After going through an exercise for planning ads budgets and sales with my Ads Like A Boss students, I noticed something major.

Many of them had small priced digital products or offers – $17, $27, $97, and even $197.

After they calculated their projections, they realized they wouldn’t be profitable when they launched their ads.

Talk about a close call!

I’m not here to tell you that your small priced products will never be profitable, they absolutely CAN be.

But if they aren’t, I don’t want you to just scrap them and throw them out the window.

Instead, I want you to know how to pivot and make adjustments so that you will be successful in marketing them.

In today’s episode, I’m sharing strategies that you can implement to make your small priced products profitable, including:

  • How to lower your cost per lead.
  • How to increase your average cart value.
  • How to tie it all in cohesively with your marketing strategy.

Tune in, and then share your thoughts with me over on Instagram (@emilyhirsh)!

If you want next-level support with your marketing and Facebook ads from a team that cares about your success just as much (if not more) than you do, apply to work with Team Hirsh today at helpmystrategy.com.


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Emily Hirsh:

Hello, my amazing entrepreneur friends, all of you out there. I am just coming off of our lunch and holy cow, it was so incredible. Obviously with a launch year, looking at numbers and goals and money that you’re making cause that’s the biggest piece of a launch. Is it profitable? Is it successful? Did we hit our sales goals? However, for me this launch, yes, we crushed it. Like we welcomed so many new students into Ignite. I am so excited about every one of them. We had so many of just the right ideal people participating in our video series in our webinar, and I’m just so excited. But also with that, with this launch, and I was telling a friend this the other day, it’s like eight, there was a whole new and amazing experience for me of a next level launch where I was so supported by my team. 

So we worked for probably two months to actually produce what we produced in the launch and from the content, to the funnels, to the copy, all the pieces, all the components. It took about two months of buildup of actual like work being our primary focus into the launch. But also this time around what I did was because we were expecting such a large number of people participating in the content, we get a lot of strategy questions throughout that. And so a lot of times, and in the past I was the only one who could answer those strategy questions because I don’t expect like my tech VA to be answering those. So instead of just having me be the primary person to respond to that, I actually pulled in a lead ads manager and our Ignite Success Coach to be supporting all of the people going through the video series and participating in our experience. 

And that was pretty incredible for me because it took away a lot of stress and it took away a lot of just constant having to respond to people. And I was able to get on and instead do Q&A calls and do a much higher level of coaching. So overall though, the biggest thing for me with the launch, like heavier numbers, our goals and crushing, you know, all of that is amazing, but also what was amazing for me was to watch my team do what they did. Like that was so incredibly rewarding to watch my marketing team just crush every project, finished every one, like produce amazing funnel pages, emails, workbooks, like all of it. Watching that happen, watching, you know, my team support with the content, those people that I brought in to support answering questions and the content, like all of that was incredible. 

And also, you know, when you do a live launch, you have a lot of exposure and energy and you just have more conversations than you would normally have. So I was answering questions and doing Q&A’s and talking to people throughout the lunch. And it’s given me so much valuable content ideas, but also really helped me see like, okay, this is what I want to do more of, this is what is working, this is what isn’t working, this is where I am more clear. 

And so I just shared this on Instagram, but I’m actually going to do in like a couple of weeks, a CEO week I’m calling it. I just made it up. It’s going to be CEO week and I’m taking four out of five days off of the week. No calls, like no social media, no electronics. I’m going to meditate for like an hour a day. I’m going to go for long walks, maybe have an audio book, but I like to also walk with nothing and just like ask myself a question and go on the walk and think about it. I come up with amazing ideas doing that. I’m going to get acupuncture. I’m going to get massages. I’m going to work out. I’m just going to give myself free brain space without noise, because I am so excited about everything that’s coming out of this launch in terms of where we’re going and what we’re going to do more, and the focus and the clarity I have for our team. We’re not launching anything new. Don’t get any ideas. We’re really focusing on what’s working, but I want to scale a little faster and I’m ready to kind of turn the dial a little bit. And I feel it in my body that we are approaching a massive growth spurt. 

And so I feel like I need to, as the CEO, make sure I’m holding that vision and plan and direction. And so I’m giving myself that week to really just plan, plan, hold the vision, take care of myself, but also give myself that freedom. So if you want to join me on CEO week of actually doing it the week of elections too, because I’m like, I may as well just get off social media for that week anyways. Anyways. All right. Well, we’re not talking about CEO week today.

What we’re talking about on today’s podcast is marketing a small price digital product or offers. And the reason why is I had this question over a dozen times during the series, the Ads Like A Boss video series and the webinar, because what I forced people to do well, not forced. I never forced you guys, but what I encouraged people and supported people in doing was creating an ads budget based on sales goals and figuring out how many leads and how much you need to spend to achieve your sales goal and working through that process. 

