Page 161 - The $100 Startup_ Reinvent the Way You Make a Living, Do What You Love

many consumers are wary of subscriptions, because they worry that they’ll keep
getting billed for the service after they stop using it or that it will be a big hassle
to cancel. (To deal with the second problem, I created a “no pain in the ass”
cancellation button for my site.) To encourage broad waves of initial sign-ups,
many programs offer free or low-cost trials to get new prospects in the door. This
works, but there is often a huge dropout rate after the trial ends. Just be aware of
this, and make sure you continue to provide value as long as people are paying.

The $35,000 Experiment
One day I received an intriguing message from one of my customers, who
successfully built a new business over the past year and is now making an
average of $4,000 to $5,000 a month from his industry. In the email he told me
about the results from an interesting experiment. I asked if I could share the
results with other customers (and eventually put it in this book), but he was
concerned about his competition learning how easy it was to increase profits. He
finally said I could share this information as long as I didn’t unmask him. Here’s
his follow-up note to me with the details:

As mentioned yesterday, I wanted to check something in my product. I set
up an experiment that only tested a single variable: price. On one sales page
I had $49, and on another $89. Nothing was different at all—same
copywriting, same order process, same fulfillment. To be honest, I thought
that $49 was a better price, but I had set that price somewhat arbitrarily.
Guess what? Conversion went down … slightly. But overall income
actually increased! This is what really surprised me. I discovered that I
could sell less but actually make more money due to the higher price.

I then decided to test it at $99. Why not, right? But from $89 to $99 I saw
a bit more of a drop-off, and I got worried. I’m now back at $89, and even
with the lower conversion factored in, I worked out that I’ve given myself a
$24 raise on every product that sells. These days we are selling at least four
copies a day. If everything else remains consistent, I’ll make $35,040 more
this year … all from one test.

I’ve decided to do some more tests. :)

Isn’t that interesting? Here’s how the numbers break down in this example: