SFR 227: Physical Vs Digital Products – Stephen Larsen

SFR 227: Physical Vs Digital Products

Mar 22nd, 2019 anchorwave

There are MAJOR differences in value between physical and digital products. That’s not it though. Here’s how to leverage the rest…

There are specific differences in value between physical versus digital products…

I want to show you the benefits of both and how I combine physical and digital products to increase my average cart value significantly.

Steven Larsen perceived value

This teaching comes directly from my Live Event, OfferMind

Over the years, I’ve coached thousands of people and gradually, I’ve discovered holes in the status quo of what’s delivered… versus what it actually takes to be successful.

I created OfferMind to fill in all the holes that I’ve seen from my (kinda unique) position.

The next OfferMind is coming up this fall on September 2nd – 3rd.

Russell is keynoting (which is very very exciting). He’ll be speaking on the last day. I’m gonna try to get a few other heavy hitters as well. It’s gonna be awesome!

To join me and Russell, go to to get your ticket.


Hacking perceived value

I want to show you one of the easiest ways to increase:

  • How much money people spend with you
  • How much money you get to keep

…sound good? Let’s do this!

If you look at a lot of the funnels that we create around low-end free plus shipping products…

For example, A BOOK.

A lot of times, a funnel starts with a physical product and then progresses to digital products as the funnel continues.

There’s a VERY good reason for this strategy, and that’s what I wanna teach you about here because…

It’s one of the easiest ways to:

  • Create a lot of income very quickly
  • Get a lot of eyeballs/ customers that are very excited
  • Get a lot more money in the door than your spending on ads


There’s a beneficial relationship between physical and digital products, (and to state the obvious) they’re not the same and they don’t serve the same purpose.

Physical and digital product marketing

My point is that whether you’re in the e-com or the info product space, adding some products from the other side of the fence is one of the fastest ways to get A LOT of extra cash in your pocket…

I’m gonna ask you a few questions here:

Q: What’s the benefit of an info product?

A: We did the numbers on my info products, and they have like a 98% margin. The margin is huge. *HUGE* (all caps)

Q: What’s the benefit of a physical product?

A: It’s tangible. It can be touched. The Perceived Value is High.

Your customer’s mind will be getting the anticipaton of a dopamine hit as soon as they place their order.

  • “I’m gonna hold it soon.”
  • “Oh, imagine what it’s gonna be like whan I have…”
  • “What’ll it feel like using it …. doing it…. driving the vehicle…” (whatever it is the thing is).

Physical products advantage

Physical products have a gigantic emotional advantage over digital. However, it’s the exact opposite when it comes to the margins.

Info Products = very low perceived value.


The perceived value of an info product is typically low because the customer knows that it just takes an email to fulfill it…and it’s probably already made.

So while the perceived value of your info products is inherently low, the margins are huge.


On all of my webinars, I ALWAYS ship an awesome physical product EVEN THOUGH it’s mostly a digital thing. When people show up they get a t-shirt. I do the exact same thing at my live event too.

Steven Larsen product marketing

There’s a physical thing that they’re gonna be able to:

  • See
  • Hold
  • Touch
  • Taste

…(whatever it is), actually in existence.


My actual profit comes from INFO… because it cost almost nothing to fulfill on.

A lot of times, on free plus shipping offers, we lead with a physical product…

For Example, A Book:

  • Low Cost
  • Low Price
  • High Circulation
  • High Perceived Value

Here’s another question for you…

Q: With all the upsells, what have you noticed?

A: They’re mostly all info!

Sometimes we’ll do MP3 players and things like that, but usually NOT. It’s usually straight info.

We know that a percentage of people will buy.

People who buy info products

After the first “Yes,” the second “Yes” is so easy… waaay easier.

So don’t mess around with the first “Yes.”

Get the first “Yes” quickly by selling the high perceived value product that’s (a lot of times) physical.


So a lot of times, in my offers, I’ll add a physical product to increase perceived value.

Physical product to increase perceived value

My Funnel Stash, I ship out a whole bunch of stuff; even though most of it’s digital.

