After setting a revenue goal for your business, the next question on your mind might be, “How do I actually reach my goal?” If that’s you, then you’ll love this episode! In it, I dive even deeper into the actual math behind your revenue goal using real numbers to help you determine what to sell, at what price point, and to how many clients or customers.
On this episode of Promote Yourself to CEO:
3:26 – I explain why figuring out how to hit your revenue goals can get a little tricky, especially if you follow so-called guru advice.
10:11 – You have to understand your sales conversion rate which varies based on what you’re selling, to who, and at what price point.
12:26 – What kind of sales call conversion rate do I see among people, even those without much sales experience?
14:53 – Let’s take a look at conversion rates of some other popular promotional methods.
22:56 – How do I know that the price point advice too many “gurus” give to entrepreneurs isn’t necessarily based on any real data?
27:39 – I discuss the biggest problems I see with offering a one-session service and my minimum price point recommendation for your signature offer.
31:39 – Here’s how building a baseline revenue with a higher-end offer can help you grow your income down the line, without sacrificing your time or salary.
34:55 – Remember this about each product, program, or service you create for your business.
Have you ever thought to yourself, “Okay, I set a revenue goal, now what? How do I actually make that happen?” Then today you're going to love this episode because we are diving deeper into the numbers of your business to help you determine what you need to sell, at what price point to how many clients, yes, the actual math behind hitting your revenue goal.
Are you ready to grow from solopreneur to CEO? You're in the right place. I'm your host, Racheal Cook. I've spent the last decade helping women entrepreneurs start and scale service-based businesses. If you're serious about building a sustainable business, it's time to put the strategy, systems, and support in place to make it happen. Join me each week for candid conversations about stepping into your role as CEO, the hard lessons learned along the way, and practical profitable strategies to grow a sustainable business without the hustle and burnout.
Hey, there. Welcome back to another episode in this series here on Promote Yourself to CEO. I love digging into the reality of running your business. A huge part of this is talking about the math, making the math work so that you don't just set these big goals out of thin air but you've really based it on facts, on data. That's what the series has been all about. In the very first episode, we talked about what is your big enough business, so the business that is the right size for you based on your stage of business, based on your season of life, based on the priorities and goals that you have for yourself.
Once you have an idea what your big enough business looks like—and the goal here is that a big enough business is one that allows you to live the life you want now instead of postponing it to a mythical someday—then we actually put some numbers to it in the second episode of this series where I shared the brand new Get Paid Calculator. Go to the show notes and you can get a copy. This calculator has three parts to it. The first is a personal salary calculator to help you walk through all of the expenses that you personally have to live your life, to take care of your personal needs, to pay your insurance, to add to savings, to pay off debt, and whatever other personal financial goals that you have so that then, we can determine what your revenue goal is. This approach is really important because if we aren't making sure that our revenue can support the take-home income that we want, we often find ourselves sitting there going, “I'm not paying myself enough. My business can't pay me any more.” These numbers are incredibly important and that's why I put together this really simple calculator to help you figure out the specific numbers for yourself.
Now that we have gone through those components of this process, the next thing is to answer the question, “Well, what do I need to do in order to hit my revenue goals?” This is where things can get a little bit tricky. This can get a little bit tricky because to be quite honest, there is a lot of talk out there that makes it seem like it's easier than it actually is. If you all have been around for any length of time listening to the podcast, you know that I am here to just pop the hype bubble and tell you the real look at what it looks like to hit your revenue goals, to hit your business goals. Let's look at the math of this. Again, we're going to use round numbers to make it really easy for you to follow along with me. When you get your hands on the Get Paid Calculator, you can put your own numbers to the calculator.
To keep it really simple, we are going to look at a goal of hitting a revenue of $100,000 a year, a six-figure business. A lot of times, I hear that this is a number that either people are concerned about. They feel like it rubs them the wrong way, like maybe they're reaching too far to say they want a six-figure business. Then I have other people on the complete other end of the spectrum who realize, “Oh, if I actually want the lifestyle I want, I need more than that.” But we're going to keep the math really simple just so that you can follow along with me here on the podcast. When you go get the Get Paid Calculator, again, you can adjust these numbers for yourself. How do you figure out how to get to six figures in your business? We have to make sure the math works. We have to look at the product, program, or service that you're offering, the price point of each offer, then how many sales you need to make of each offer in order to reach that revenue goal.