And I walked people through that. You guys know if you’ve listened to the podcast a lot that you, I am a numbers obsessed person. And so I don’t make any decisions without numbers, including, you know, what my ad budget is, backed by what my sales goal is. So here’s, I would take people through this exercise where we’d say, okay, what’s your sales goal in dollars? How many units do you need to sell then? And then what is, how many leads do you need to get in? And then it was kind of spit out after going through a calculator in the process, the budget. Here’s what happened for a lot of people, anybody selling, you know, a $27, some were like $17 or $10 or $12, either physical product or really small price, digital product, even like $97, $197.

They came back after doing the exercise and they’re like, well, I’m not going to make enough money. Like this profit margin is not good enough. I remember one specifically, it was a $97 and she’s like, well, I’m going to have to spend, you know, $7,000 to make $10,000, according to this formula. And here’s why I love this because by doing that formula and creating that expectation ahead of time, she’s able to see, okay, if I was to go forward just like this and get that cost per lead and not many leads and that sales conversion, here’s where I would land, versus where she might’ve gone is let’s start ads. Let’s create our marketing strategy. Let’s just launch. Let’s just go. Let’s just see what happens. And then, you know, halfway through or a couple of weeks into starting, she’s like, Oh, I’m not making my sales that I need to, or that I want to. 

And so first thing is by working backwards and saying, based on your sales goal, how many email leads do you need to get? Or how many views do you need to get to your sales page if it’s a physical product? If you convert, you know what, three, four, five, 6%, whatever it is of all those leads or views, you know, what then is your sales and what’s your revenue? By doing that first you set yourself up for realistic expectations. Now let’s talk about what happens when you do that and then you’re not getting the numbers back that you want. So you do that and you’re like this person you’re like, well, I don’t want to spend $7,000 to make $10,000. I have to pay my VA. I have other business expenses. I’m not going to be profitable. It’s okay. So we’ve now shone a light on this problem. 

So our options are two things. One, we can figure out how to get the cost per lead down and the sales conversion up and play with those numbers and figure out what’s possible and what we would need to hit to make this profitable. Or two, we can create a strategy to increase the average cart value. So either adding an upsell, raising our price, adding an order bump, adding something so that the customers are spending more money and the average cart value is higher. Those are two options. 

And so this is really common with small price products that you’re going to play with a pretty small margin. You don’t have a lot of room to spend $10 cost per lead, or get a very low sales conversion out of all your traffic and your life. And it’s absolutely possible to be profitable and successful, but I also got a question from somebody on this thread that really intrigued me. And they’re like, how are all these big companies who sell $7, little things successful? And I don’t know a specific company she was referencing, but I liked this question because I think sometimes we might see, you know, large physical product e-commerce companies out there, or maybe it’s a really low price membership, which we’ll talk about a membership in a second cause it’s a little different. 

If the first month is low, you have more purchases coming in, but you might see somebody selling something low price. I don’t know, like cheap jewelry or something. And you’re like, they’re running ads. How are they successful? Here’s how: truly they most likely have investors who have given them upfront money to spend, because if you can, you know, put up front, I’m just gonna throw out a number. Let’s say you have 50 to a hundred thousand dollars of an investment, capital investment. And you have that money to spend. You can front your ad spend a lot of money and they’re probably losing money. Most likely like a $7 thing in the beginning, they are losing money, but what they’re banking on is a rush to the market like that, getting customers and having those customers are telling people what they bought coming back to buy more things. 

That’s how they’re doing it. I guarantee it because if you do the math and you are a solopreneur doing it all by yourself with no capital investment, just like most of us are, you either have to choose to front money and invest money for probably the first 90 days that you’re not going to get back to make a brand splash and really make an impact and start getting people, you know, referring others to your business, coming back to buy more, sharing it organically on social media. Like you’re going to start getting other traffic sources, but if you are a new business and you have no audience, this is where I say buying data, they’re doing what I say. They just have this ability to do it faster and at a higher level, most likely. 

So companies who get that, you know, spend 90 days spending some or all of that investment money and then they make a bigger splash. They’re able to start getting those customers. And then they start seeing an uptick in traffic from organic, from referrals, from people, again, returning to buy more products or different products or buying gifts for friends. They’re counting on that if they have a low price product. And so the way they see it is when they acquire that customer, then that customer has a higher value than that one $7 purchase. 

So that’s how those companies are doing it. And so I loved her question because I was like, yeah, I could see how, if you are, you know, watching this digital product business run ads to a $7 thing, and then you’re doing this math formula and you’re like, I’m not going to make money. They’re probably not making money in the beginning. Either they’re paying for brand awareness, they’re paying to buy data, they’re paying to get customers who they’re counting on returning, or they’re counting on referring friends and they have an investment to probably do that. Most likely. I’m not saying every case, but that’s the reality. 

So when you have a small price product, again, like I said, it can be profitable, absolutely. But you have to create that formula and know what numbers you have to hit. So what’s the cost per lead you can afford to pay? Can you pay a $5 cost per lead or do you need to figure out how to get it at $3? And then out of all those leads, what’s the sales conversion that you have to hit in order to be profitable and with a small price product? 

