Survey Says: "The Math Won't Math"
On the fallacy that everyone can have a scalable business doing what they love, and the real numbers that don't get spoken about enough.
I regret to inform you, but sometimes the math won’t add up the way you hope in business. Even though it seems like it should based on how many people are selling you solutions for scalable, infinite success.
The coolest thing about an online business is that in most case all you need is a computer, an internet connection, your brain, and clients willing to pay you.
It is truly simpler than ever to start and run a business compared to needing to lease a storefront or office, and/or needing to purchase supplies for product creation or inventory.
My background is in selling products of all kinds and while there was a lot I loved about that, and although I was great at it, I don’t foresee ever doing it again because it required so much effort and lots of logistics.
The problem is that because most online businesses can be run much more simply, especially if you operate as a service-provider, consultant, or coach, we often get the impression (or are outright sold) that growth should be easy and constant. That we can do a few well-crafted social posts each week and be signing clients and selling out programs left and right.
I’m grateful everyday for my 13 years spent in more traditional businesses before I moved solely online in 2017. It’s saved my ass again and again and it makes me incredibly valuable to my clients.
In the sector of the online space that I’m in there are generally 3 paths:
Provide a done-for-you service
Provide knowledge that helps people
Provide a combination of those
Some people ebb and flow between them or start as a service-provider and over time move into mentorship/teaching. There’s no right or wrong, but there are differences. And each has their own limitations.
By the Numbers
At it’s most basic there are 4 ways to hit your revenue goals:
Sell a higher-priced thing* to fewer people
Sell a lower-priced thing to lots of people
Sell a mid-priced thing to a moderate amount of people
Sell some combination of those
*”Thing” is your offer. That could be a service, coaching, a course, a group program, etc.
For the sake of easy math, I’m going to use $10,000/mo in revenue as the goal here for the examples. (But your goal can be whatever you’d like.)
It would be easy to see then that:
One $10,000 VIP day/month (paid-in-full) would get you there.
So would four $2,500 VIP days OR $2,500/mo retainer clients
You could also fill a group program that’s $1,000/mo with 10 people
Or sell 1,000 courses that are $100 each
Or some combo
Now here’s where things start to break down when we overlook the nuance of it all.
(To me the most fatal flaw of the online space is the lack of nuance in marketing nearly everywhere. But I digress.)
*NOTE: There’s zero way I could possibly give every example here. So I’m sticking with the most common.
Service-Providers:
These are folks like copywriters, brand designers, web developers, email marketers, business managers, virtual assistants, social media managers, and more.
They are using their direct time and labor to do something for you in your business. And/or they run an agency where they manage a team of service providers.
If you don’t want to run an agency (and many people don’t), you could potentially outsource smaller pieces of your work in order to take on more clients and thus make more money.
But the done-for-you nature of this work means you’ll only ever be able to take on as many clients as you have time for.
An upside: If your work lends itself to having ongoing clients that pay you a certain amount each month, it becomes much easier to do revenue projections and plan for income consistency. Not foolproof of course, but easier. And if you get a solid reputation for your work then when a client ends their contract with you, you can often fill that slot quickly.
Coaches/Consultants/Mentors/Strategists:
There are lots of names for people who work with you in a guidance/knowledge capacity. There’s some nuance just to those titles alone, but for the sake of brevity, let’s just consider this group to be people who work with you as a thought-partner.
Sometimes these folks will provide deliverables (strategic guides, launch overviews, messaging documents, etc) but they are generally working 1:1 and/or in groups to help guide clients so that they can achieve certain outcomes with the consultant/coach’s knowledge and support.
There’s often a bit more leverage here to serve more clients at once when we consider the teaching element that’s often common in this type of work.
Even for service-providers there’s always the option to teach something to many people at once for a lower cost, thus leveraging your working time.
For instance, you could charge 10 people $500 to learn a valuable skill over the course of a few hours. Yes, you have to factor marketing time and time to put your training assets together, but that’s still pretty great. But this also assumes you like to teach and are good at it.
Or even if you do something like an asynchronous audit that’s highly valuable to your clients but fast for you, it can make for a great revenue opportunity that’s a lower lift.
