People claim they cannot buy your product, no matter the actual situation.
A person will spend five dollars on coffee daily and yet won’t put double that into a tool that might save them hours of work. Or won’t put just a few weeks’ worth of that into the premium version of a software they use every day.
This can cause you to end up in a nasty situation. You might have to fight customers on price. Go cheap enough to overcome that hesitancy. Buyers don’t know and do not care about your overhead; competition sets prices. Quality must be noticeably higher to justify even slightly higher costs.
And you can end up insolvent because of this mechanic. You can burn through advertising money, distribution costs, and website hosting to only sell at a loss.
This is untenable. But, thankfully, there’s a solution.
Because when someone buys something, they are then in a much more buying mood. Even if there is a time delay, a seal gets broken.
Overcome perception, not economics.
Micro-transactions, those little one dollar or fewer purchases on mobile games, work on this exact idea. It can be used unethically, but it need not be. You don’t have to stoke gambling or other addictions to profitably use low prices to get over the unwillingness to pay money.
Get someone to buy something small or just take something for free, and a percentage will agree to a bigger cost for related products. You can scale this up and up. So long as each installment product is worth the larger price, some people will get there.
You can make a whole business work on these principles. People do it all the time.
Let’s say you offer a phenomenal deal. Good, right? Okay, but that deal will cost you more than you make off it. You’re selling at a loss to even make the deal possible to offer.
That’s not great.
But, along with that phenomenal deal, you offer something small, on the side, optional, that you’ve raised the price to a little more than it has to be. Or you also offer a premium package with just the right up-charge to recoup the loss from the deal. Essentially, if they buy anything at all past the deal, you’re profitable.
Math is required. It’s very easy to lose money if you’re not thinking with every factor and every cost. When you’re selling on volume, small numbers add up quickly both ways. You must monitor things and roll with the punches, but the results can be intense.
Get them with a deal, then make the profit on the impulse buys, the value upgrades, and the next product in a series. It works for grocery stores, book series, fast-food restaurants, and online games. It even has the added benefit of making customers buyers for longer, as they make their way through your scaling offers. As you expand your business, you will want to have people still around to snap up those offers.
It’s not easy, it takes a lot of work to set up. But, when done right, it’s one the most intensely successful business models in the world.