Running a profitable business is not difficult, it simply comes down to offering a product that is worth more than it costs.
If you follow this rule, you will never go out of business.
The problem is that businesses make the mistake of creating products that either don’t offer a lot of value or are way too expensive.
Today, we are seeing a lot of big businesses being replaced by younger, stronger and smarter startups that offer greater value at a more reasonable price.
Blockbuster is a great example of this.
As a consumer, would you rather pay $2 for a movie that you can only keep for 24 hours… or $12 a month for unlimited access to over 6,000 movies and 1,000 tv shows?
Your answer to this question is the reason Blockbuster has been replaced by Netflix.
Brands today spend a lot of time trying to figure out the best way to go about marketing their products, and not enough time asking themselves the question — is the product we are offering worth more than it costs?
When the iPhone 7 first came out, it was priced at a jaw-dropping $649, but since its release it has sold a record-shattering 78.3 million phones.
At first glance, $649 seems like a hefty prices for a piece of technology, but if the average consumer keeps their iPhone 7 for 18 months, they are spending on average $1.18 a day to have a device that gives them an opportunity to change the world.
That’s less than a cup of coffee.
Follow the $10 for $5 Rule
As a brand, a good rule of thumb is what I call the $10 for $5 Rule.
If someone were to offer you $10 in exchange for $5, chances are you would quickly pull out your billfold and pay up.
Why? Because someone is offering to double your money.
If the product you are offering is not worth double the value of what it costs, go back to the drawing board and design a better product.
Take the price of the product down.
Offer and entirely new product.
Add additional features to the product.
Do whatever you have to do to ensure the product you are offering is worth more than it cost.
By Cole Schafer
Cole is the copy chief at Honey Copy, where he helps startups make more money through emails and landing pages that read like poetry and sell like Ogilvy. When he isn’t slinging copy, he is right here on Medium sharing ideas about life, business, marketing and ketchup. Or riding alpacas.