so ladies and gentlemen welcome to a highly anticipated module inside of well gradiency as a company because here's the thing when it comes to e-commerce and infopro businesses even more so than local business it's so down to intuition and there's such a broad range as I said if you've got a a local Biz agency and you know you're working with real estate agents or solar companies you know there might be a little bit of flex between you know or or maybe you might even increase your price from one client to another by like double right and that'll be a big deal whereas with an e-commerce or info product agency you might have a client who's billable is five times that of another client because the the scope of the businesses are so so different so for that reason I've always gone off of intuition but in today's module I've kind of taken everything that I actually use and the process that I use on a sales call subliminally and you know through pen and paper which we'll talk about in the next phase or two phases after that and I've gone ahead and once again distilled that down into two tools that you can go ahead and use that will give you some clarity and will give you a Rudder as to how much you should be charging the client and not only that but based on how much you are charging the client what sort of results do you need in order to Warrant that pricing so when it comes to pricing online businesses if you feel as though you've just been kind of um you know in the dark out of the loop and just kind of uh just using your intuition which actually is a good thing uh but you just want something a little bit more tangible and just to add a bit more logic to your decision- making when it comes to pricing then this is a module for you [Music] [Applause] so ladies and gentlemen as I said pricing your services for Ecom and online Biz now in today's teaching we're are going to go over referring back to the best pricing models the Ecom client Revenue calculator how to have a sense for their monthly Revenue going into the call some real examples with clients and other brands how this feeds into intuitive pricing and lastly using all this ammo and our pricing model to pitch so real quick let's just go ahead and revisit the pricing models for for e-com and info now you know this a very simple one is base model and this works with all e-commerce and info product clients you know usually at our agency we'll have a high base model if it's a client that you know I'll be honest we actually don't have you know the greatest expectations that we'll be able to have a very juicy performance deal um just because of you know maybe the way they're structured maybe the fact that they're already doing a lot per month and you know we only think we'll be able to add an extra 10 or 20% to their results but you know when they're uh you know pulling in a million a month already Revenue wise then you know that is a big difference um or uh a lot of times we do this with sort of high ticket infopro businesses where there's a phone call funnel and attributions just a little bit more of a nightmare to kind of deal with then we have base plus performance uh you know with this we love this with e-commerce clients um you know sometimes we'll charge A600 lb base plus performance a 2500 lb base plus performance um and you know we've built up to I think or at least this year up to 28k pounds which I think is $440,000 in a single month and our base with them was 1,600 so that's like, 1600 lb and the rest of it whatever that was like 26,000 was all performance lastly we have performance only now we personally don't do this with any of our clients just because we like a client to have just a little bit of skin in the game you know even if it's just 1,600 LBS or 2500 lb like really not much but to me it's just a just a little sign that they're serious so you know with you uh that can be kind of your it's a very good um angle you know it's a very good offer and it's you know it's um it's a very easy sell but as I said for us personally we do like to get just a little bit of skin in the game if possible the only pricing model that you have to stay away from is bold offer pricing when it comes to online businesses because I said there's so much uh there's such a discrepancy between these different businesses yes info product SL education companies SL coaches Consultants yes you know that is that in e-commerce yes those are technically niches but to me they're actually more Umbrellas of businesses they're a way that they run their business business right uh it's almost like e-commerce is pretty much the same as brick and mortar but with brick and mortar you know you couldn't have a bold offer pricing because each business is just radically different and to be honest that's the same thing with e-commerce and um you know uh info prod businesses education companies whatever you want to call them um because at the end of the day we as agency owners we refer to them as niches but they're not really actually technically niches they're more as I said just Umbrellas of businesses once again as I mentioned the best Rudder and the best tool that you have is your intuition but I have gone ahead built out two tools for you so first one is the client Revenue calculator now this actually gives you some context going into the call okay because the thing is the client is going to tell you on the call how much they're making right uh it just gives you some context and this is actually a very powerful lead sourcing tool and so whether you're doing a personally or you're actually getting your VA to do it um you can actually use this tool as uh a way to um once you've lead sourced a way to kind of qualify and see that they're doing uh the sort of numbers that you need in order for them to be a client so as I said very very useful tool when you are collecting leads but you can also use a before you even have that first meeting even if that's just a demo call or something just to get a feeler for where they're at you know it's uh at least it gives you some more time to kind of think about pricing then we've got the break even row as