Let me start by saying this –

I know what’s like to sell affordable products online.

I built a half a million-dollar skin care company called Trefiel, where the majority of the product was made up of our two best sellers:

  • 4 mask bundle sold for $32.95
  • 5-Mask pack sold for $39.95

Those are seriously slim margins when you look at the cost of acquisition and running an eCommerce business.

And ever since I wrapped up my time at Trefiel and focused solely on teaching what I learned in that company, I’ve mostly worked with women who sell “affordable” things.

Things that are well-priced. Things that are impulse buys. Things that don’t require a lot of thought to buy.

And you know what? It’s totally possible to build a great business with products under $100. You can do serious turnover – in the hundreds of thousands of dollars every month – with those kinds of products.

I’ve seen it in client’s businesses who’ve I’ve helped get there.

There’s just one problem with the affordable pricing model.

There’s very rarely a lot of money left over at the end of the month.

When Corona happened in March 2020, I had probably one of the biggest breakthroughs around product businesses that I’ve ever had –

The clients who have affordable pricing struggle with profitability. The clients who don’t have affordable pricing, don’t.

Sounds super simple, right? It took me a while to have this one but once I did, I started to see just how badly this one single issue was affecting 80% of my clients.

Most product businesses have about 30-40% profit on the product, before operational expenses or marketing expenses.

So when you start to take on big advertising costs and scaling your company to tens of thousands of dollars a month in sales, then hundreds of thousands of dollars a month in sales, it very quickly becomes a big problem.

Because yes –

Overcoming the constraints of low margin products is by selling volume. But you have to sell enough volume to make profitability a reality.

Most people can’t sell (for a number of reasons), and as a consequence, most people won’t ever get to the point where they have enough volume to overcome Low Margin challenges.

This means if you have affordable products, you’re almost always going to be in that “low margin, low volume, low profitability” phase. 

That’s why you feel like you’re spinning your wheels. That’s why there’s very little money left at the end of the month. That’s why you’re struggling to get to the next level.

It sucks. Been there, done that.

But before I show you how to solve this, I want to show you exactly what happens on the inside of two example businesses, drawn from real life client experiences, so you can really see how this plays out.

What happens when you have an affordable product

K comes to with me a $100 product that has 40% profitability on the product. She goes through my process, makes a tonne of money (having her first $17,000 month – 170 units! ) and is so excited.

New milestone, right? “I’ve got a real business”.

But when it comes to:

  • Paying her ad account so it stays running;
  • Paying her bills with me;
  • Giving herself a salary;

She’s barely scraping by. Some months, her ad account is turned off because she didn’t have the cash to pay Facebook. Eventually, despite making tens of thousands of dollars a month, she’s trading while insolvent and everything falls over.

That’s not an exaggeration.

Her entire business collapsed because she was making too much money… but at the same time not making enough money to be profitable.

That’s what happens when a Low Margin product business doesn’t have the volume of orders it needs to be profitable. And honestly – out of the thousands and thousands of calls I’ve done with women around Australia – most of you are stuck in this stage.

Let’s look at it from a different perspective though.

What happens when you don’t have an affordable product

J comes to me and she sells a $300 product with 80% profitability on the product. She goes through my process, makes a tonne of money (her first $25,000 month – 83 units!) and is super excited.

Why?

Because she can pack 40 orders all month, every month and not break a sweat. Plus, after all expenses, she’s got an extra $10,000 she didn’t have before.

J didn’t run into the problems that my Low Margin Product clients have. She didn’t have to sell more and more and more things to make more money. She just had to keep making a cool $10,000 profit a month and all of her goals would be met.

Of course, she wanted to grow – now that she saw the possibilities.

But there’s a difference between her and K –

She doesn’t have to grow her company to make enough money.

Why women in product businesses price their products affordably

It’s statistically improbable that any of us will be successful. Only 3% of women in business ever make it to the “million dollar a year revenue” milestone.

There’s a whole barrage of reasons for this, which I’ve written about extensively in other posts, but the most important one that’s going to help you get past the Low Margin Product hurdle is this –

You priced your products so people would buy them.

And that was your fatal mistake.

When we price something because we want people to buy it, what we do is think about the lowest common denominator.

You think to yourself –

“Okay, I want as many people as possible to be able to afford this product that I’m selling. So I’m going to price it in such a way that more people can afford it.”

Notice how I bolded afford in that statement? There’s a really good reason for that.

You’re staring down the barrel of The Affordable Fallacy and it’s one of the reasons why despite your product being affordable, nowhere near enough people buy it.

Let me explain.

The Affordable Fallacy 101

When you price your product, you’re setting the bar for what type of person comes to your business. Affordable products attract people who “afford” products.

What does that mean though?

There are two ways that people spend their money –

  • The first takes the amount of money they have and spread it across as many things as possible. They like affordable because what they value more is quantity, not quality. They want all the things and they want them cheap.
  • The second takes the amount of money they have and spread it across 1-2 things. They don’t like affordable because what they value is quality over quantity. They want the best of the things they have and they want them to be expensive.