Often these types of offers can help as lead generation for larger offers as well . (But that’s a different post for a different day.)
These types of folks can certainly set up their offers for better revenue projection too by creating offers that span certain periods of time (3/6/9/12 months), and depending on the type of coaching being offered, some people might be with you for a few years. Or work with you at one point and return later for more.
Course Creators/Info-preneurs:
Folks in this category primarily sell courses, templates, downloadable guides, or other learning materials as digital downloads. They may also run memberships around their knowledge and digital assets.
Due to the digital nature of the products themselves, there truly is no limit to the amount that can be sold. There is the labor to create and update them, and also customer service on the back end, but much like writing a book…when it’s done it can just keep being duplicated.
Service-Providers and Coaches can most certainly also have digital products in their offer suites.
These can be offers that are solely the downloadable product or they might come with additional community or coaching elements. An example would be a digital course that has an online community you get to join once you purchase. Or access to regular Q&A or coaching calls either ongoing or for a period of time for extra support as you work through the material.
While in theory you could sell unlimited downloads, these products are still at the mercy of conversion rates, which I’ll talk more about in a moment.
Price Points vs. Ideal Clients vs. Your Goals vs. Your Resources
Now this is where things start to break down, especially among the people I work with and people I’m friends with online.
While on paper making more money seems as simple as saying: “Just raise your rates!”…that can come with its own complications.
I’m not referring to when it’s time to give yourself a pay raise or keep up with inflation by increasing your prices a bit. What I’m talking about is how when you double or triple a rate on something it can often come with new challenges you may or may not want to overcome.
It could mean that your entire brand message needs to change because you need to attract a different kind of buyer. It could mean that your visual brand needs to change as well depending on how high we’re talking about with those new rates. And your marketing will almost certainly need to shift too.
And it might mean you are no longer catering to a client you really want to serve anyway. Or what you most want to offer simply won’t make sense for the people who could afford it.
Think about it…
If you offer a $2,500/month retainer for social media strategy and management, and wanted to make that $7,500…the people who could afford that would most likely have an employee do it instead, and probably for less. (Not always, but often.)
If you teach people how to clean their homes more quickly and keep them tidy longer, you could charge a few hundred dollars for a course they could use to learn that, but if that same course was $3,000…the people who’d be ok spending that amount of money to learn about cleaning could just hire a housecleaner instead.
If you’re a coach you could create a $50,000 program but then you’d have to be able to find the right folks who want to spend $50K on the solution you’re selling and have a specific enough marketing presence to seem attractive to them.
This isn’t even about affordability or a “fair price.” This is about the actual logistics of your brand and how it intersects with your offers and ideal clients.
You might be absolutely delighted to go this route now. If so, go for it! Again, it’s not about a universal “better” or '“worse” here. You may decide you want to revamp your business, your brand, you ideal client, etc. and it could be perfect. But that isn’t always the case for everyone.
Not to mention…you might not always have the resources on hand to get the ROI you want with the offers and brand that you have; such is the case if you would need to invest in paid ads. Similarly, you might not have the resources to invest in a new brand and positioning either.
What I mean by “resources”?
The way I view resources in business is generally the amount available at any given time of:
Time
Money
Capacity (energy, focus, ability, etc.)
Knowledge/Skills
Support
Let’s say you want to move into something you can heavily leverage like digital asset creation. And this is on the heels of already being a coach for creative entrepreneurs.
In your time as a coach you’ve worked your way up to having offers you can confidently sell in the $5K-$15K range. You primarily work with clients 1:1 at this point.
You typically get your clients via referral/word-of-mouth or by them becoming aware of you because you regularly speak on podcasts and teach in programs where your ideal clients are. Sometimes people find you on social media too.
Now you want to take your knowledge and skills and turn them into informational courses and other products to increase your revenue without increasing your time spent working with clients.
While you won’t necessarily need as much time and energy once you begin delivering these new products, you’ll need to be able to:
Design the curricula effectively
Create the course materials
Create the marketing materials
Strategize a launch campaign
Execute the launch campaign
Each of those steps will require one or more of your resources.
If you have a lot of money at your disposal, you can hire experts for every part of this. If you have some money, you can hire out for certain parts. If you have little to no money to invest you’re going to need to use a lot of time and energy to learn each of these skills and strategies.
