SFR 219: Adding A Second Pricing Tier - Stephen Larsen

SFR 219: Adding A Second Pricing Tier

Feb 22nd, 2019 anchorwave

A plane only makes money when in the air, but needs tons of systems in place on the ground to support it. Get your plane in the air more easily with a second pricing tier…

What have airplanes got to do with creating a successful funnel?

I really DON’T know that much about airplanes, but last week, on my way back from some consulting in Hollywood, my brain started running hard… and all these epiphanies started popping up.

I was walking through the airport with the most ridiculously painful pair of shoes just killing my feet. (I hate those shoes, I’ll never wear them again)….

Steven Larsen pricing strategies

Coulton was with me, and I was like, “Hey, Coulton, hold on, I can’t talk. I have to write these ideas in Trello, or I’m gonna forget them!”

Here’s what was goin’ on in my noggin…

AIRPLANES & PRICING STRATEGIES

The airport was virtually empty, and as we were walking out to the actual gate, I could see all these airplanes just sat there. I thought, “Well, that’s funny. The airport’s empty and all this inventory is sitting right here on the tarmac.”

When got to the terminal, I started building a members area and putting together some cool stuff for OfferLab. I was still thinking about all these empty planes when I remembered a teacher in college who had us study airline pricing strategies.

For example:

  • How much money each airline lost for every seat that was NOT filled.
  • How many seats needed to fill just to break even on their costs.

It was fascinating… and I started thinking about the similarities between how air travel and ClickFunnels are based on similar pricing models.

DO YOU OFFER FIRST CLASS?

Top tiered pricing

If you look at ClickFunnels, 20% – 30% of the users are on the full $297 version, (if you’re not, I strongly recommend you do. It’s very much worth it).

At the time of writing this, there are about 70,000 monthly ClickFunnels users. (Russell talked about the numbers publicly recently, so I’m cool to say this.)

That 30% revenue from the top $297 tier is about the exact same amount as the other 70 – 80% that comes from the lower tier.

Did you hear what I just said? There’s a HUGE lesson here.

What does this have to do with airplanes? Follow me for a second…

Steven Larsen sales techniques

I was sitting looking out at all these planes, and I started running the numbers.

I was like, “Huh, okay… these airplanes reserve 20 to 30% of their capacity for first class buyers, and then everybody else, in the back is economy with tiny upsells here and there.”

SuddenIy, it hit me, and I realized how clever it is to have a two-tier pricing model.

Thinking about the ClickFunnels space, thinking about airplanes, thinking about my own products, I realized, “Oh my gosh, the same model’s true. It’s about 80/ 20.”

About 20% of customers take my really expensive $35,000 to $50,000 option where they fly to me, or I fly to them to design everything out.

Everybody else takes the cheaper stuff, and that’s fine…

Again, what’s funny is that:

The 80% in revenue is almost the exact same amount as the 20% revenue that comes in from the top tier.

Which means that…

Just by having a MORE expensive option, you actually can DOUBLE your entire business.

SELLING STATUS

Tiered pricing status

I don’t remember what book it was, but it was talking about (I know there are varying beliefs on this) how having more than two, maybe three pricing options inside your company creates customer overwhelm.

So you have the:

  1. Major Price
  2. Really Expensive Price.

So I was sat thinking about these airplanes, and I was like, “Huh, that’s gotta be why they have first class right at the front of the plane. It’s totally a status thing.”

You pay extra NOT to get to the same freaking location as everybody else. I have nothing against that. I love first class, it’s awesome.

The 20% who fly first class create as much revenue as 80% of people in the rest of the plane.

Second pricing tier model

I was like, “Whoa, I need to make sure that I’ve got two tiers of pricing in EVERYTHING that I’m selling.”

I don’t care if you sell a book at $7.95, you need to add that extra tier. You could have $7.95 for a softcover and $21 for the hardcover.

This is literally the reason why order bumps and upsells work. You don’t need everyone to buy… and in fact, most won’t.

If you have a 20% uptake rate on your OTO or your upsell, that’s really freaking high.

You can take the average cart values from $7.95… and double, triple, quadruple,10X and beyond, with upsells.

HOW DO AIRLINES MAKE MONEY?

Airline pricing strategies

I was thinking about airlines, and how the 20% of first class customers create just as much revenue as the other 80% of customers… and I was like, “Can an airline make money when they’re:

  • Maintaining the planes
  • Cleaning planes.
  • Loading Planes

….? The answer is obviously, NO!

