
The most common mistake I see people make as they plan, start, and grow their Internet marketing businesses is to focus more on the marketing than the business. That is, they invest all of their energies following someone's "system" before determining if their business is viable (or that the system works for anyone other than the provider). Also, no matter what type of business you have, you will need to ensure that your costs to acquire and support a customer are significantly less than the expenses. Suppose you need to reach out to 1,000 strangers (aka prospects) in order for 10 to become acquaintances (aka opportunities) and one to become a friend (aka buyer). Then suppose selling one of your items (product or service) provides a gross profit (selling price minus item cost) of $100 total. This means you will need to spend 10 cents or less to reach each stranger just to appear to break even. In reality, you'll loose money on every sale because of other business expenses in this example. You need to get your business formula (model) figured out before you begin to pour money into your marketing to ensure your business can succeed. Add Comment A common obstacle in marketing and selling products that pay for themselves over time is the pay-back period, or the amount of time required before the advantages of the product overcomes its investment. A business buying such a product would need to have the cash reserves to tie-up money for months or years in order to achieve future savings. A hybrid pricing model that balances the upfront capital cost (price) with ongoing operational expenses may provide a solution. In other words, you could price the product at near-cost and require periodic payments (maintenance agreements, annual licenses, etc.) to generate revenue. This is a well proven and effective approach since the selling price covers your costs and the payments bring in cache flow and profits. If this approach seems attractive and feasible for your business, consult an accountant to ensure your pricing and fees are precisely balanced and do not create cash flow or other financial challenges. | ANSWERSJoin the ConversationClick on Comment(s) to share your thoughts or request more details about an answer.
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