Now, here's where things can get tricky and what I want to caution you against, and this is especially for entrepreneurs who are in the coaching, consulting, training, teaching, creative, course-creation space. I know I have a huge variety of entrepreneurs out there. The majority of the women that we work with are in some service-based or education, training, consulting, coaching-based business. This is going to be specifically applicable to you because what I often hear out there is that people are being told by these so-called gurus that what they should do in starting their business, especially if they're wanting to take their business online and create a passive business where they can work from wherever, and make money while they're sitting on the beach, like all the hyphy stuff, a lot of them will say things like, “You should start off with a low price point product, then over time, you build a series of products, programs where you're slowly taking people up in price point.” It's called an ascension model in a lot of these spaces.
Let's say they recommend that you start with a $50 product, then you build a $100 product, then maybe you get to creating $1,000 product. Here's the challenge I have with this, and why I'm not a fan of this approach, starting small, then gradually building higher price point offers, is because you have to sell so much volume in order to make those lower numbers work. For a lot of the business owners that I am personally working with, that my team is working with, they don't have the resources in starting their business, meaning they don't have the time, the energy, the funding to spend as much energy as they're going to need to get volume to work out of the gate. Let's say, again, your revenue goal is $100,000 in your business and you start with a $50 product. If you have to sell $2,000 of that $50 product, that means you have to get in front of multiple thousands of people to buy it. Just because you have an audience of 2,000 people does not mean every single person is going to buy it. In fact, you will likely need closer to an audience of 100,000 people to make that $50 product a $100,000 revenue stream.
This is where this whole ascension model starts to fall apart because the volume of audience that you need in order to make these super low price points work often makes it so that the math will never work out and you end up spending a lot of time, a lot of resources, and a lot of money trying to profit off the back end of a $50 product. Let's say you go up to a $100 product, now you need 1,000 of that $100 product. You need 1,000 sales, 1,000 people buying a $100 product. A smaller volume but you're still going to need so many people to buy that in order to make it work. What if you go to a $1,000 product? Now you need 100 people to buy it. Again, this is not impossible but if you are just starting out and you do not have an audience, you do not have a list of potential clients, you are still figuring out where your clients are going to come from, how you're going to find them, engage them, and nurture them, you're trying to figure out the sales systems, getting 100 sales is a lot of work. You probably will need to get in front of, again, thousands of people in order to make that work.
My question back to most of the people I'm working with here is okay, if you can take that product out there, that product, program, or service—I'm just going to say product—into the world, could you sell 100 of it right now? Given where you are at your current stage of business with your current audience, could you sell 100 of a $1,000 product? For a lot of people, the answer is going to be no. The reason the answer is going to be no is because we have to understand how many people we need to get in front of our offers. I think this is where we see, especially on social media, that you only have to sell 10 of a $10,000 product or 100 of a $1,000 product or 1,000 of a $100 product. It sounds easy when it's simplified like that, when somebody is over simplifying what goes into selling something to an audience. But like I said, just because you have 1,000 people in your audience doesn't mean 1,000 are going to buy the thing. We have to understand what's called your sales conversion rate. This is going to vary based on how you sell what you're selling and who you're selling it to.
There's a couple different conversion rates that I've included in the Get Paid Calculator for you. This will help you see how many people you potentially need to get that offer in front of to get the sales that you are looking for. Let's say that we took our first product, maybe it's going to be a one-on-one offer that's $10,000 and your goal is to sell 10 of them in order to hit your $100,000 revenue goal. How many people do you need to tell about this offer? How many people need to check out this offer or engage with you about this offer? When I'm talking about needing to check out this offer, I'm talking about they not just found you one time, they actually got on a call with you or they saw a sales page or they were actively engaged in the buying process. All of those different sales mechanisms convert differently. I think this is really important to understand.
