Understand the Importance of Your Business
The survival and success of any business enterprise is dependant on a focal product/s that can facilitate a continuous flow of funds. This product/s, in most cases, is a comparatively lower priced one which can create high demand and bulk sales. For example, when we compare a Lamborghini and a Camry, the former is a high-priced, up-market brand which cannot create bulk demand, but can fetch in huge profit margin by selling a few units, primarily because it is a big ticket product. In contrast, a Camry is a relatively smaller ticket product, consequently it has a greater demand, is affordable by a larger group of people and has a potential of greater sales turnover and thus a good profit margin.
Let’s look at a different product from a totally different industry, the Internet business selling “How To” goods. This business creates very thorough and commendable video compilation; one such video series comprises of 10 DVD’s and is priced at $100 for a series. However, this is might not be profitable enough, if this is the only product the business is involved with.
In events of economic downturn, a consumer might not be willing to spend so much for a video series. The business, therefore, should have a few more relatively less expensive products, which can attract higher demand. They can have a set of fewer video series priced below $30 which is much more affordable and can increase the foot fall and thus sales. So we can infer, from real life examples, that low-ticket products are the “bread and butter” for any business, something that can sustain a sales turnover and feed the business to maintain continuity.
The subsequent paragraphs are aimed at guiding a business in the direction of identifying and building their low-ticket products, which can become as fundamental as their “bread and butter”. The guidance and recommendations are to act as a launch pad to help you in choosing the appropriate direction. It might not be applicable to your business in totality; however, you can imbibe and employ whatever is suitable to your personal and business circumstances and leave the balance for later use. You can learn from these concepts and ideas and implement these whenever you feel your business is prepared to handle these well. To grow a business continuously and successfully, the two major facets are creation and sustenance. There is a vast amount of learning and information that one can use to promote their business growth.
Before getting started with the report, let’s define the term “low-ticket item” more precisely. This definition is applicable to the entire report, unless stated otherwise. Goods and services that are provided to the consumers at a sale price lower than $100 are referred to as Low-ticket items. One needs to consider that each cent counts and the prices can differ by cents right up to 99.99 dollars. However, there is a bit of qualification; maximum amount would change to about $75 during an economic or market recession. So it is important to be conscious and sensitive to the targeted market.
AN In Depth Look At Low-Ticket Products
After having a brief look at the definition of a low-ticket item, lets do an in depth study of its price valuation and benefits. The pricing of any low-ticket product is maintained relatively lower so as to attract more customer foot fall and sales. In general, price level should be kept under $100. For a product, average price judged would be subjective to a particular individual; however, a good approximation would be somewhat around $29.99. An average would imply that there would be infinite number of products above or below this figure, but it is up to the seller’s assessment to ascertain the price level for his/her product or service.
Pricing of a product or service is undoubtedly a vital factor. However, it is the value for money aspect that determines whether an item can be categorized as a low-ticket-item. A consumer would be interested in a purchase only if he/she feels the product or service is worth its price. At the same time, a seller would want to make at least some profit to justify his/her business. So, while pricing an item one needs to take the middle path which would suit the expectations of the buyer and the seller.
In majority of cases, the ultimate product or service can be priced at or under its worth and yet the price exceeds the cost of manufacturing or providing the product or service. This is attributed to the fact that the finished product has greater value than the sum total of its individual components. To illustrate this with an example, consider a written report on any random topic, costs $5 to write, however, the information provided in the article is worth $15, which means it can fetch a price of $15 when sold to a consumer. In case the seller chooses to sell this article as a low-ticket item, he/she can price it lower, at $10, which means it is priced under its worth, but is still selling at two times the manufacturing cost and making a profit.
It is important to study and explore the market before determining the product and the price for the low-ticket item. To exemplify, a product, which a seller wants to provide as a low-ticket one, is available from all its competitors at double the price, then such sellers should not choose this particular product as a low-cost item. Reason being that despite increasing the foot traffic and sales for his/her product, the seller might still not making as much money as he/she possibly can if he/she does not classify this product as low-ticket.