For Secret MLM Hacks, I ship out a lot of stuff when people buy … even though it’s mostly digital.

That’s a huge hack to the game right there. It’s MASSIVE.

So with your info product, I would bundle up a whole bunch of physical stuff to increase perceived value.

Q: But how do you use info products to increase the perceived value of a physical product?

A: By answering the questions the arise from the purchase of your product.

For Example:

What questions would you have if you bought a whole lot of healthy chocolate? (Besides, Am I kidding myself?”) 😉

Physical products

  • “How do you keep it?”
  • “How much can I eat?”
  • Different recipes

So what if you had a whole bunch of info products that explained that?

And guess what?

You don’t even have to make the info products yourself!

Instead, just interview people who love making fake chocolate recipes and have them create a video for you. It scratches their back and it scratches yours.

You could go interview a few health coaches, and have them add in their stuff… and BAM! $197 upsell that’s just boosted your average cart value like crazy!

You’ve created a high perceived value thing, (not as high as physical), but MASSIVE margins on the backend.

I do that a lot now for that exact reason.


The relationship between physical and digital is something that I’m always looking at when I’m creating offers.

There wasn’t a lot of stuff I had to add to my 30 Days offer to make the perceived value go sky high after I added in my OfferMind Event. Why?

OfferMind perceived value

A physical event created HUGE perceived value! Waaay more than a 100 bucks the offer cost…

I didn’t have to go add in all this other stuff…

  • Stack
  • Stack
  • Stack
  • Stack
  • Stack

…just to boost the perceived value!

Stack to boost perceived value

I could tell from the comments. People were like; “Oh my gosh, a two-day event!” I couldn’t even read them fast enough.

In an hour there were 700 views that had been shared like all over the place. I was like, “Sweet, you all just marketed for me!” Dunso, right!

The product wasn’t made at the time, but it still increased the perceived value.

I’m ALWAYS looking to see what perceived value/ perceived relationships I can leverage.


Short product marketing copy

Q: How much sales copy is on Amazon?

A: Like, NONE!

There are bullet points, but there’s no sales letter on Amazon. Why? Because Perceived value is huge: “I’m gonna hold it. It’s gonna show up in the mail.”

Anticipation is a huge tool.

That two-day free shipping! It’s just short enough to increase anticipation and just long to bother you…. You know it’s coming and that ten bucks for the jump rope starts to play with your mind…

You’re like, “I can imagine myself. Mm-hmm, I’m Rocky, baby!” And you totally mess with your identity.

You start justifying the purchase to yourself because of who you want to be…

Physical products have a high perceived value

“I’m Steve Larsen. I’ve got a beard, baby. I’m tough!”

We all do that with every product we buy…

And your customer wants that experience when they buy your product too.

So when you look at the relationship between perceived value, price, and actually holding, tasting, and anticipation that it will show up.

Your customer wants the excitement.*GIVE IT TO THEM*


JCPenney is one of my favorite case studies ever. It’s one of my favorites from College.

The guy who created the Apple store and the genius lab was hired by JCPenney’s.

The Apple store was such a huge hit, and JCPenney’s were like, “Holy crap! What if our store experience was more like what Apple’s got going on?”

So they hired the Apple guy, and said: “Do the same thing over at JCPenney.”

The first thing the guy did was start gutting stuff. He made it look like an Apple store. It didn’t look like a JCPenney anymore; it looked like an Apple store.

Apple store perceived value

He said to the customers:

  • “Hey, you know mark our prices up and then give you coupons to knock it back down to the original price. You’re a smart consumer, so we’re not gonna do that.”
  • Instead of $9.97, it’s gonna be $10 because we don’t wanna insult your intelligence.”
  • He stopped sending out the discount mailers.

Q: What happened?

A: A fourth of JCPenney’s’ stock price plummeted the next quarter. Just, BOOM! SLAM!

Now let me ask you a question…

Q: What did the Apple guy kill?

A: The fun of buying. He got rid of it.

The fun of buying and perceived value

People want the anticipation. They wanna play with the perceived value.

