all of that requires you to be a marketer and to have an audience and to explain what you’re doing to your audience. These marketplaces, especially eBay. If I had a couple billion dollars or like whatever, it would be like a hundred billion, I’d buy eBay and revamp the whole thing and I would get rid of buy it now, pricing stuff, items, and I would only use it as an auction platform and really nerd out with everybody.
[00:24:47] I think there’s so much power in. The eBay auction model that’s never been tapped into, but anyway, sorry, we’re on a, I’m on a
[00:24:55] Michael: ramp. No, this is, do not apologize. This is fascinating. We’re not gonna come up with a neat solution, but I love this idea of getting the market to set the pricing and my only reflection from a much more primitive, point of view.
[00:25:06] And by the way, my response on that a hundred percent agree, I’ve never understood why eBay has become a kind of rubbish version of Amazon. Instead of being what it is. I think. As a positioning error for eBay, a massive error. Although, they’ve never got on the phone to me yet to ask my opinion.
[00:25:20] So maybe they know a thing or to about adults already. Maybe they do. I don’t know. Maybe they do, but anyway, having never sold on eBay, I have zero right. To say anything. But what I would say is this, and knowing Amazon pretty well from the seller side, there’s, the talking about the market selling pricing.
[00:25:34] Another way of putting it is that I think. I think the market always sets a price, by its behavior. And I think you’ve gotta accept the initial verdict and then you have got. Main options that I’ve seen. The first one is you can work super hard on the listing to really articulate the differentiation points of the product.
[00:25:51] And a lot of people don’t do that. If they’re good at creating products and operations, they’re often not amazing at marketing, in which case hire somebody who’s good or get good at it. And we’ve. Seen a lot of moments in the mastermind really improve their marketing chops and you can get very unsettled differences on Amazon very quickly, cuz they’ve got a lot of traffic.
[00:26:06] We’ve even seen somebody who’s pretty good at marketing and we just ripped their listing apart and they went from a 30% conversion rate to 40% the next month. It was very neat and we all felt good about that. But that’s the first thing. The second thing is if it isn’t different though, you are gonna have to develop the product or the packaging and that’s expensive.
[00:26:23] And that’s why the third option may simply be accept the market has spoken. And accept that this is how much of the product you’re gonna sell at this price. And if it’s still profitable, but not exciting, keep selling it, but don’t put a ton of extra money and time into something that has not got much potential.
[00:26:38] And that’s often the wisest course, or sometimes the fourth option is accept the market spoken. It’s never gonna sell at a profit unless you do crazy things to it. And that money and effort would be better spotless where, and just stop selling it, which is brutal. Yeah. But I honestly, the most grown up people in the mass mind, the most relaxed people in the mass mind are cutting products left right.
[00:26:57] And center. And like the most relaxed person has got the biggest revenue there. And they’ve been working the business coach and they’ve just basically advised ’em to cut a lot of their product lines. Yeah. And they’ve cut a lot of their product lines and they’re looking relaxed. They’ve cut a lot of staff.
[00:27:09] So they cut over. And I’ve never seen an eCommerce seller look happier about life. Despite being in a slowdown. Sales are much slower than they were 12 months ago. Yeah. And that’s because they’ve cut the dead wood. So there you go. I think all of which is to say to your point of the market dictating price.
[00:27:23] I think we, the market doesn’t necessarily dictate price unless you let them, but the relationship between price and sales velocity yeah. Is set by the market. I believe just all the time. And that’s what people try to control. And that’s like trying to, being Sy, sys with a Boulder, pushing it up here or kinking you in the sea or whoever you like, you just can’t
[00:27:41] Jason: control these things.
[00:27:42] It’s really two layers of the operational, strategy there. One layer is the product itself, the right thing to be proposing. And it’s interesting because we’ve worked with clients who have a killer product and then they’re like, what’s the next thing for you? Launch another thing.
[00:27:59] And they launch the second thing and it’s a total dud, but they spend all their profit and energy and time neglecting, from the, they take the good thing and almost treat it like, it is just a given and then they pour all of the time, money and energy into the bad thing. It’s so weird. How business owners think I know we’ve done the same thing.
[00:28:20] It’s I’ve got something amazing. What are you focused on? Not that , what are you focused on something that’s not working at all? It’s like, why are you doing that? Cuz I really want this other thing to work too. Cuz then I’d have two things that work. I was like, yeah, that’s not really gonna happen.