And the real kicker is that you could do all of this well and your launch could still have underwhelming sales results if there aren’t enough people in your audience to even see your marketing campaign.
That’s because not enough online entrepreneurs have a clear understanding around standard industry conversion rates and what it actually takes to make more consistent, predictable sales.
(And why I don’t recommend growing revenue with low cost digital products when you’re solely doing organic marketing.)
Conversion Rates…and Where the Math Breaks Down
I recently asked two good friends who work heavily with launch campaigns for million-dollar online businesses what they were seeing currently in terms of conversion rates for sales.
Conversion rates refer to how many people are exposed to a piece of marketing (email, webinar, ad, etc.) versus how many purchase.
*NOTE: “Warm” refers to people already familiar with a brand. “Cold” means at the time of seeing the piece of marketing they are new to the brand.
Here’s what they said:
“If I can get 3-6% on warm I’m happy. Higher, I’m losing my shit. Cold I aim for 1-2%.”
“Even on email we estimate conversions of 1-3%.”
This means that in the first instance, out of 100 people on a webinar, 3 to 6 people would purchase. Or with an email sent to 100 people, 1 to 3 people would purchase.
Of course there are always outliers, but this is pretty standard.
So if your course is $2,000 you could stand to make $2,000 to $12,000. But if it’s $200 you’d make $200 to $1,200.
In fact, a few years ago I was tagged in the Facebook group attached to a course about creating and selling courses because someone had posted asking for an expert who helps with sales and marketing.
It resulted in a few sales calls and in every instance the person was dismayed at their lackluster launch results. Especially after seeing such incredible testimonials on the sales page for the program they’d invested in. (But again, those testimonials perhaps lacked the nuance and context necessary to see how those results were possible in the first place.)
When I inquired about their launch results and how many people were in their audience, what I often heard was: “Only 3 people bought out of around 100.” Then I’d have to break the news to them that they had actually had a successful launch!
But with courses that were only $100-$150 compared to the $2K+ they spent to learn how to create and launch their course, that result didn’t feel great.
And this doesn’t even scratch the surface of the fact that whenever you’re launching anything you have to be sure you have enough of the right people in your audience, that the offer you’re selling is what they want and are willing to pay for, and that you clearly articulate its value properly in your marketing.
More Agency of Choice by Knowing What’s Needed
As I wrap this up I want to reflect back to the example of the coach who wants to create a course and her resources vs. audience size in relation to results.
Depending on her launch goals, the price point of her course, and her audience size at the time of launch…the math might not work in her favor. At least not yet.
Knowing this in advance she could then make better choices around how to proceed:
Raise the product price
Start organic audience growth well ahead of the launch period
Begin a paid ad campaign to grow her audience
Set up strong referral partners to help with promotion
Create a list of “hot leads” to reach out to personally when the launch begins (these would be people who’ve been interested in working with you but your previous offers weren’t quite the right fit)
Or some combination
Honestly, personal outreach is one of the most successful things you can do if you’re launching something where you aren’t relying on a huge volume of sales to meet your goals. (But that could also be its own post.)
Ultimately I never want to be a joy killer when it comes to business. I love being a positive cheerleader and looking for opportunity in every situation. I love how entrepreneurship allows us to be creative, to problem solve, to work with awesome people, and more.
But if we don’t have a good understanding about what’s necessary, if we’re missing fundamental knowledge, then we can’t make the best choices for ourselves.
We might not always like the choices at hand, but we lose some of our personal agency when we don’t even know what the options are. And this makes us acutely vulnerable to people selling solutions that aren’t always the right ones for us.
Generally what we also need is more time, or more of the other resources, or both. That just doesn’t get spoken about as much because it isn’t sexy.
Our brains don’t want to purchase a program where someone says, “It took me 10 years to get to consistent $100,000 annual revenue,” when there’s someone else selling how they did it in one. Even though doing it in one is far less common.
Change in any industry starts with knowledge. I hope this helps you see that if it feels like you should be “further along,” perhaps it’s just that the math isn’t “mathing” in your favor just yet. And that you have a better idea of where to focus next to move forward effectively.
If not, I’m always here to help with clarity.