calculator now this is a very important tool because this will tell you hey if their margins are this and you're going to find out what their margins are on that first demo call or that first discovery call whether you use a one call or two call close uh and you know I give you the script and we'll get into all that in in Phase five but really my point is is based on their margins and based on how much you're expecting to spend and once again this will be information that you find out based on how much they're already spending and if they're not spending uh you know anything yet which is very unlikely if they're in e-commerce or info product business um then obviously you'll be able to send estimation as to what you will be spending in the first month that will tell you based on their gross margins as well as how much you're spending how much you need to be returning uh both in terms of Revenue as well as a row as multiple and then you're going to plug in your estimated fee now if it's a performance fee uh or if you're making most of your money from performance obviously don't punch that in because you're only taking a Performance Based on the results they get okay so that's not that doesn't really um come into the break even territory if that makes sense uh you're just going to be plugging in your base fee now I recommend you actually have the break even row calculator open you know while you're taking notes and stuff like that and you can start plugging in numbers and you know writing down I said this all stuff we talk about in Phase five when it comes to sales uh but this will give give you an idea as to like hey if I even charge if I decide to double my pricing if I want to charge 2K to e-commerce business flat fee and I'm like you know what [ __ ] it I feel like they can afford four what does that do you know what's the trickle down uh effects when it comes to their Break Even row as including your fee so I will show you that tool it's a very very powerful tool so so now let's actually start off with the client Revenue calculator now in order to punch in the details for this we are going to use similar web now similar web is the best tool I have found out there or at least the most accurate tool I found out there in terms of um getting an estimation for a website's foot traffic now once we have found it on similar web we're also going to use myip. ms uh kind of just to validate it or get an idea if it's in that rough ballpark also certain businesses and I think gadgy is actually one of them um I'm wearing the gadgy uh cream pocket tea at the moment um it's actually one of those businesses where I don't think it gives you any data on similar web because we don't get enough foot traffic so I'm going to show you that and we're actually going to punch in some details for GGI and we're going to see whether this calculator is accurate and then we'll also do it for one of our old clients as well so ladies and gents as you can see this is similar web now I'm going to go ahead and punch in gadgy and from what I remember it doesn't actually give any yeah Global rank category rank we're sorry uh insufficient data so yeah they don't have enough data on this so in that case I would go to myip. ms and you can see gg.
com so you can see right here it says 200 uh you know just under 200 visitors per day and I actually check with the web team the other day and it was actually 5,100 visitors in the last 28 days um so yeah 200 uh just under 200 visitors per day I don't know if if it's less than 100 I'll show less than 100 but yeah um it came out to one uh you know 5,100 the other day so we'll just plug in you know 200 or if it says you know so yeah because it says under 200 here I know that you know uh if it goes below 100 it would it would show that so it needs to be between 100 and 200 range so we'll go smack bang in the middle at 150 so that so that would be 150 * 30 4,500 so first things first our currency is pounds at gadgy website visitors so we get 4,500 and by the way this is per month now our average order value at gaji is somewhere in the range of 100 now the next thing you're going to do is you're actually going to select the industry now we've gone ahead and we have a lot of data on this both in terms of our clients as well as you know the gradient Community as well as as well as a lot of softwares and partners that we have behind the scenes um so we've been able to collate all of this information right here uh and you can see uh obviously gaji is a clothing and fashion brand so the industry uh average as I said after compiling a bunch of different sources comes out to 2. 44% now this estimates gad's Revenue monthly Revenue at £1,000 and in the last 28 days it's been roughly £1,000 so gadgy does around anywhere from 10 to 15 grand a month organically we don't run any ads for it like literally nothing uh our biggest issue has always been stock and GGI is just a little fun little side project you know I just like the blue light blockers we make and this and that um so yeah you know this is literally bang on I said I think in the last 28 days we we've literally done around like 11,000 um so yeah right there this gives you a nice estimation and here the thing this doesn't this tool isn't there to be 100% accurate this tool is literally just to tell you okay is this person qualifed not qualified going into the call what can I kind of expect uh etc etc now we're actually going to take a look at one of our old clients now bear in mind they were a clan of ours uh maybe probably like two years ago at this point um so so for that reason we don't have the most up-to-date stats uh but I definitely still have a ballpark so we can see right here it comes out to 950,000 visitors in July so we're going to go ahead and plug this in 950 1 two 3 and average order value at Aura um I think their ring comes out to $300 so let's go ahead and change that to Dollars uh so that will be around $300 now the issue is we have clothing in fashion which is a higher conversion rate so if we go here to electronics you're going to see it's much lower at 1. 27 and that brings this business's Revenue to 3.
