economics of internet
Your FIRST SALE is the most expensive sale you ever make.first step in understanding the economics of your online business
If you are wondering about the reason behind it, it is a very simple one, selling to existing customers costs less than acquiring the new customer.
Let’s talk about the Economics in Online Business again.
Economics is in general the metrics of how much money you put in and how much you take out or earn with the input.
Your real income is actually your total income after you have deducted the expenses from it, including all the taxes. So, now if we are talking about getting better economy of business, let’s get in to details of how we can do it without any or very less extra work.
Your income comes from either existing or new customers and as I said before, repeat sales is usually less costly compared to acquiring new customer every time you have to make a sale.
Let us take an example of McDonalds, in order to get a new customer to their store; they spend about $1.75 per customer in their advertising. So if they make that customer just buy a $2 burger they only make $.25 profit.
Whereas when they ask “Do you want fries with that?” and that customer buys $2 fries then after deducting the cost of making the fries, they make $1.75 net profit.
Average Marketers don’t get this and keep on promoting one off items and keep on searching for new customers every single time.
You know the cost of acquiring new customers is going to be very high whether it is PPC, Banner Ads or Solo Ads.
It is in the range of hard to impossible to make a profit in your first sale. Because when you make the first sale that person becomes customer to the product owner.
Those customers are not YOUR customer.
Let us take an example of a ClickBank product that gives a 50% commission for a $27 product. When you make the sale you get $13.5 that is it. That buyer becomes a customer for that ClickBank Product Owner. Any new product that product owner creates later on, he can sell it directly to that customer. He don’t need you.
This is the economics you need to understand in order to make real money in this business you need to promote products that has commissions for both Front End Products and also Back End Products. (Believe me this is where the real money is made and it’s always more money than the front end products) usually the front end products cost $27-$47 maximum $100-$300 but the back end products cost up to $10K sometime even more so you are selling to existing customers so there is literally no extra work and you make BIG Money.
economics of internet