How much should I charge for a funnel?

If you’ve ever wondered how much to charge for a marketing funnel, this blog post is going to clear up exactly what your pricing strategy should be for marketing funnels.

At Beaver Funnels this is one of the top questions were asked by funnel builders. We want to do a longer term pricing strategy webinar or training session, but for the time being I wanted to get the main points down in a blog post.

Often when we ask the question “how much should I charge from marketing funnel?” What we are really asking is “how do I justify a price which the customer can afford?”

Our pricing model is often linked closely to our own confidence in our abilities. Pricing is a difficult subject for many people because it involves money, confidence and time in the market.

The question shouldn’t be “how much can I charge for a marketing funnel?”

The question should be “how much value do I need to deliver for my ideal price of $xxx?”

Figure out what to charge

The single biggest mistake funnel builders make when pricing their services or marketing funnels, is putting together a package of products and services and trying to figure out what to charge for it.

If you have 10 mattresses and you are trying to sell them altogether at bulk, it would be relatively easy to figure out the pricing strategy. You have your storage costs, purchase costs, delivery costs, customer and marketing costs. You’d know exactly how much to charge in order to make a profit.

Services however become very difficult because a lot of what we create is built with time and skill. Funnels are not a commodity, therefore we cannot use a commodity pricing mindset when building our funnel products.

All too often I see people putting together their idea of what they would deliver in a marketing funnel, and then trying to break up an idea of what they are going to charge for it.

This is very common with bespoke services and proposals for new customers and new projects. Typically it’s a sign that the offer isn’t standardised and therefore suffers from a more flexible pricing. We are going to show you how to remove this roadblock.

 

Decide your price FIRST

This is going to sound entirely counter-productive and even downright insane. Before deciding what you are going to deliver to the customer, ask yourself “what does the customer need to give to me?”

Your pricing strategy shouldn’t revolve around what you believe the market will pay you, but what you need from the market. If you think your business requires $250,000 a year in revenue, then you need to think do I want to charge 25 customers $10,000 or 10 customers $25,000?

Deciding your pricing first will give you a massive advantage over your competition. They are still charging per service. Instead you are going to buck the trend and decide what you need to make in order for the business to be profitable.

It might be that you have a $1000 turnkey funnel solution, which you want to sell to 250 people per year. It might be you decide you’re going to have a complete marketing and branding strategy combined with automation and funnel marketing for $250,000 for one customer for the year.

By deciding your price first you are making a statement about what you need to see from the market. After you’ve decided how much you want to charge per customer BEFORE even deciding what you’re going to give away, you change the method at which you will begin to attract customers.

50% of that price should go to you

We use the Mike Michalowicz method from his book Profit First for our pricing and product strategy. This means that we divide up the money per project before we’ve even sent an invoice.

This means that deciding on a price of $25,000, we decide that 50% of that $25,000 is going to come to us. Straightaway you are beginning to pay yourself for your time and investment on not only the business, but the deal and the project.

Some of that will go towards your management and delivery costs of course, but the majority of the delivery should be taken care of by somebody else. Which is where we come to the 30% below.

This means that of your $25,000 you now only have $12,500 to spend on costs, tax and profit. Hopefully you can see how this changes what you might deliver to the customer.

30% should go to costs and overheads

30% of your projected price should be going on costs. This is your business overheads as well as the project costs to hire someone to outsource the majority of the work to.

As you can see of a $25,000 budget, that leaves $7500 to spend on outsourcing. Does this number change what you believe you can deliver to the customer?

I know for us it did. It meant that we were often over delivering and giving away too much for the money we were charging. Instead of $25,000 being spent on the entire funnel, $7500 was now being spent on the funnel.

We started removing features and deliverables from our products in order to make sure that we could spend the $7500 to get someone else to deliver the funnel project.

15% to tax

Next we allocate 15% of the income tax. Although tax rates may vary country to country, we have found that 15% is a pretty accurate number to save per product. Usually a good accountant will be able to get you down to 15% but adjust accordingly.

5% to profit

Finally and perhaps most most importantly, we allocate 5% of all our budgets to profit. This is a pure profit margin, meaning every single cent of that 5% is kept and never spent on the project. It is pure profit to demonstrate growth within the business and allows us to build up a nest egg for future projects and investments.

This 5% should be paid first in your bank accounts, if you follow the Mike Michalowicz Profit First formula you’ll find it’s easier than you might think.

Hopefully this is giving you a brief introduction into how to price your marketing funnels. Rather than listing out everything you want to do and asking yourself how much you can charge for it. Ask yourself what you need to make per year and per project and allocate budget accordingly, before deciding what to deliver for that price.

The question then becomes what do I need to give to the customer to justify this price, as opposed to what do I need to charge to justify what I’m delivering. A subtle difference but a difference nonetheless.