Let's say we have a $10,000 offer and our goal is to make 10 sales to get 10 clients at $10,000 each. If I'm going to use sales calls as my mechanism to get those clients, I'm actually going to get on the phone with these people in order to invite them to work with me, in order to buy this product, program, or service, then you will find that because of the high-touch nature of the sales calls, you will convert pretty highly on them. In fact, in the calculator, I've put on the low end 25% conversion rate, meaning one in every four calls should convert to a client. That is what I see for people who aren't even that experienced with sales but they are getting people who are genuinely interested in their offer on the phone. For people who are more experienced with sales or they have a longer track record or they have put other pieces of the marketing puzzle in place, we see people converting at 50% to 75% if not higher simply because their reputation is out there, so by the time people get on the call, they already know they want to work with them. It's just a matter of a few questions and some logistics.
Sales calls tend to, hands down, be the highest converting sales mechanism out there. You don't have to get in front of that many people if you only need 10 clients at $10,000 each in order to hit your $100,000 revenue goal. Again, you'll be able to plug all of this into the Get Paid Calculator here, then if you're doing sales calls and one in four is converting, that means over the course of the year, you need to talk to 40 people. You need to talk to 10 people every three months. That is so absolutely manageable. You don't need a ton, ton, ton of people in order to make that business work. If your conversion rates are even higher as your reputation gets even stronger, if you're getting really warm referrals, people who are very familiar with your work, then you might find you don't even need to talk to 40 people. Maybe you only need to talk to 20 people in order to get 10 sales. That's one of my favorite ways to think about, “How many people do I actually need to get in front of in order to make the sales that I want?” The more high touch you are, the more engaging your sales process is, the higher overall the conversion rate is going to be. We can always add high touch elements, even if we're trying to sell something in a different way.
Let's say that you have been following around in this entrepreneurial space for a long time and you've started to hear about the idea of launching a product, program, or service, and maybe you've started to follow along with some launches, you've seen several launches happen and these usually take the shape of a few different forms, but essentially, they are a period of educational content that has people sign up, they actually enter their name and email in order to sign up for this educational content that then invites them to join the product, program, or service. This could be a video series. A three-part video series has been very popular, the whole Product Launch Formula that Jeff Walker made really popular. There is the webinar launch that Amy Porterfield and so many other people have really advocated for. There's a challenge launch. Y'all have seen me do this with the Plan Your Best Year Ever Challenge. All of these provide amazing value—if they're done well—they provide value for free in exchange for an email address where then we can invite people into the product, program, or service that we're offering.
The downside of this is you do have to get in front of more people than if you were just enrolling people with one-on-one calls. The downside is you have to get in front of more people. The plus side is that once you have these launch formats figured out, once you've created your challenge, you could rinse and repeat that over and over and over again, so it doesn't take as much time as maybe having one-to-one sales calls. Like everything in business, there's a give and take. There's a give and take here for what happens, but on average, let's say a typical webinar strategy or challenge strategy converts at 5%, meaning that if you have 100 people take your challenge, then five may sign up for your product, program, or service. If we have, let's say, a product, program, or service still, we're using the same price point just to keep it simple, it is $10,000, so maybe this is a higher end group coaching program that you are offering at the end of your video series or your challenge or your webinar or whatever mechanism that you are using to do that full launch, then 5% of the people who participate in that launch will convert. If you're wanting those 10 sales at $10,000, you need to have 200 people go through that launch at least.
Now, I'm going to tell you right now that the conversion rate here can vary wildly. I have seen the conversion rate on a full launch be as high as 15% or 20%, especially for super niche markets or products, programs, or services that are very, very specific. They solve a very, very specific problem that not everyone can help them with. For example, I've had a client who is a professional dog trainer but not just a dog trainer for your pets. She actually is a dog trainer for people who compete with their dog in agility and obedience events. Her launches tend to sell out super quickly and convert really high because there's not really anyone else in the space doing what she's doing. But if you're going out there with a program or a course or an offer that is more mainstream or that's more similar to a lot of others, it may not convert as high. There's again, that little play. In fact, I'm seeing that over time, and we are seeing this right now in general, that people in most audiences, depending again on your niche but a lot of audiences are starting to get a little tired of the webinar launches or the video series launches. They're not paying as much attention to them as they did 10 years ago when these types of things first started becoming popular.
