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Home » Big Red Tomato Company

How $350 increased profits by 150%

How $350 increased profits by 150%

I recently wrote a post on how $350 transformed a business sharing a case study of one of our one hour brainstorm clients Tom.  We helped Tom have clarity of though which allowed him to drive extra revenue (and profits) whilst he was in the pub!

This week, I’m featuring another 1 hr brainstorm/consulting client called Alison. Alison increased her profits by 150% on each item she sold.  This is how she did it:

How $350 increased profits by 150%

Alison produces custom made personalised gifts from items found, recycled or bought. These gifts can be personalised with names or a message, such as a birthday or anniversary.

These gifts are sold via an online retail site which sells selling lots of other types of products from small independent companies.

One of the biggest challenges in presenting your products on a website rather than in a shop is that people can’t see the quality of your product. Consequently, it’s hard for you to command a premium price for your products over similar types of items.

Also, even where the personalisation is on standard type of product such as, say a T-shirt, how much more would someone be willing to pay over a non personalised T-shirt?  This is even more difficult to achieve when you’re starting out in business and don’t have a huge past customer base talking about your products.

In terms of Alison’s product costs, other than time, the biggest costs to Alison is the costs of bought in materials such as packaging.

One particular item which was a best selling item, was very popular as it had a good price entry point. Thus making it a very affordable gift.

The problem with this though is that it wasn’t particularly profitable as the packaging (a presentation box) took up a relatively high % age of the product cost.

So we created an upsell

We suggested to Alison that the packaging becomes a product in it’s own right to be charged as an extra item to be sold separately.

The packaging is actually a ribbon tied presentation box which sets off the gift nicely, but it’s not necessary. So, now Alison gives her customers a choice:

1) You can order the product in the presentation box and she charges an extra $5 including shipping.

2) Or you can order the product without the packaging.

Guess what? 95% of her customers choose to have the gift supplied in the presentation box paying the extra $5.

If they don’t, she saves the cost of the packaging which she used to give away.

Sales have been totally unaffected.  So, either way she’s better off than she was before.

Given that the unit cost of each packing box is $2, which she’s selling for $5, that’s 150% return.

So, could you create an upsell for your business?  Is there any part of your product which you could sell separately?

So what could we do for you?

For an investment of $350 you get 1 hour of our time by Skype and we can talk through the problem and work out a way forward to help you grow your business or make more money. To find out more and book our services click here.