6 million without obviously I can't disclose much but I can tell you overall that is pretty pretty accurate now you can see this is total website visits on desktop and Mobile in the last 6 months I would be uh if you get a premium account which you really don't need to a similar web then you can actually go back even further than that and I know that they're actually getting I think when we were working with them uh twice as much traffic so as long as their conversion rate holds up um then I know that yeah this should be pretty much accurate so now we are going to look at one final brand now we've never worked with this company but um I'm a big fan of uh the owner Reese wabara U big fan of like his overall work ethic good entrepreneur the St he is also based at UK and I always have a lot of love for uh young UK entrepreneurs so so we can see this brand mdv had 760,000 uh website visitors last month so if you go ahead and punch that in uh one two three uh average order value uh pounds average order value I would assume I mean they've got products that are as low as 3040 some that are kind of more in the 180200 range but average order value I would assume would be anywhere between 120 and 150 so let's punch in 120 uh industry uh clothing and fashion and that brings their revenue to 2. 2 million per month now uh ree who's the owner is like very open about his numbers on his social media and this and that and I think uh last time I saw he was doing around 2 and half million a month 2 million a month um so yeah once again this doesn't need to be 100% accurate this tool this just gives you an estimation for hey is this a good lead are they worth reaching out to is it worth sort of um you know even opening up a conversation but not only that because you know right now we're talking about pricing it also gives you a really good estimation and you know this is a really cool tool because when you're doing lead sourcing right you you can collect all of this information and you can actually have an estimated Revenue count next to their name right like it's it's really really cool right because then I said when you're doing lead sourcing you can kind of figure out hey which one it just it gives you without you ever speaking to business owner because obviously the thing is this this estimated C Revenue calculator that this is an awesome tool but at the end of day this doesn't like this isn't going to mean [ __ ] when you speak to the client themselves and they'll tell you you know it'll comes directly from the horse's mouth but it's a really cool tool and I said before your first call it also gives you a bit of an idea as to how much they're doing now as I said this information just really feeds into our intuitive pricing but the most powerful tool when it comes to pricing in my opinion is the break even Ras calculator you know when it comes to pricing for online businesses it's really down to getting a feel for what's the potential upside right based on their past advertising history based on their product based on a bunch of different factors and we'll get into that in just a second what is the potential upside and you know in all sometimes you miss the Mark I miss the mark all the time right and I think okay this is going to be a home run and it we do well but it's not like one of our it's not one of our like hero clients right and sometimes I'm like okay I think you know we'll be able to make a little bit of money for this client um and when I say a little bit I guess when I say a little bit that's um to give you some context that still means a [ __ ] ton of money watch your profanity right it's just for us obviously you know five years in this game like we have very very high standards so my point is sometimes I think okay that this clown will be able to you know get really good stable Sol results and we just smash out the part for them so when it comes to the upside part of the pricing um you know sometimes you get it wrong sometimes you get it really right you know that don't worry about for me the more important thing is can you make sure that there's no situation where they lose money where they're in the red both between your ads their margins and your service fee right so between those three those three things their actual gross margins your service fee as well as well as the ads do you have and can you have bulletproof certainty there's no chance that we'll lose money if that's the case then even if they're actually advertising at a break even between all those things uh they have a new customer through the door right and when they have a new customer through the door you know really that's where great businesses are built you know repeat customers looking look at the lifetime value of a client rather than just like the first uh day one cash collected you know we've already talked about this in the last module so I'm going to show you how to actually use a break even r as calculator so obviously another thing to mention is you won't really need to worry about this if you're working with the info product Clan because you know their gross margins are 100% right so I'm not going to say any specific names but we've got a jewelry brand that we work with um so I'm going to go ahead and punch in their details now their gross margins are actually 40% um we spend around $250,000 a month with them so one two three um so our break even Revenue with them is 625,000 and that's obviously with fee and without fee and I'll punch in our actual base fee we take most of our money from performance with this client so you can see right here the break even Ras uh is actually this is with fee and without fee as in like with out our service fee it's actually 2. 