The first time I ran my challenge launch, it was amazing. It was 2014. Many people were excited about it because they hadn't seen anything like that in the business space but eight years later, it's not going to convert as high. But the assets are there so it's easier for us to rinse and repeat. Anyway, you can play with your conversion rates here based on your own data but again, let's say we're using a 5% conversion rate, you need 10 sales, that means you need 200 people participating in that launch to hopefully get those 10 sales. What if you don't want to do that full-on launch and you just want to send out emails to people, so you just want to put people through an email sequence? This is something that is pretty easy to do. A lot of us see this, especially if you have built up a pretty decent sized audience and you're communicating your offers to them, you will see a lot of entrepreneurs, a lot of small businesses go through these enrollment cycles for their programs, their courses, for whatever offer that they have where they will maybe spend a week or two emailing out. This can be amplified with others like social media, ads, and things like that, but email is the primary driver, emailing out about this specific offer.
This isn't necessarily as engaging as a full-on launch. If you are doing a challenge where people are getting a lot of content, it's usually a little bit more engaging. People are a little more likely to convert on that. We see those often convert higher than an email-only launch. Email-only launch, let's say it converts at 1%, which might sound really low to you but honestly, the industry average is 1% to 2%. If it's 1% to 2% and you're still looking for those 10 sales at $10,000, you need 1,000 people to see that offer. Hopefully by now, you can see there's a massive difference here between having 40 calls in order to get 10 clients, or getting 200 people into your webinar or your challenge in order to get 10 clients, or having 1,000 people in order to get your 10 clients, depending on the sales mechanism that you choose and your specific conversion rates.
But I plugged into this calculator some baseline conversion rates for you to look at. If you are not seeing, at least, this level of conversion with that specific way to get people into your offers, then chances are we need to improve your sales there. If you're not seeing one in four people convert off of calls, then there's probably some room for improvement. If you're doing a webinar launch or a challenge launch and you're not seeing 5% convert, then there's probably some room for improvement. If you're doing emails and you're not even getting 1% of people to buy, there's probably room for improvement here.
But why do I love looking at this so much? One, it helps us to really break down the numbers of, “What are the right price points? How many people do I need to sell at that price point in order to hit my revenue goals?” I think a lot of times, when we listen to all the hype out there and we start to feel like, “Well, I have to start with the small $50 offer,” or “I have to start with $100 offer before I get to a $1,000 or higher,” I want to tell you that is a rule that some person made up that is not necessarily based on any real data. Here's why I know this is true because I myself did not start off in this way. I knew that to get started in my business, I had a very, very real timeline in which I needed to be profitable in my business in order to pay myself. Instead of trying to sell a whole lot of a low price point offer, I decided to focus on a $2,500 offer. So $2,500 offer, what was that? This was before I had really any intellectual property created. I didn't have a course, I didn't have anything like that, I didn't have a product, but I did have my expertise.
In 2008, when I started, I knew that if I could get about, I think it was 20 people at the first half of the year and 20 people in the second half of the year, then I could hit my six-figure mark, pay myself when I needed to pay myself to take care of my family, and I could do it without overextending my calendar. If you plug in $2,500 into this calculator, again, and your goal is to make $100,000, then you see that you need 40 sales. For those 40 sales, then you have to think about, “Well, how am I converting those people and how am I making this happen?” For me, at that point, I did not have a big audience. I did not have a big list. Social media wasn't even being used for business at all. There were no Facebook pages for business. There were no ads. Nothing like that.
