5 More Lessons From a $213,000 Launch

Two weeks ago we first wrote about the launch of our new training platform for online business builders in 5 lessons from a $213,000 launch.

Today we have 5 more lessons from our launch to share with you. If you’re building an online business or launching a new product, this post is for you.

6. Low Priced Products Can Deliver Big Financial Results

Online courses are priced at almost any amount you can imagine, from free all the way up to $3,000 and beyond.

This always raises interesting questions. How do you price your own information products? Do you have to price high to earn high? Can lower priced products still earn good revenue?

In the case of Fizzle, we decided to make our monthly membership affordable for a couple of reasons:

  1. We believe we can produce high-quality education for online entrepreneurs at a reasonable price, and we believe this training should be affordable to most people who want it.
  2. We wanted to differentiate ourselves from the crowd of “gurus” selling training in the $2k and up range.

We weren’t sure this pricing strategy would pay off, but we knew of many online training platforms covering other topics that were priced similarly and have been spectacularly successful. Lynda.com, Udemy, Treehouse were three models we used to help make our pricing decision. We thought of this as an opportunity to bring a proven model to a market that hadn’t really seen it before.

Are we leaving money on the table by not charging $2k for Fizzle? Perhaps, but the launch results were very encouraging, and we think this pricing level will create more member success stories and long-term relationships. In the end we want to make good money, but we believe helping our members succeed (and not gouging them) is the best way for us to succeed.

So, how does the launch of a $29 product lead to $213,000 in revenue? The revenue doesn’t all come in at once. The $213,000 figure is based on two calculations: average monthly revenue per customer and average monthly churn rate.

In our case, we earn more than $29 on average from each customer because our deluxe package is priced at $49. We also offer annual packages at a slight discount, so those need to be taken into account.

We’ve since moved to a single $35/month level.

Once you have your average monthly revenue number, you also need to calculate your average monthly churn rate. This isn’t an easy number to calculate, especially when you first launch, but it’s probably the most important number for any subscription type business.

Your churn rate is essentially the percentage of people who leave your site each month. Average churn rate is hard to calculate because different groups churn at different rates. People who sign up with a coupon might not “stick” as long as people who signed up at regular rates. Different traffic sources will churn at different rates. People who have been members for six months will churn less than brand new members, etc. etc.

The best you can do is to watch your churn rate over time, and to measure by cohorts. Cohorts are just ways to group your members to see what’s really going on with your data.

Once you have an average churn rate, you can now calculate your average customer lifetime value. Customer LTV is simply the average revenue per member X the average length of memberships.

Divide your monthly churn number by 1 and you’ll get the average length of a membership. For example, if your churn rate is 10% per month, your average membership length is (1 / .1) = 10 months.

If your average membership length is 10 months, and your average monthly revenue per member is $50, than your average customer lifetime value is $500.

This is why churn is so important. A reduction in churn from 10% to 8% means customers stick around 2.5 months longer. 2.5 months at $50 is $125 in revenue per customer. That extra revenue could open up tons of opportunities for content production, advertising, making customers happier, etc.

Churn Rate Effect on Membership Length

Next, you just need to multiply your average customer LTV by the number of customers who signed up to figure out the expected revenue from a given launch, month, promotion, etc. Again: keep in mind that the average churn rate can change dramatically from one group to the next, but this is a good starting point for calculating your revenue.

This might sound a little complicated at first, but it’s actually fun to calculate and watch these metrics so you can try to improve them over time.

These numbers show you exactly how a fairly low-priced monthly subscription can add up to big revenue over time, assuming you keep your customers happy.

7. Promotions Work

Your product probably won’t sell itself. You have to give people compelling reasons to buy. The more specific and time-sensitive your reasons, the more likely people will jump in.

Time and time again, we’ve found that running special promotions is one of the best way to sell a product online.

When we launch, we run multiple special promotions for different groups (email subscribers, blog readers, launch interest list subscribers). Leading up to the official public launch of Fizzle, we held multiple smaller alpha/beta launches and offered special intro pricing for those as well.

Within the first 72 hours of Fizzle being open to the public, we had already signed up over 600 paying members. Without a carefully executed launch plan that included special launch promotions, we would only have signed up a fraction of those customers.

We also occasionally run other promotions around special holidays, anniversaries, etc. We’ve found that a well planned promotion can lead to more sales in 72 hours than we might typically sell in a month or more.