Also, you have a much higher sales conversion. So if I let’s say I’m selling a $97 digital product and it’s selling on a webinar, which arguably isn’t the best strategy because it’s so low priced, but let’s just say, I’m doing that. I need to sell like 708% of all the webinar registrants to that product. Whereas if it was a $97, I’d probably only sell like 1% of all the registrants. So you’re going to have a higher sales conversion, and you should have a higher sales conversion because it’s a smaller priced, you know, lower risk for somebody to buy that product. 

Now, if you can incorporate this into your strategy, in my opinion, this is the best thing to do, which is create a higher average cart value. Add in an upsell, add in an order bump where somebody adds something to their order form. If you have a physical product, can you create a bundle that somebody can add on? Can you create a reason why they’d buy multiple quantities of what you’re selling? Can you create a specific, you know, product they’d want to add on to their order that goes with what they’re buying? Because if you can increase that average order value, you’re automatically going to make more money with every sale that you’re already getting. So that’s the best scenario. 

The second one is looking at your numbers and being realistic because sometimes you just have to figure out how do I get my cost per lead at that price? That’s what I can afford to pay. So it is absolutely possible to market small price, digital products, and be profitable. It’s not easy. And in realistic ideal world, if you don’t have investment and you don’t have money to invest in the first 90 days of your marketing, you need to become profitable faster. You’re probably better off creating one more offer. That’s more exciting pensive that you can make more money with because you just look at projection calculators and doing the math like high ticket is so much more easy to make money off of and profit because one sale has such a high value. I don’t think everybody should do high ticket, but $97 is a low price product. 

You’ve got to sell volume and you have to sell volume at a low cost per acquisition in order to be profitable. So if you could sell a $97 product and a $197 product and 5% of the people who buy the $97 product buy the $197, you’ve just made an extra $500 for every, oh, sorry no. Actually a thousand dollars for every hundred people that buys if I did that math right. I might’ve done that wrong. So that’s how we make small priced offers work. And there’s a lot out there that do work, but I mostly wanted to adjust that question of like, well, how are these bigger companies doing it? I see ads for $7 products. Like how are they profitable?

Let’s talk about membership sites. A membership site is often a small price point of entry. It’s, you know, $27 a month, $97 a month, $17 a month. There’s a lot of low price, especially in the fitness and wellness industry of memberships. Most of them, almost all of them are probably not profiting until about the third month of that member. So you are again, fronting money to get members oftentimes to then see the average value of like an average member stays for eight months, or an average member stays for seven months. 

So the key with memberships, and you can’t do this from the beginning, but as you launch a membership is you need to know your churn. You need to know the average amount of time somebody stays on in your membership. What that means for that. Like if it’s $97 a month and they stay on for eight months, you’re making just under $800 per customer. You need to know that in order to know what you can pay to acquire a new customer, you need to know if I don’t make money until month three or month four of their membership payment am I still profitable? And you can’t again know that right away. There’s lots of strategies that with membership launches, where you want to do like a big splash, get an initial several members, because then you’re dealing with churn issues and you don’t want to have like five members at one time. 

So there’s a lot of strategies with membership sites I could do a whole separate podcast on, but the key is it’s yes, it’s a small price like initial first payment, but also you’re paying for those monthly payments. And so as you build a membership, you need to know what that average amount of time a member stays in your membership and what that means for the amount you make per member. And then what that means you can pay to acquire somebody. So, you know, I can afford to not make money for the first two or three months. Most likely with memberships that is what’s happening and people aren’t making money until later on. Also memberships are great to lead to something else bigger, so having a membership that then kind of nurtures those leads, and then they’re like, what’s next? Having something else that they can buy after, that is also a great strategy in those memberships. 

So to summarize, if you have a small price digital product or physical product, and you create, you know, projections or you go through that formula of, okay, how much money do I need to spend to make my sales goal, and it comes out at the end is not looking so good, it doesn’t mean that Facebook ads is not going to work for you or that you can’t market and your business is just you  might as well give up. Like, I don’t want you to ever feel like that because it’s not true, but you’re either going to have to invest in the beginning to get it to a profitability at a higher price product or play with your cost per lead and your sales conversion and figure out where it needs to be to be profitable and then get it there through strategies. 

So that’s what I have for you today guys. I got this question so much, which I didn’t realize how many people out there are really trying to sell a small price, digital product. And I know there’s tons of e-commerce people selling, obviously small price physical products. So this is very relevant if you fall in that boat, but that’s the option. And again, that’s the beauty of going through this formula and really figuring out what the reality is of your marketing strategy versus having to figure this out like after 30 days of spending ads and being like, oh man this is not how I thought it would be, or how it was going to play out. So thanks so much for listening today, guys and I’ll talk to you on Thursday.