It was very much still the early days of social media, but I knew that I could go out there and build relationships, and get people on a call with me. I knew that I was pretty good on the phone and if I could just get enough people to have a conversation with me, that I could share with them how I could support them, so at $2,500, this very first coaching package I put together, it was six months for $2,500 of two times a month coaching calls with me, coaching and consulting calls, or if they decided to pay monthly, it was $500 a month, so it was $3,000. Because I knew I was pretty good at sales calls, I really only needed to get on the phone with about 80 people in order to get 40 clients; and 80 people, again, over the course of a year, that really wasn't too hard for me.
That meant that I needed to get 40 people on the phone in the beginning of the year, 40 people on the phone in the middle of the year in order to fill my client docket. That worked for me incredibly well because I was able to tap into the first 40 people based on my network, based on referrals, based on collaborating with other people who are potentially in my field, then that gave me a solid six months to work on my marketing. Once I had those first 20 clients in the calendar, it gave me time to work on my marketing. It gave me time to start building my email list. It gave me time to get in front of more people, so the next time I opened spots for coaching, I had people who were actively ready and interested in working with me.
I think that is something we need to think about. For some of you who are listening, you might be thinking, “$2,500 is really, really high. I don't know if I have anything I could offer for $2,500,” and you might be thinking that the size of the package is too big. I totally get that. I totally, totally understand that, especially if you have only been charging hourly for your coaching, for your teaching, for your training, for your consulting. I talked to so many people who are service providers who really have been on this hourly model. Maybe you're a therapist, maybe you are a nutritionist, maybe you are a parenting coach. It is really common for people to start out in these fields and do what they see everyone else doing, which is, “Oh, you just sign up for one session at a time.” The biggest problem I see with that is that we are constantly trying to resell and rebook our clients, not only in order to keep our client full and to hit our own numbers but we're having to work so hard to get our clients to stick to the plan that will help them see the results that they're looking for, that will help them actually get where they want to go.
In general, one session with a personal trainer is not going to get me to my goal of health. One session with a nutritionist is not going to help me fine-tune things or stay accountable to what I need to be nourishing my body with. One session with a parenting coach might be great for some tips and tricks but won't actually lead to the real transformation that needs to happen internally when you are doing some big shifting of beliefs and behaviors. For a lot of the clients that I work with, longer containers work as a win-win. They do better for the client. They do better for you, the service provider. In that way, thinking of these price points suddenly doesn't become as high because you're committing, on your end, to this client for a long enough period of time to help them see a real result. On their end, they're committing to themselves, they're committing to this process by saying, “Yep, I'm going to sign up for six months of this instead of just a session or two.”
The math is where this can work really, really well. If you are an expert, have expertise in something, have experience in something, I encourage you to start looking at a price point for your signature offer that is anywhere from $2,000 to $5,000 minimum. The $5,000 price point tends to work really well for people who are doing creative work and delivering something. I see $5,000 being a great price point for website designers, for graphic designers, for photographers. If you are actually delivering an end thing for your clients, then that $5,000 price point might be your starting price point. The final thing I want to say when it comes to plugging in your numbers here is that when I am looking at the math behind how to get people to their desired revenue in their business, I am rarely looking at leveraged or passive income first. Unless that client happens to have a large audience that they've already built and they can already tap into, the numbers don't work very well otherwise.
There have been a handful of times where I've looked at the traffic that one of my clients have had or the size of their email list or the size of their social media and because maybe they were building those things on the side as a hobby or when their business was still very part-time, they did build the audience and they could sustain a leveraged, so a course or a coaching program or something along those lines or a more passive lower price point offer. But for a lot of us, the higher price point is what's going to get us to where we need to go in order to bring in the revenue we need, in order to pay ourselves what we actually want to pay ourselves.
