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Here's a better way to make a lot more money (Part 2)

Here's a better way to make a lot more money (Part 2)

April 14, 2011

Last week I was telling you about the dangers of trying to compete on price.

It's a mistake too many businesses make. Why? Because there can only be ONE low-price provider. (See last week's e-letter.)

So what's the secret to increase sales if you can't just lower the price? The goal is to create an offer so different and so unique that gives your product a higher perceived value. That's only part of the secret, however.

The second part of the secret is the how; how to go about creating a higher perceived value using what I call a "competitive bubble." A competitive bubble is what makes your product or service so different from any other competitor that buyers can't compare prices.

One of the best ways to create a competitive bubble is to create a system, not just a product, you can sell. Donald Trump isn’t just selling his advice, he’s selling a system to help others invest in real estate like he did. Jeremy Shapiro, who holds seminars on buying and selling foreclosed properties and increased his prices from $495 to $6,000, isn’t just selling information -- he’s selling a system that shows step-by-step how to do it.

The secret to increase sales without cutting prices is to create a "competitive bubble" that makes your product or service so different from any other competitor that buyers can't compare prices.

Let’s say you wanted to teach people how to fish. You could give lessons and charge $30 dollars per hour. If you spent three hours on lessons at the end of the day you would have $90. As you can see, there is no leverage here. But if you offered a system and sold it for $395, you would make far more money.

Let’s look at the future of both of these businesses. In an average eight-hour day, you could give two sets of fishing lessons at three hours each. The other hour you would need to sell your services and set appointments. At the end of each day, you would earn $180. You would have to sell 10 lessons per week or 500 lessons per year. The maximum you would earn is $900 per week or $45,000 per year. This gives you about two weeks off for vacation. Here’s the rub, if you are ever sick, you lose money. If you ever want to take time off, you lose money. You will never make enough to buy free time or afford employees to work for you because there is simply not enough money in the dollars-for-hours swap.

Now let’s look at the business if you sold a system teaching others how to fish at $395. You would only need to sell 10 per month or a little more than two per week to earn the same as giving lessons and trading dollars for hours. Let’s say that for every five systems you sold, you would have to give one hour of your teaching time. That means you would only be required to invest two hours per month in private teaching time. The rest of your time could be leveraged in growing your business.

Here’s an example of what your system might look like:

  • 3 CDs of you talking about how to approach a fishing hole, what to look for and how to read the water and weather conditions. 
  • 3 DVDs of you demonstrating in a video everything a viewer needs to know to catch more fish. 
  • How-to manuals for users to refer back to when needed. 
  • Sample lures. 
  • Maps of the best fishing spots. 
  • A special report on the best bait to use and where to get the bait for free. 
  • And lastly, you can include some of your time that they would have to request (up to one hour).
  •  

You’ve now created a competitive bubble that few competitors can compete with – and you’re still meeting a need in the marketplace with a unique offer. Your prospects can’t compare you with very many others in the market so you’re no longer competing on price. And few can offer the same value you have to offer. As a result, your margins will be higher and you can spend more time marketing and leveraging your business instead of working in your business.

 

3 questions to help you create a competitive bubble in your market

1. What advice or information do customers or clients want from you? 
2. What products or services do you already have that is different from your competition? 
3. How can you leverage those competitive advantages to develop a system you can offer that teaches others how to do it themselves?

Try it and let me know how it goes.

Always taking you from where you are to where you want to go,

Jon

Jon Goldman, President & CEO