Different ways of making profit

Every company is different, but often the same theories can be applied to them. The most general one that is used is simple – you have a product and you sell it. But if that’s all you do, you are not taking advantage of the tremendous potential you’d have if you’d do something more.

#1 Lets imagine you have one product that you sell. If you’re narrow-minded, you might think that here’s not too much extra you could do. But you are wrong, very wrong. You can have one product, but if you vary minor things (maybe just name and package), you could sell the same product to different consumer groups for different prices. Take two beer brands produced by the same company – one is targeted at students and the other is meant for business people. Brands are different, names are different, bottles are different and even the prices differs 50%. But you know what? The beer inside is exactly the same. If you’d only had one brand you would have only one consumer group to sell to, but now you have two, and with different prices. Open your mind.

#2 Lets be original and lets keep imagining we still have just one product. And let it be beer again. I like beer. You can have only one beer brand available, but you can sell the same brand to the same consumer at very different prices pretty much at the same time. Don’t say it’s impossible. Just think about it. It’s so obvious. Think of beer. You go to the shop and you buy a bottle of Budweiser for cents. An hour later when you’re drunk already (okay, I doubt that happens with a beer that’s close to water but stay with me) you go to a bar where you pay for the same beer 4 times as much. Same beer and sometimes you even get it in the bottle, the same bottle you got from the shop an hour ago. So – you can sell the same product in different places with a different price. And people will not think you are ripping them off. They are used to it. It’s normal. Open your mind.

#3 Beer. I love it. If you’re a beer manufacturer then you have all the resources and machinery available to produce beer. Right? Right! But you have more. You can use the same resources to produce other goods as well – lemonades, bottled water and so on. Take Honda (no, that’s not a beer brand) – Honda doesn’t just produce cars, they are using their available resources and additionally they produce motorcycles, engines, lawnmowers. Open your mind.

#4 No, no vodka. Still beer. When you first start to produce beer, you have a lot of investments to do and the profit marginal is not too high. However, once you have the factory set up you can produce NEW products with 60% of profit already. Because there’s no extra development needed. Get it? Or let’s imagine you are a programmer and you have developed an online magazine system. To create the first magazine, it takes time and money to develop the system, to acquire the know-how and so on. But now when you want to create a second magazine you already have it all – the system, the know-how. So the development will be a lot quicker and a lot cheaper than the first time, thus increasing your profit marginal substantially compared to your first magazine. All in one – by using the same idea in multiple different ways/times, you can make 60% of pure income from it.

#5 When someone has bought from you once then there’s a good chance he will buy again. But you need to help them. Let’s talk about backend products and backend sales. Firstly, you advertise your product for a certain amount of money. Now you make a sale. For many businesses it’s the end of story. But it shouldn’t be. If you can make backend sales then you could spend more money for getting one customer and still make more money. Take beer; or think of monthly magazine subscriptions and so on. And what’s more - When someone has bought something from you (via the internet, for example), ideally you’d have their contact information so that a week later you could contact them to offer them another product. People who have bought once are more than likely to buy again. Eg take business ebooks, you might think that if a person bought something this week he isn’t interested in it the next week or that he’s out of money or…but no, it’s often not so, it’s like an addiction – you try it once, you want more. And as a business owner you should use it.

#6 And something totally different. Taking advantage of people’s laziness. Or bad memory. Or however else you could call it. Basically let’s say you have a website where you offer people paid subscription. So everyone who wants to read your website needs to pay a monthly fee. Usually, to get people to sign up, web owners use trial offers. Meaning that eg. 7 or 14 days you get free access to check out if you’d like to pay for something like that. But here’s one extra you could add, to get you more profit. Firstly, people like free things. And if they can get a trial membership for free, many of them will go for it. But there could be one tiny requirement for it – you need to submit your credit card information. And the point here – if you don’t cancel your subscription by the end of your trial period, you will be charged the next month’s or why not year’s fee. And if you tell that to your trial member upfront there will be no problems. 50-70% definitely do cancel before the period ends, lets say 5% wants to start paying and others just forget all about it…well, until they check their credit card report and later cancel (AFTER they have been charged the first fee). One site that seems to be doing the same very successfully is Encyclopedia Britannica. On their trial registration page stands –

A credit card is required to validate your free trial. You will never be charged during your free trial, and you can cancel at any time. If you decide not to cancel your subscription, your service will continue for just $69.95/yr (Save $1,325.05 off the print Encyclopædia Britannica)

And just to mention in between everything else. Yes, I know you have bought business books before this one and will most likely do it again soon. But what I would suggest is that you don’t just read the books, but read them, think of what you read, make notes when you see something good, make notes if you get an idea from the thin air while reading the books. Yes, this often happens, at least to me.