How to Help Clients Evaluate Offers for Profit
Is your leader bursting with ideas for new offers? Do they have multiple offers without a clear business strategy? Or are their offers not as profitable as they should be? As an operations strategist, it’s your job to help them create a plan for success. Since money makes the world (and businesses) go ‘round, how can you help clients evaluate their offers for profitability?
When you’re evaluating individual offers, you need to test your market, figure out your resources and investments, and (of course) create your financial dashboard.
1 – Test the Market
Looking at the market as a whole to see where your offer fits is really a research and planning phase of implementing an offer. You need to know if your offer is marketable to determine whether it is (or can be) profitable. Ask yourself:
Is there a market gap that I can uniquely fill?
Does your offer fill a unique gap in the market? Research the market and your competition. Use their products for yourself. Is there some way for you to improve the process or accessibility or some other piece of the product or service? Where’s the gap?
What does your inner circle think?
Your existing clients are your most favorable audience. They already know you and like you, and are probably willing to help you with your experiment. Practice your offer on them. Or survey them to find out what they’re looking for and adjust your offer to that. (I highly recommend The Content Experiment’s Ask Your Audience Challenge--which she’s running live soon!)
Talk about your offer or idea with your mastermind group or other groups that you participate in. They’re a great resource for you.
What’s your pricing and/or value?
If there are similar offers in the market, that can point to your starting pricing range. However, when you start comparing (or if great comps are not available), I encourage you to focus on the unique value of your own offer to set your own price! I’ve even straight up asked my inner circle what they’d pay for things (RE: surveying my audience).
2 – Figure Out Your Resources
What resources do you have already in place? What investments do you need to make in order to make this happen?
Run the Initial Numbers
For your offer, run those initial numbers. What are your fixed costs? If it’s a tangible product, that’s clear: know your materials, manufacturing and distribution numbers to start. If it’s a digital product, you won’t have the same expenses, but your website is an incremental cost and maybe you have new software requirements that you need to meet.
Estimate what you can reasonably sell, then do the math to see at what point you would break even and when you would start to see a real profit. (See 4 ways to measure profitability.)
Break-even point formula: Fixed costs ÷ (sales price per unit – variable costs per unit) = $0 profit
Let’s see this math in action, using some very simple digital product launch numbers:
$3,000 additional website copy & launch emails + $1,000 funnel builder & tech support + $700 additional software = $4,700 fixed costs.
A product priced at $100 per download would take 47 downloads to break even ($4,700/$100 each = 47). If you can sell 20 of these downloads per month, it’d take about 2.5 months to start seeing profit on your initial launch investment.
Note: For simple math purposes we assumed this digital product didn’t have any variable costs (3% bank fees are a typical subtraction here).
The Tech Piece
It’s pretty much required that in order to make your offer/launch successful, you’ll need (again, using a very simple digital product launch here):
A short-form sales page (or minimally a shop area with descriptions)
Additional blog writing, emails or social media posts
MemberVault or similar (affiliate link)
ActiveCampaign or similar (affiliate link)
What’s optional for you? Things that are nice to have might be:
A long-form sales page
ThriveCart (upsells, affiliates, the good stuff)
A launch email sequence
Facebook ads
The Human Piece
Remember that whoever is working on the launch needs to be paid, so factor that into your costs. Also, when you have a team working on the launch, understand who has authority around spending. An administrative assistant won’t have spending rights but maybe you do as the Director of Operations (or as the CEO, if you’re evaluating for profitability in your own business). This helps to keep tabs on spending before you start making money.
3 – Create a Financial KPI Dashboard
Before this point, you were looking at the competition and forecasting your numbers. Now, you can measure how you’ve done after some time has passed and you have actual numbers you can pull together.
This step is listed “after” the launch because technically, you don’t have to have all the dashboard fanciness in place before you launch. “But Kelsy, you’re a dashboard evangelist, why don’t you recommend I have it as soon as possible?” Stay with me.
You see, there’s this whole measurement concept of leading indicators versus lagging indicators. Leading indicators are predictive. You can look at that number and see into the future. Lagging indicators are your after-the-fact numbers, which financial results tend to fall into. They are numbers that you can only look at after something has happened, but that’s really too late for decisions you wish you’d made.
There’s a lot of software (what I call data feeds) that can feed into a financial dashboard. Let’s say August is launch month (Month 1). You don’t have a dashboard all set up, but you need to see what’s going on as much as possible. How do you do that? Look at sales. That’s the thing I want to get my hands on first. How are they doing? I want to see those in real-time. So, I might just go to my Thrivecart dashboard to watch what’s happening in sales until I get a chance to build a more proactive dashboard. There’s no point in having a visualization tool just to have one. So get your hands on what you reasonably and monitor the situation.
How often should you check your sales?
It depends. Is this an evergreen launch or a time-sensitive launch? What are the leader’s goals and expectations? Is the goal immediate cash (one-time sales or referral retainers) or is it going to take growth over time (digital products or courses)? What are the good/better/best goals? What does “good” look like to the leader? Understand those product launch expectations.
I want to have those same conversations with the leader as I do when I’m talking with them about overall financial strategy.
Then, a quarter down the road, we’re going to be able to get deeper into those numbers and create a KPI dashboard for your client. This will be a huge value because they can see real numbers, understand what’s really going on, and take action based on reliable information. With this dashboard, you can turn financials into more of a leading indicator that helps them make decisions and drive productive action.