The final thing I'll say here is that over time, as you focus first on these higher end, higher touch programs and services, it starts to build what I call a baseline revenue. A baseline revenue is where you, by taking on these clients, can stabilize your revenue and give yourself a runway for a period of time. Depending on how long it takes for you to deliver that product or program or service, it could be a three-year period or a six-month period or even a 12-month period. But when you have those clients who are now contracted with you and they are paying you, even if they're paying you on a payment plan, they give you the revenue that you need locked in and allow you a runway of time to figure out the other things like, “How do I build an email list? How do I record and create an online program? What does a group coaching program look like? How do I actually launch something?” Those things are a bit more complicated and take a bit more trial and error than inviting people in a one-on-one manner to work with you.
This is why I often recommend starting your business not with the low price point, gradually stair-stepping people up to the higher price point. I flip that. I don't want an ascension model. It takes a very long time to make each and every part of that work. It's a lot faster to focus on a higher touch, higher value program or service that you can deliver without a whole lot of people that can create the baseline revenue that you need and help free up now the time that you need in order to maybe build a little backwards in your business some of these smaller offers. Again, this is what I did in my business. I started with my one-to-one coaching and consulting, I got my baseline revenue established, and once I knew that revenue was established—and I only had to talk to 10 people a week, I was just coaching 10 people at a time—that gave me two days a week where I could go and work on my marketing, where I could build out an online program, where I could put some of these pieces in place and within a year, two years, three years, I was able to completely shift out of one-on-one into a more leveraged business model. I was able to do that without sacrificing my salary and without working more than 25 hours a week.
These are the reasons I think looking at the numbers are just so incredibly important because if we don't make sure that all the math works out, we might find ourselves underselling and not realizing how many people we need to get these offers in front of. The final thing that I will say here before I close out this episode, in addition to going to get the Get Paid Calculator and going through each of the three parts here that go along with this series we've been talking through, I want you to remember that for each offer that you create for your business, you have three systems behind the scenes you have to create for it. For each offer you have, there are three systems behind the scenes that need to be created. There's a marketing system, there's a sales system, then there's the delivery customer experience system. Each time you add a new offer, you're not just adding one system, you're adding three. The more offers you create, the more complexity is going on behind the scenes of your business.
I tend to see that a lot of entrepreneurs, especially once you're a few years into your business, there's a lot of trial and error, which comes with the territory, but sometimes there's a lot of creation without editing. This is where we can actually sabotage ourselves from hitting our revenue goals. We start focusing on creating more and more and more ways to work with us, more and more and more products, programs, or services and it actually dilutes our efforts because it takes so much effort to market, sell, and deliver each offer. I recommend focusing on one core signature offer. Do your best to hit your revenue goal or hit the majority of your revenue goal with that offer. I truly find that the 80-20 rule plays out in a lot of our businesses. Then make some additional offers if it feels aligned and it is not going to take away from your core signature offer. I tend to find, for a lot of our businesses, we have a signature offer. This is what most of our clients do with us, then we might have an upgrade offer. Maybe once they finish the signature product, program, or service, they go into this next level or we might have a bite-sized offer. We might create that later, this little piece that allows people to get an idea of how they can work with us.
Beyond that, we may be adding additional layers of complexity to the business. As you punch these numbers in, I really want you to be thinking about, “Can I realistically serve this many clients and get in front of enough people to make all the numbers work?” If you start to feel like maybe this is a lot more than you thought it would be, maybe you bit off a little more than you can chew, how can we play with this a little bit? Does it mean we need to look at a different price point? Does it mean we need to simplify and let go of a couple offers, and really double down on just one or two? Those are usually going to be the top recommendations that I give my clients when they're going through this process, is not to add more, more, more, but to look at how we can do less but better, and how we can do that at the price point that allows us to have the schedule we want, work with the number of clients we want, and still hit our revenue goals.
I hope this episode and the last few episodes were helpful. This has been so much fun for me to create for you all. I know that when you go to download this Get Paid Calculator—and I will have a tutorial on there for how to plug in all your own numbers so that you can really see how this works in your exact situation—it will help you have so much clarity in your business. That clarity is everything. Having clarity about your numbers and about what actually needs to happen truly is a game changer. If you love this episode, please let me know, tag me on Instagram @racheal.cook. I want to hear from you. I want to hear your aha's and insights on this one. Until next time, I'll see you soon.