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Get Off the Free / Cheap Trend!

If you’re looking for the same regurgitated advice that every other internet marketer gives you, then you’ve come to the wrong place. Recently, I’ve seen a trend that I think is a dangerous one.

Several top internet marketers are dishing out advice on how giving out free or VERY cheap products on the front end is the way to go. I completely disagree with 95% of that and think it will actually hurt more people than it will help.

Sure, their logic might make sense upon first glance:

Cheaper Price / Free = More Customers = More People to Sell on the Backend To

But let’s take a closer look at that…

Let’s say that you send 2,500 visitors to your site and convert a whopping 40% on your free offer (that’s a fairly high percentage even for a free offer — I’m being generous). That’s 1,000 “customers” and $0 profit.

Now, let’s say that you have a $97 product in the backend or as a one time offer. Those 1,000 “customer” never bought from you and are classified as freebie seekers as of right now. A 5% conversion rate on them might be very optimistic, but let’s assume that you get that 5% conversion rate. That’s 50 sales, or $4,850 for you.

Kind of sad for 1,000 “customers” — that’s only $4.85 each, which again is pretty optimistic.

But let’s assume that you want to take advantage of your paying customers now and you offer a $497 one time offer to your 50 paying customers. Since these are paying customers, they’re conversion rates will probably be a bit higher. So let’s say that 10% convert. That’s 5 sales, or $2,485.

We’re at $7,335 so far. Now I know what some of you are saying … the money’s in the list, and you have 1,000 “customers!!!” Well, not really. We have 50 real customers and 950 freebie seekers. Even if we doubled our paying customers, that’s still not much. You probably won’t make $1 per month per subscriber for a freebie seeker, so you might make a few hundred to maybe even several hundred dollars a month off that list if you’re good.

Now, I know some marketers offer a cheap “trial” of say $1 or so with a forced continuity in the back of $50 per month or so. You might think that this would be a better model even if only half of the original 1,000 “customers” bought. The problem there (and most marketers won’t tell you this) is that most forced continuity models will have a much lower conversion rate even if the original offer is cheap or even free. The few exceptions to this might include free/cheap trials to software, tools, services, etc. where the buyer expects to pay a decent monthly fee if they like what they get.

So what about the other guy…

Higher Price = Fewer, Higher Quality Customers = Higher Priced Backends to Sell To

Let’s take a closer look here.

Let’s say that you get your 2,500 visitors to your site and only 3% convert instead of the original 40% on a $297 product. That’s 75 customers or $22,275. We already have 3x more than the other model even BEFORE we include the backends.

Since these are proven buyers and higher quality, we can focus on bringing them higher price point backends. The backend should at least be the same price point as the front end if not more. So let’s just say that we do $497 on the backend. We should expect at least a 10% conversion on that because these are proven high price point buyers who’ve already bought from you (I’ve gotten as high as 66% backend conversions at similar price points). That’s about 7 to 8 buyers (7.5). Let’s just say 7 - that’s $3,479 extra. On the higher conversion end, you could easily top $20,000 extra.

However, with those 7 very high price point buyers, you can then go on to offer an elite one time offer or upsell at $1,000 or more and grab a small percentage there as well.

We’re already hovering around $25,000 on the low end. But it just gets better. Now that you have 75 decent buyers and several elite buyers, they’re worth significantly more to you and far more likely to buy higher price point products in the hundreds or even thousands of dollars. They’re also more likely to purchase some subscription programs at decent price points as well — probably worth far more to you than the prior list.

You can take this logic to the extreme and focus on even higher price points from the start or high monthly subscription products.

The key here is to have something that provides value and that people want. If someone wants something bad enough, they’re willing to pay for it. That’s a key to remember.

In addition, offering free or cheap products can always frighten off some of the normally high price point buyers too. And we’re not even getting into the quality of free/cheap vs. paid/high price point products argument yet — we can save that for a later time.

So before you jump on the bandwagon of the free front end trend, give it some thought. You might be shooting yourself in the foot.

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