If you haven’t tried running a special promotion for your products before, give it a shot. Every situation is different, but most people appreciate a deal, especially if they were on the fence about purchasing in the first place.

8. Content Marketing Pays Off

There’s no question, content marketing is a lot of work. Operating a blog like Think Traffic for nearly three years takes an incredible amount of time, creativity and dedication.

But the payoff can be huge.

When we launch a new product like Fizzle, we don’t have to go around paying for advertising or begging for customers. We’ve worked hard to build a following at Think Traffic and people who read this blog become our first customers and biggest supporters.

In marketing, there is nothing as powerful as a dedicated audience. Forget every marketing tactic you know of. If a dedicated group of people regularly look to you for advice, inspiration or entertainment, the selling part is easy.

But driving sales isn’t the biggest benefit of content marketing. Having a crew to sell to is gold, but what you learn while building that audience is even more important.

When you publish regularly to build an audience, you learn exactly what people want and need. Product ideas are easy to spot and test.

We talked last time about the minimum viable product. Content marketing is about building a minimum viable audience. There is no better insurance against a product failure than building a dedicated audience and learning what they want and need.

9. You Can Learn a Lot from Reverse-Engineering Other Businesses

I mentioned earlier that we looked at existing training platforms like Lynda.com and Treehouse to develop our pricing strategy. That wasn’t all we learned from examining existing businesses.

To develop Fizzle we looked at dozens of video-based online training programs. We dug into each to see what we liked and didn’t like. We made comparisons of several and took notes.

Reverse-engineering other businesses can give you a huge head start. You can learn how other products are built and delivered and borrow and adapt what you need for your own situation.

But this isn’t about copying tactics. Simply doing exactly what another business is doing without understanding why they’re doing it is like wearing a dive helmet to the bottom of the ocean because you thought it looked cool, not realizing it served a purpose and that you needed an oxygen supply to make it functional.

To really reverse engineer another business you need to become a detective. Don’t just look on the surface. Pick things apart, go through sign-up processes, examine emails, contact customer support, read testimonials and ask what customers think.

Then dig deeper: follow company founders on social media. Read team members’ blogs. Scour the web for articles and interviews with the people who built the product.

Try meeting with people in the company directly. Be up front and let them know what you’re developing. If your business is in a slightly different niche, it shouldn’t be a problem. Even if you are in the same niche, most smart businesses don’t see competition, they see opportunities for collaboration.

In the course of building Fizzle, we learned a lot from examining other businesses. The folks over at Udemy have been helpful and willing to share details of their success. Ryan Carson from Treehouse has been great as well, meeting with us and by being so transparent and helpful in interviews and on his blog.

10. Nothing Substitutes for Going All-In

If you’ve been following Chase, watching his videos or conversing with him recently, you’ve probably heard him use the phrase “all-in” once or twice. I think I’ve heard it 100 times in the past few months.

We’ve been big on the concept of going all-in around here recently, for good reason. I made a similar declaration myself last year and haven’t looked back.

We’re 110% committed to helping the small online entrepreneur who wants to make a difference in the world and build something she’s proud of. We care about what we do so much it’s hard to call it “work.” It’s more like a mission.

When you’re all-in on what you do, people notice. When you care about what you’re making so much, you bring fresh insight and dedication, and that shines through for your customers to see. There’s something attractive about unrestrained dedication, and people notice, join in and help promote what you’re doing.

Fizzle wouldn’t have happened without that level of dedication. Going all-in isn’t about some short-term result, it’s about dedicating yourself to a cause or group of people for the long term or maybe the rest of your life.

When you’re driven by a cause you believe in, a story that’s bigger than the failure/success of your product, when you tap into something matterful, people respond. If people aren’t responding to your work, examine your dedication first.

You’re not just launching a product, you’re at the head of a movement. Serving an audience with everything you have and helping them defeat their dragons ends up being the best sales tactic of all.

There’s no substitute for being all in. :)

If you missed them, check out the first five lessons in this series. If there’s anything you’d like us to expand on, leave a comment below and we’ll gladly reply.

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  • http://www.tostartblogging.com/ Ahmed Safwan@ To Start Blogging

    Congratulations Corbett on your successful launch.
    The best lesson I learned is the sixth one “Low Priced Products Can Deliver Big Financial Results”. I see a lot of products that costs more, but you have done it right and you convinced me to do the same.

    Thanks for these tips.