[00:28:36] Is it? No, it’s not happening at all. And it’s so funny. We have, we get coaching gigs like that. Like why do you wanna work with us as your coach? I got something that’s really not working. Why don’t you just stop it? No, I wanna pay you $2,000 a month to help me make it work.
[00:28:50] yeah.
[00:28:50] Michael: Tell me about it. I get people approach me all the time with, I got one client, fortunately was open to the fact that he said he approached me. He’s doing drop shipping. It’s completely different business model on a Shopify site. Really good first, in the. Year of selling really successful revenue, profit it’s scaling.
[00:29:06] He’s got good operations in place. And he approached me to say, I want to private level and import stuff in China. And I want to talk to you because I know you’ve done that and you know how to do that. And the first thing I said is, please don’t do that. Not in the current, don’t do that now five, 10 years ago, or seven years ago when I got into it eight years.
[00:29:21] Yes. That would’ve been a smart play. Right now. No, don’t do that. And he’s not even doing private labeling. Did he listen to you or did he go find another? He did. Yeah. I said to my, the biggest challenge for you, you have products that are made of steel. You’re in a famous area for still making of the UK.
[00:29:35] My challenge to you is go and find somebody literally 10 miles down the road. And that’s exactly what he did to be fair. He did exactly what I suggested and the economics of it were better and the supply chains are better, but in the end, He’s doubling down on what’s working. Thank goodness. The drop shipping, because it’s working and to your point, doubling down on what works is.
[00:29:52] That’s one reason this must, my memory looks so relaxed the other day. They are actually having the courage to, with the help of a really good mentor. Who’s very experienced on, Eight nine figures in whatever, in, in retail at his time. And, they’ve had the courage to cut the dead word.
[00:30:06] And as a result, the business is not under the pressure of trying to push that Boulder uphill. And to your point, sun cost is such a huge thing and we’ll get it. And I don’t think you can really solve it for yourself cuz you can’t see. Yeah. You can’t look outside your skull and see yourself from the outside.
[00:30:22] It’s just not possible. Yeah. I think that you just have to have somebody look at it and you have to trust their answers enough to do it. I think those are the two things that strike me out.
[00:30:28] Jason: Yeah. It’s so right. And many times as business operators, we do this where we see a shiny object and an adjacent, area.
[00:30:35] And we think, man, we too wanna be in that space, whatever it is. And we, and we somehow. Neglect, the one thing that’s working in exchange for the thing that’s not working that we’re trying to make work. And it’s so interesting, that we do that. And the wiser path sometimes is to say, no, I’m not gonna be tempted.
[00:30:55] I’m not gonna, I’m just gonna double. My sales or my profit on that one thing that is working, I’m gonna figure out how to make a four pack, how to make a hundred pallet sized version for the B2B people. I’m gonna figure out how to get it into home Depot. I’m gonna figure out how to get it into ACE hardware or into, restaurants or whatever.
[00:31:16] Those are the harder things to do with a product that’s really working. And so that’s a different whole, this is a whole different podcast than what we started with, but I think there’s so much nuance here about business decision making that I think is really a challenge.
[00:31:29] And all of us face these struggles together. It’s there’s, it’s common to all of us as e-commerce operators.
[00:31:35] Michael: It is, all I would say is, although we have ended up going down a bit of a rabbit hole, but I would say it all does relate back to pricing. One of the things this person I’m talking about in the mastermind does is that they are very.
[00:31:45] Keen, whenever they can to raise prices, they’re always trying to raise prices, but they test them. And if they result in terrible sales velocity, then they’ll bring them back down. But, I think the acid test of a product is can you, have you got pricing power to use your phrase that you use all the time and indeed the title of your book?
[00:32:01] If you don’t, then it’s not that great a product which doesn’t mean you should stop selling it, but you certainly shouldn’t spending all your time and efforts. On that single product, unless you are overall branding these work. But my experience is the market speaks. It’s normally giving you a pretty major hint.
[00:32:14] You can probably squeeze a bit of extra profit out and you should by. Redo the packaging. That’s a fairly cheap and relatively straightforward thing to do without screwing up the product and getting quality control issues and so forth. And you definitely should maximize the listing to, to sell that’s something you should do, but that isn’t gonna save your product from being bad to good.
[00:32:34] It will get a good to really good or a moderate to moderately. Good. And that’s all in my speech you can do. And that’s, it’s accepting. Reality is hard.