5 so we punch in our service fee converting from pounds which we charge our clients 2800 with them it's a 2,800 a month plus 5% return on ad spend the Bas only kicks in after the first 300,000 that we make them return on ad spend but anyways that's beside the point our Base Service Fe is 2,800 pounds so dollars I think that's what like $4,000 so you can see our break even r as um well first of all our break even Revenue that we need to accomplish is $635,000 and don't mind the zero uh that is a bug that we are aware of so by the time you see this it'll be totally fine and fixed our break even r with our fee uh which I think to me is is a better way to look at things is 2.
54 and then our break even revenue is 635,000 now let's use uh fresh numbers for let's say you know I I get it we work with medium to large size uh e-commerce Brands you know this is what I would consider a more medium siiz e-commerce brand let's use something that uh for a beginner is something a little bit more realistic and we punch in some numbers so let's say you are working with a brand that makes some you know nice uh lower-end headphones let's say their gross margins are 60% and you're expecting to spend uh 20,000 in the first month right on ads um and then uh your service fee let's say your so in that case right your break even will be 1. 67 and then if you spend 20,000 you need to make back it uh 33,000 so that way uh based on how much you're spending and then their margins basically at that point you know they're a break even let's say you're charging this client um you know $3,000 right well now your break even row as is 38,000 so kind of anything if you're spending 20,000 you in my opinion to be bringing back in 40,000 um in order for it to be kind of worth their while and that means that your break even is 1. 92 once again I would say you know you you would have to have a two uh Break Even rise uh in terms you know in terms of it being worth it for them as a clan so what this does and the beauty of this tool is this gives you an idea hey both with your fee and without your expected fee how much do you actually need to be bringing this clan back in both in terms of Revenue and you know in regards to roaz as a multile for it to be worth it to them so as I said once you have that break even Raz calcul later now you can start looking at a couple other metrics to figure out hey can I actually get these results for them the first thing you're going to look at is past ad results now bear in mind I'm speaking in the context of having an advertising agency if you were speaking in the context of email marketing or SEO you know you're going to kind of use your own numbers obviously you know uh if you're doing email marketing or SEO there's no ad cost involved so that kind of changes things slightly but nonetheless the tools are still applicable so me in my position as as an ad agency the first thing I'm going to look at number one is past ad results because you know if they have a history of not even being able to break even on ads let alone having a service fee chucked in there you know in terms of considering their gross margins then you know there's only so much we can do and the other thing is we're going to look at how egregious like how [ __ ] terrible or [ __ ] was their attempts or their past agency's attempts cuz here the thing if their past agency actually and we can honestly hold up our hands up and be like and this doesn't happen often I will say right as I said I think for you guys you're always thinking oh you know like it's you know uh SMA is saturated look trust me we greeny as large you know it is the biggest education company on Earth but you need to understand that people who actually get in the program you know in agency Navigator after the first 3 years you know we might have like a few thousand students right but you look at that compared to like the you know hundreds of thousands of shitty agencies and I think this is also a very fun and enlightening thing for people in the greny community to experience is you know poaching or taking over from another agency and being like holy [ __ ] this is really how terrible the standard is out there so sorry little tangent uh back to my main point sometimes we will actually come in and look at the pass agency and we like honestly maybe there's there's a few things that we would tweak but 80% of it we you know we would have done the exact same and if that's the case and the past agency was able to get a 1.
4x row as and the break even is you know 1.