An airline only makes money when a plane is in the air. That’s it. NOT preparing to launch, NOT double checking or triple checking…

Those are all important things, but the airline only makes money when that thing is in the sky.

Airline sales techniques

However, when you compare a plane’s time in the air with the amount of time a plane’s on the ground doing preparation, maintenance, onboarding, offboarding, safety checks, fueling, baggage, all that stuff.

A plane’s not actually in the air nearly as much as it is on the ground.

I’m getting to some very important principles here… Keep following me on this.

80/20

Steven Larsen army

Think about the army, the military itself; only about 10 – 20% of the army is actively in combat. It takes the other 80% of the force to support the other 20% that’s in active combat.

80% is just there to support the 20%.

However, if your plane does NOT take off… if you don’t understand the core of your business… if your plane sits on the tarmac…

You will NOT make money.

TIME FOR TAKE OFF?

Tiered pricing take off

Let’s stick with the plane analogy a moment longer…

It’s NOT likely that you’re ever gonna keep a plane in the air 24/7, that’s just not feasible…

BUT the goal is to find whatever makes you money the fastest, the hardest, the biggest, and the strongest… and GET IT IN THE AIR.

*JUST LAUNCH*

That’s the biggest message I’ve sent out in my Science of Selling Group. It was a little bit of a joke, but NOT REALLY.

Across all the hundreds of funnels I’ve built, and the millions of dollars they’ve brought in… all the stuff …

The fastest pass to cash I have EVER seen in my entire life is this…

*You Have To Launch*

Tiered pricing secret

That’s it. There’s the secret!

You’re like, “Oh, gotcha, Stephen. I see what you did there.”

BUT I want you to understand: *YOU HAVE TO LAUNCH*

Get the plane in the freaking sky. Toss that thing up and let everyone know, “Look, my plane’s in the air.”

Launch tiered pricing

And understand that:

  • Yes! It takes quite a team and a system to support that thing in the air.
  • You actually do need a business to support the revenue that’s being brought in.

But when you start bringing revenue in, find the two tiers that are MOST easy for you to create.

Having a second tier is one of the easiest ways to double your business.

Only 20% will buy it, (but even if they don’t), you’re gonna be able to double your company and double the revenue faster than anything else.

PEOPLE WANT TO PAY YOU MORE

It’s the reason why Grant Cardone sold 3,000 tickets at $10,000 each to his 10X Event.

The other 29,000 tickets he sold, those were $500, or maybe $1,000.

There’s a category of people who are willing and eager to pay you MORE money.

Make more money with tiered pricing

So do yourself a favor, and just…

  • Put a second tier inside of whatever it is that you’re selling; double or triple the original price.
  • Figure out how to get that plane off the tarmac because you’re losing money as long as it stays on the ground.

Your system needs cash, and if the plane is on the ground, you’re NOT gonna bring any money in. You’re just gonna keep doing maintenance, and checking oil levels:

#JUSTLAUNCH

Want to know the fastest path to cash?

A: Just push the button, and move forward.

Make money fast with tiered pricing

The BIGGEST questions I want you to ask yourself are:

  1. How can I add a second tier?
  2. How can I get the thing in the air, and build the 80% that keeps it in the air almost all the time?

Adding a Higher Ticket Product is likely the Simplest Way to Double Your Business.

Hopefully, you guys see how you can tweak that in your sales funnels and pricing strategies.

BOOM! Until Next Time – Keep Crushing It!

Hey,

I know this game can take a few tries to get the money flowing, especially the first time, right? And that can suck.

I also know from experience how frustrating it can be to know your business is just a few tweaks away from your next big payday, but you don’t know what tweaks to make.

I’ve felt completely paralyzed by that in the past, and it sucks.

I’ve been blessed to work with thousands of new and successful businesses over the last three years, and two things have really shocked me.

#1: I began noticing the pattern to success is vastly the same, but everyone’s spot on the path is obviously different.

#2: I’ve been shocked and overwhelmed by the number of people asking for my help, my systems, and funnels in their business.

Well, until now I’ve never had a system or product in my own business to help you build yours. Now, I’m finally able to be public about all this.

If you’d like my help to build your offer or sales message funnel and even your content machine, go to myofferlab.com.

Steven Larsen OfferLab

The path to online and offline success is 80 percent the same regardless of the product, price point or industry, and it works if you’re new, or are already a killer in business.

You can get more details on how to get my personal attention and frameworks in your own business by going to myofferlab.com

In-person classes are limited to 60 people each, and frankly, I can only do about two of these a year.

Get more details, and even jump on the phone with us for free at myofferlab.com

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