We all do that stuff though…

I buy the products because it represents me… NOT because of the price. We ALL do it… whether or not we wanna admit it or not.

So look at the relationship between:

  • Price
  • Value
  • Anticipation
  • Physical products
  • Digital products

… these are all mechanisms you can play with and leverage.

You need to ask: “How can I increase the potential average cart value of my funnel by increasing the perceived value?”


FibreFix and The Harmon Brothers came to Russell and asked for help.

I was like, “No way! Dude that’s awesome!” Russell goes: “Yeah, they said if we help them they’ll help us, and maybe we can do a viral video.”

Viral video for digital products

… and that’s how the viral video idea started and we got to do a cool project with FiberFix.

FiberFix was selling all of their stuff on Shopify…

So… here’s another question for you…

Q: What’s the potential cart value of something on Shopify if it’s $7.95?

A: Yeah, $7.95. You can’t go up anymore. There’s no upsells. Potential cart value is capped at $7.95. It’s not a funnel, it’s a website. That’s why websites suck.

Shopify even says on their own blog that you need a sales funnel if you want to sell a lot. They even name ClickFunnels. It’s crazy.

Sales funnel product marketing

So we left FibreFix on Shopify, but we needed to increase the potential average cart value… A LOT!

So instead of just being able to buy one product…

  • We built a funnel where you could buy one, two, three, four, five or ten products from the get-go.
  • We did a bump for $10.
  • We did another upsell that was like $47.
  • There was another $97 thing.

We increased the potential average cart value up to like $900!


Human nature and perceived value

Q: Do you know what happens when the option to by more is is there?

A: Some people start to take it!

We started to look at the stats; money coming in, average cart value, cost to acquire, (all that stuff) to see the difference between what was coming in from:

  • Amazon Potential Cart Value = $7.95
  • Shopify Potential Cart Value = $7.95
  • ClickFunnels Shopify Potential Cart Value = $$$ *HUGE*

(It think it was a $25 product actually… anyway, the principle is the same.)

Shopify and Amazon couldn’t go any higher, but on ClickFunnels the potential cart value was huge.

We looked at the numbers, and, yeah, most people bought 1 product, but there a percentage who bought more:

  • 10% = bought 2
  • 8% = bought 3
  • 5% = bought a HUGE amount
  • A few bought 100.


Q: Do you have to pay for and purchase that customer again?

A: No… it’s Pure profit!

That’s how you wreck the game!

Info products

The same principle is true when you create a core offer:

Adding physical products will drastically increase the perceived value… when you bundle in info products that are easy to fulfill on.

Info products are still huge value… it’s just hard for people to imagine it.

That’s why we’ll put things into a CD… or a massive spread of CDs and product boxes… even if it’s not coming packaged like that…. it people start to experience the product in their head.


When you pick which products you’re going to sell be methodical about what you choose… we’re talking lifestyle business…

I’m NOT talking change the world business, yet.

Change the world's perceived value

I fully intend on changing the world. It took me a long time to say that comfortably. I want to change the world.

In the beginning, it was me figuring out something with enough zeros behind it… where the market expected to spend a lot of money.

So that I didn’t have to stand up and say, “Hey, this is gonna be challenging for you to get this. You gotta spend $100 000 for this little supplement pill.”

Internally people are like: “What?”

Battling perceived value

I don’t wanna have to battle that…(and neither should you).

So instead, chose markets where there’s capacity for:

  • High Perceived Value
  • Massive Anticipation
  • Easy Fulfilment
  • Physical & Digital Bundles

… you’ll make your life easier and your wallet fatter!



If you’re just starting out you’re probably studying a lot. That’s good. You’re probably geeking out on all the strategies, right? That’s also good.

But the hardest part is figuring out what the market wants to buy and how you should sell it to them, right?

That’s what I struggled with for a while until I learned the formula.

So I created a special Mastermind called an OfferMind to get you on track with the right offer, and more importantly the right sales script to get it off the ground and sell it.

Wanna come?

There are small groups on purpose, so I can answer your direct questions in person for two straight days.

Steve Larsen OfferMind

You can hold your spot by going to

Again, that’s

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