This exercise takes a little bit of math, but will change your perspective forever. It will help you to understand the proper discounting and pricing structure for your products/services.
If we look at the lifetime value of a customer – we make better sales, promotions, and marketing decisions.
Here are the calculation formulas to identify this number. It is multi-step math. We will do it for you.
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Send those answers to firstname.lastname@example.org
To keep this concept simple.
If your average lifetime customer value is $10,000, you will ask yourself better questions.
Better questions will lead to more targeted sales opportunities.
If that math were true and you needed to generate $100,000 annually, then you know that you need 10 customers to do that.
Targeting 10 focused sales in a year is much easier than a shotgun approach.
Now, you might hit that target in one month? Good. Then you have an entire year to build up margins and prudent reserves.
Also, you won’t worry about a discount. If you know someone is going to pay you $10,000 on average in a year – what do you care if you discount 10, 20 or even 30%? How many times a day would you give up $3,000 to get $7,000 profit?