Self-Realisation, Uncategorized

All other things being equal (simple contribution analysis for pricing)

If you make a product that costs $5 to produce and package, how much should you charge for it?

I don’t know.

But there’s a simple bit of arithmetic you can do to understand sensitivity in pricing.

Should you charge $7 or $9?

Well, if you charge $7, you make $2 a unit.

If you charge $9, you make $4 a unit, or twice as much.

Which means, all other things being equal, you’ll need to sell twice as many at $7 as you’ll need to sell at $9.

It doesn’t feel that way, but it’s true. 100 sold at $9 is more profitable than 180 sold at $7. And to take it a step further, you’ll need to sell 800 at $5.50 to make as much as you would have made at $9. Eight times as many.

No one knows what your demand curve is going to be like, no one is sure what impact your pricing will have on all the other items you sell.

But be honest with yourself about contribution.

Price is a story, it’s a story we tell ourselves and others about what we have to offer. But price is also the path to being able to stay in business.

Reblogged from: here

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Self-Realisation

“What have you got?”

The wrong answer to this question is often, “what do you need?”

When someone asks what you have to offer, when they ask for a menu or a price list or some indication of what they can choose from, it’s tempting to ask what they want, because maybe, just maybe, you’ll figure out how to make that for them.

When you act like a short-order cook at a diner, people rarely ask you for something interesting. Instead of trying to figure out what will get us picked, we might figure out if there’s a way we can sell people on dreaming about what we have instead.

Reblogged from: here

Self-Realisation, Uncategorized

A kick in the asterisk

What’s the point of being open 24 hours a day, seven days a week, especially if you get zero calls between 3 am and 4 am?

Why take the risk of offering a no-questions-asked money-back guarantee when you know that a few people are going to show up with ridiculous requests for refunds?

Do you really want to offer an all-you-can-eat buffet? What about the trolls that eat too much? Shouldn’t you have limits?

Simple. Because you’ve just eliminated a reason for people to wonder. They don’t have to wonder about your rules or your hours or your fine print, because you took away the doubt.

Reblogged from: here

Uncategorized

Escalators, Elevators and the Ferry

Escalators make people happy. They’re ready when you are, there is almost never a line, and you can see progress happening the entire time.

Elevators are faster, particularly for long distances, but we get frustrated when we just miss one, and we often wonder when the next one is coming, even after a few seconds. (That’s why lobbies have mirrors, to give you something to do when you’re waiting).

The ferry schedule, invented by Cornelius Vanderbilt, is a third way to deal with transport. Instead of having each boat turn around the minute it arrived, he guaranteed when it would leave. We can build our day around a schedule…

[Or you could point them to the stairs.]

What do you offer your clients?

Reblogged from: here

Self-Realisation

What do you want?

The industrialist and the one in power would like you to choose from a list, multiple choice. To interview with the companies that come to the placement office, to select from what’s on offer, to ask, ‘what do you have?’

This is the world of “If we don’t sell it, you don’t want it.”

But in revolutionary times, when the number of options is exploding, the opportunities go to someone who can describe something that’s not in stock, that perhaps has never even been described before.

Custom-made does you no good if you don’t know what you want.

Reblogged from: here

Self-Realisation

When you’re offered precisely what you were hoping for…

say, “yes.”

If you’re a musician, that means that when the internet says you can play what you want, record the way you want to, release it when you like, at the length you prefer, to the fans you’d like to share it with…

If you’re an actor, that means that when the internet says you can perform what you’d like, film it with the team you’ve chosen and distribute it far and wide…

If you’re a writer, that means that when the internet says you can write what you want, when you want to, at any length and subject matter and intensity you prefer, and then send it to five or ten or a million friends and followers…

You get the idea. Now, for the first time, you can choose yourself. You can be responsible for what you do and how you do it. You have to do the hard work of finding and pleasing an audience.

But you do have to say, “yes.”

Reblogged from: here