Archive for October 20, 2014

Reduced Bank Fees For Small Businesses

Guested from Miriam Schwab:

PSA announcement regarding banking and small businesses in Israel:

No matter how many years I’m in business, I’m constantly learning things that I can’t believe I never knew. Like how to properly calculate overhead and how it needs to properly factor it into pricing (no, I’m not totally dumb, but I never quite got it until my amazing bookkeeper showed me the light recently. I can get into this another time).

Anyways, for years we’ve been paying ridiculous bank fees at Bank Mizrahi for our business account. The fees were often double and triple those that we would pay in our personal account. For example, a bank transfer via the website cost 1.20 NIS in our personal account, and 12.90 NIS in the business account! It drove me crazy, but I figured that’s how it is and there was nothing to do about it.

I recently had to meet with the bank manager. During our meeting, I mentioned that the fees they are charging are ridiculous. She said “Companies with revenue of under 5 million NIS a year can pay the same rates as personal accounts. We don’t do this automatically because we can’t tell if a company has different accounts elsewhere.”

What? You let me pay these rates and lose thousands of NIS because you couldn’t be bothered informing your long-time client about how the fees work?

So now I’m telling you. If you are running a small business and have a business bank account, you may be entitled to lower bank fees if you aren’t already getting them.


Top 10 Tips On Pricing Your Products

Often see people asking about how much they should price their product for, so thought I would give my views on it:

1. What is your ultimate goal of your launch? Is it to build a list or to make money or some other reason? In theory, the lower that you price your product, the more sales that you will make and therefore have more customers. In theory, the perfect price depends on the elasticity of the market. For example, would it be easier to sell it once for $1k or a thousand times at $1.

In practice though, there are other factors also at play…

2. Do you have affiliates or JV partners? Are they promoting you to make money or are they doing you a favor or do they want reciprocation? Depending on the answer, you need to decide how much commission you want them to have. For some affiliates, 50% of $7 may be plenty to persuade them to mail. For others, they would want 100% of $27. Depending on who your affiliates are and the aim of your launch should help you to price your product and decide on a percentage of comms to give out.

3. What does your product consist of? Is it justifiable compared to similar products in the marketplace to charge a certain price. Or should you be charging more or less? Compare what similar products have been priced at and how successful they were (or not).

4. Do refunds bother you? If so, make sure that you are not increasing the price higher than the ‘value’ of the product.

5. VERY IMPORTANT: How good is your salesletter? Are you able to sell the product at the price that you want. Are you able to justify why you are selling it for so much. Or in the case where you are building a list, is the price too good to be true.

6. What is your backend? Depending on the price of your backend and the conversions and commissions that you are giving to affiliates should affect the price of your product. For example, are you selling the frontend as a teaser (perhaps with 100% comms) so that you can make the cashola on the backend? Backend sales are an excellent weapon to be able to give away a huge bribe to affiliates on the frontend so that you can make more on the frontend and ultimately they can make more also.

7. There is a lot of psychology at play with pricing. Especially with an intangible product, the price is dependent on the value that you build up. One easy way to build up value especially in the IM niche is to compare it to the return that they will be getting. Will it make them an extra $x whereas they are only paying $y? Is there a similar product that is selling for 10 times as much whereas your software does the same thing?

8. Build up value by offering bonuses. Always put a price to them. Offering a $97 bonus on a $7 product can do wonders to sell that product. Obviously, be true to the value…

9. I’m not a massive fan of dime-sales, but they can work. Be sure to spell out that 10 people have already purchased and that if they don’t purchase now, then they will pay more.

10. Saved the best until the end…test! Test to your own list. Buy a solo ad. Buy FB advertising etc. If you are genuinely testing so that you ultimately make your affiliates more money, then that is fine and will not be seen as selling to your own list first…Test at the beginning of launch. Test during launch. No-one truly knows the answer of what the best price will be, but whether you are making your money on the frontend, backend or ultimately setting up your product to make more money in the future, the price can make a massive difference in how much you ultimately make, so definitely worth doing.

(Please feel free to share this article as long as you attribute it to Ben Shaffer and this blog)