[00:32:43] Jason: That the accepting reality is hard for entrepreneurs because we get where we’re at by not accepting reality. It’s like I got a good product and a business because I said, I’m gonna impose my will on the world.
[00:32:56] And I got to a point where it worked. And so the, but the temptation for the entrepreneur is to say, yes, I did that. And now I can impose my will on the marketplace with another product. And many times that’s just not true. And I, I spent a long time, 10 years between first hearing about e-commerce selling to selling online.
[00:33:18] And I thought for 10 years about different products. And. You can talk yourself into something, being a reality when it’s not a reality. And I think to your point is in this comment is you have to test a thesis like, okay, can I launch this product? And can I sell? And if the answer after a certain amount of time is this is not working, then.
[00:33:38] Finding a new ad agency, finding a new business coach, finding a new sales channel. Maybe you do all of those things one time, and then you say, okay, if two SEO companies couldn’t make this happen and two Facebook ad companies couldn’t make an happen. And two business coaches couldn’t help me sort this out.
[00:33:53] I’m done this product is a dud and I’m moving on to the next thing, and I think that’s probably, Some of the decision making and playing with pricing can be part of it. And maybe you find your breakthrough, but maybe you don’t and you gotta cut. Cut your losses and move on.
[00:34:05] You.
[00:34:07] Michael: one final thought on that? I think sometimes, I I got a couple of moments in the last one you’ve produced incredible products and their product development process was textbook was really amazing. And I know people who’ve done that and making a fortune really great profits and other people who are doing that and they’re selling well, but there is a cap on the price point given by the market and, the market, meaning that we are people willing to pay more or not.
[00:34:28] And who else is selling similar stuff and, That’s product ness. Again, the price that you can sell something for and the profit, relative to your cost is a very good reality check on. Not whether the product’s good, but whether the product, marketplace is gonna reward you or not. . So to your point, is there a space for a really premium price product?
[00:34:49] Sometimes the answer is no. And again, that isn’t where you’ve got a boring product or even an UN differentiated product. You’re just in a marketplace that won’t allow you the sort of head room for the price. And again, price is that kind of pivot point between supply and demand that tells you so much, doesn’t it.
[00:35:03] The more you look into pricing, the more. I, there is really, I I started reading that book that you recommended priceless. Whoever it’s by can’t remember, but we’ll put it in William Poundstone. Yeah. That’s the one there’s so much that goes into this. Look as a summary, I’d definitely echo what you were saying.
[00:35:18] I think everyone, the more I talk with you about this, the more I think everyone should go and read pricing power by you by Jason D. Miles. Definitely because there’s so much in this and the more you peel back the layers of the earlier and the more we realize how critical this is, but let’s just summarize what we’ve been doing today.
[00:35:33] What’s your summary of principle number four for their listen.
[00:35:37] Jason: Yeah, you’ve gotta have a business strategy that is aligned with your pricing strategy. And those are dominoes that have to be set up together and fall in the right direction. And they can really do damage if they’re not aligned.
[00:35:51] And so your best path forward is to be very clear on your business strategy or goal for the, for short term, and then to create a pricing strategy that works to support. Really robustly. And when you can do those things together, you’ll have a powerful opportunity to make headway in the market, in support of your product and in support of your business goals overall.
[00:36:15] So I would say that’s a bit of a summary. Yep.
[00:36:18] Michael: Love it well, interesting as ever man, to talk to you. Interesting. Doesn’t really cover it. It’s really fascinating. I love this Dutch auction idea. I’m gonna have to go and educate myself about that. If you’ve enjoyed listening folks, just a couple of things.
[00:36:29] First of all, you can find us on the call in app, on iPhones near you. I believe we got over a hundred subscribers now on that, whatever that means there’s ity metrics, but, somebody’s listening. So come join us there. And we are on, of course, all podcast epi. Podcast channels, I should say out there, including apple podcasts and Spotify, the biggest ones, and on both of those channels, now you can, if you wish leave us a rating at a five star, so we’d love your highest and best rating.
[00:36:54] And if you are on apple podcast, your highest and best review as well. If you can give us that, just wanna say, thanks, man, for bringing this whole topic up. It’s so fascinating. And it’s so central to making a profit. I think this is really important topic.
[00:37:09] Jason: Yeah. Great times. See you buddy.
[00:37:10]