Here’s the best real life example that I have from my own life –

When I was in late highschool and in my early career (before Trefiel and 10k Customers), I worked as a receptionist at a law firm.

I hated it. I was so bored. But… it paid me $365 a week for a small amount of hours, which meant I could do horses with all my spare time.

I had a really expensive performance horse. I spent $15,000 on him. I trained with the best coaches on the Sunshine Coast, Queensland. Each lesson was $100. I had the best gear money could import into Australia. I spent upwards of $4,000 on Italian imports.

How?

I poured literally everything into horses. Every single cent I had. I was a devout, passionate, obsessed horse girl.

Those are the customers you want.

But those are the customers you send out the door when you price your products “affordably”.

And here’s the problem with that –

If your goal is to have a product business that funds wealth creation and lifestyle that you want for yourself and your family, you’re not going to achieve those goals selling affordable products to people who want quantity over quality.

  • People who value quantity over quality are always moving onto the next thing.
  • People who value quality over quantity stay with the best thing that money can buy.

So when you’re constantly having to acquire new customers, you’re spending mountains on advertising and literally pouring all your profit into trying to acquire more of the same customer.

You’re building a business around the customer who’s ultimately going to leave because “more is better”.

Which means…

There’s no profit.

I want to show you the exact maths I use to help my clients have this breakthrough.

  1. Take your AOV (Average order value) and multiply it by your POP (profit on product)
  2. This gives you your PPS (profit per sale)
  3. Take your DS (dream salary) and divide by your PPS (profit per sale)
  4. This gives you the number of orders you need to fulfill to achieve your dream salary…

Or does it?

Actually, it doesn’t. Because the reality of product businesses is that you never keep all the profit on the product. You’ll be lucky to keep 20% of your POP.

So let’s do the real calculation of what you actually need to sell to achieve your goals.

  1. Take your AOV (Average order value) and multiply it by what you’ll actually keep as profit on your product (say 20%)
  2. That gives you your RPPS (real profit per sale)
  3. Then, take your DS (dream salary) and divide it by your RPPS
  4. That gives you how many orders you actually need to fulfill to achieve that goal
  5. Then, going one step further, times that by your AOV
  6. That gives you the yearly revenue you need to have in order to achieve your dream salary

When I do this exercise with clients, I usually find the second time they do this calculation, their faces sink. Because the reality of the size of the business they need to build in order to achieve their basic lifestyle goals is so much bigger than they originally thought.

And that’s especially true when you have affordable products.

Because like I was talking about at the start of the post, you have to sell so many of the damn things to get even slightly close to getting the volume you need to achieve those goals.

That’s without even considering the profitability of selling affordable products (that’s a whole other problem to deal with).

There’s a better way of making more money in product businesses. And no, it’s not in selling more things.

It’s actually selling LESS.

And to give you some tangible insight, let’s compare two of my clients. One of them has a $100 AOV and 7% RPOP (real profitability on the product). The other has $200 AOV and 20% RPOP.

$100 AOV and 10%  RPOP

  • AOV for client ($100) x .10
  • = $10
  • $100,000 / $10
  • = 10,000 orders to fulfill
  • 10,000 orders to fulfill x AOV ($100)
  • = $1,000,000 yearly revenue

$200 AOV and 20%  RPOP

  • AOV for client ($200) x .20
  • = $40
  • $100,000 / $40
  • = 2500 orders to fulfill
  • 2500 orders to fulfill x AOV ($200)
  • = $500,000 yearly revenue

See the difference?

The worst part of this calculation is I’m not even talking about using your product business to create wealth and financial security. I’m JUST talking about paying yourself a salary that you’re actually worth as the CEO of your company.

The $100 difference on a AOV and 10% difference on profitability means you have to sell $500,000 more of your product.

That is just an insane amount of work to get paid a reasonable amount of money, don’t you think?

The way you should actually price your products

Recently, I’ve made the switch in 10k Customers to only working with clients that sell luxury products and there’s two really important reasons for that:

  1. They have to sell less to achieve the same goals
  2. They are more profitable so the CEOs behind the companies are happier with their business overall.

And if you’re thinking to yourself –

“Well shit, I don’t have an expensive product. My product’s pricing is under $100.”

Don’t worry – most women way undercut their product because they’re scared of charging for what it’s really worth.

One of the first things I do with all of my clients is put their prices up. A really good example of this is the sustainable underwear company I was working with late last year.

The CEO behind the company sold the most incredible, hand-made, organic, sustainable underwear in the entire world. And she was charging way, way, way too little for the product and the work that went into making it.

So, I got her to double her prices.

She immediately started making more money. Like, within 24 hours. And within 30 days, she had grown by such a huge amount that she had to hire to keep up with the demand.

Because here’s the thing –

If your goal is to build a million dollar product business, pay yourself a good wage and build real wealth, you HAVE to sell expensive things and get good at selling expensive things.

And the people who are willing to pay that price for what you have are far easier to sell to than people who want affordable products.

That’s what I do. That’s what I help women like you do.

And I’d love to have a conversation with you about your business and what’s going on it.

Email me, let's talk