  • http://itarsenal.com Rob

    So cool to see more of the backend on Fizzle’s development. These lessons aren’t things we can’t hear often enough, make it affordable, promote, and create awesome free content to lead the way, love it.

    Did you use any third party services for promotion? It sounds like it wasn’t necessary due to the powerhouses you had in the founders.

    • http://fizzle.co Corbett Barr

      No third party promotion yet, aside from a few helpful mentions from friends or reviews from existing Fizzle members. We’re planning to do a big push to get the word out elsewhere starting next month.

    • http://healthywealthyaffiliate.com/newsletters/ John @ 109 Sales/Day Affiliate

      hey Corbet, congrats!

      Did you use any methods or techniques from Jeff Walker’s Product Launch Formula when mailing your audience (list) and creating awareness and desire for your membership?

      • http://fizzle.co Corbett Barr

        Hey John, great question. I’m not very familiar with that program, other than what I’ve heard second-hand.

  • http://anchortab.com Justin Westbrooks

    I love that you ended on “go all in”. That’s something my team and I are having to reach deep for the courage to do – especially as we’re on the cuff of our beta release. It’s not easy, and can be scary, but it’s worth it. Even if you fall flat on your face, at least you’ve give it your best shot. If it doesn’t work, you’ll be that much more prepared to reassess, and try again. The true failure is: NOT going all in. Thanks for this encouragement – I’ll share with my team.

    • http://fizzle.co Corbett Barr

      I hear from people all the time who think they can successfully start 3+ different projects at once, but I’ve yet to hear from anyone who actually pulls it off. Putting everything into one project (maybe two at most) is the way to go in my experience.

  • http://www.thinkdobusiness.com Noor Shawwa

    Great post as usual Corbbett.

    You have proven how powerful content marketing is. It’s an amazing thing to have a loyal base of people actively listening to you. When you deliver things people want with great quality, you have great results like you guys have.

  • http://lifeleveler.net Leon

    I’ve loved Fizzle since day 1 :)

    The quality and dedication does show, it comes through from you guys going allin. I just wish there were 48 hours in a day so I could watch, work, watch some more work, workout… and at some point eat and sleep lol

    • http://fizzle.co Corbett Barr

      I’d even settle for 30 hours in a day, but I don’t think either of us will get our wish. Thanks Leon :)

  • http://www.matthewinsardi.com Matthew Insardi

    Nice on the launch… The reverse engineerging is clutch. Once you know what works you can scale like crazy and make a killing. and combine that with going all in and there is nothing stopping you. That’s where most fail. The dont go “all In” They arent mentally and physically jumping into the pool, there only dipping there toe in the water.

  • http://www.247blogin.com Tim Sumner

    As always brilliant lesson! I love the reverse engineering piece too. One can learn a lot from deconstructing the success of everyone else.

    I can’t wait to sit on Fizzle! I’m “Going All In” :)

  • http://blogboldly.com/ Darlene

    I am so glad to hear you say that about pricing because I agree. Yes you have to sell a lot less of a $2000. product versus a $495. for example, but a LOT more pp will buy at $495.

    Then there is your ‘Start a Blog That Matters’ for it’s super reasonable price point. Not just the affordable price but what you get!! The weekly emails we receive to stay on course with the lessons, helps with focus. I bought the course to see if I wanted to recommend it to my newbies. I even mention it in #2 here: http://blogboldly.com/four-essential-elements-of-successful-blogging/

    I think your Fizzle price point just might be the sweet spot, and once I come up for air with my new site I’ll go check it out. :)

    ~ darlene

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  • http://makeextraincomeathome.com Felipe Jose

    I am not thinking about building my own product yet, but I think your tips are really great! Product creation is something that is not so difficult but is time consuming, on the other hand, I can imagine how lucrative this can be.
    I hope be ready soon!
    And thanks for your views!

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  • http://www.galinabelyaeva.com Galina

    Hey guys!

    Some complicated stuff there, but I love that amazing online entrepreneurs become affordable.
    Also, you are taking this business to the new level of professionalism: online entrepreneurship proves to be “legit” to people who are unfamiliar with this model.
    Your price strategy showcases that we can create ethical revenue models. I love it.

    Best,
    Galina

  • http://www.simpleetclair.com Jonathan

    Beauty.
    I did notice your dedication, and it’s definitely contagious.
    Love you guys!

  • http://whyileftgoogle.com/ Arman Assadi

    Excellent post and great work guys! I just saved this to my Evernote. I’m sure I’ll be referring to it again :)

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