There are two basic ways to make money.
One is to offer a product or service and charge a premium fee. If you go this route you likely don’t need as many customers to turn a nice profit because your margins are higher. This is the SLOW DOLLAR METHOD because it takes fewer transactions to reach your goal. Think of a Mercedes. They don’t need to sell as many cars as Hyundai to be successful. Or think of an elite coaching program that sells off of exclusivity and access offering a prime fee for both because only a few people can get in.
Then there’s the other way.
It’s when you offer a product or service and charge a lower, sometimes rock bottom fee. If you go this route you need volume and scale in order to turn a profit. This is the FAST NICKEL METHOD because you need a lot of transactions to make it work, but a lot of transactions is easier since your barrier to entry is much smaller (consumers see less risk in departing with their money). Think of an iPad app that sells for just a few bucks… like Angry Birds for example. Angry Birds was released in 2009 and has gone on to sell 12 million + copies via Apple’s App Store and supposedly over 50 million copies across all platforms (mobile, Android, etc). Now, because of the tipping point volume that was created there is Angry Birds apparel, merchandise and even talk of a movie or TV series (indirect revenue which spawned from the fast dollar approach of access and scale). Would the same impact have happened if Angry Birds had tried to go the SLOW DOLLAR route? Probably not.
It’s not that one of these ways is better than another. One plays off of scarcity, exclusivity and the positioning of premium status. The other plays off volume, crowds and a perceived discount value that minimizes risk to consumers, making access easier.
There are pros and cons to each but either way… if you are starting a business or launching a product of any kind you need to consider these two methods in order to determine which route is best for you based on your goals and ideas.
You must evaluate your potential market and determine which method would bring you the most success.
In some cases it may be best to use them both. Have a FAST NICKEL product or service that is on the lower end of cost in order to serve as sort of a funnel. It’s what gets some people through the door but then you can have an “upsell” or a “premium version” that is the SLOW DOLLAR next step.
Finding the right mix requires some trial and error. Experiment with your offerings. Don’t be afraid to test before launching full steam.
Finding that magic mix is worth the effort.