Why Your Best Customers Should Pay More

So, here's my rule of thumb for upsells, taking into account that 20% of customers have far more spending power than the ones below. Now, remember, we had $2 here and the next level had 28. So, it was like 14 times more wealth between just the bottom 50 and the next 40. But, just using the Pareto principle

in terms of how you can apply this to pricing, like you not understanding this is why your business is not making as much profit as you want, all right? So, my rule of thumb is that for every new tier is that you want to 5 to 10x your price and expect 20% of people to take it.

Okay? So, here's how it works. So, let's say that you sell 10 customers, okay? So, you sell 10 customers, do do do. Let's do it again. Okay? Now, if you have eight of these customers at $10 per month and you've got two of them at $50 per month how much am I making on these guys? I'm

making $80 per month in total on the bottom 80. And then, I'm making $100 per month on my top 20% or my top two. And so, by serving these two customers differently, we double the revenue of the business, which by the way, again, is my rule of thumb. I want each tier to bring me another double, like another

full amount of revenue. Otherwise, I'm like, I don't know if it's worth creating the actual extra constraint of operations, right? But, here's where it gets even nastier. Let's say that this covers the majority of our overhead. That means that this extra $100 might contribute 10 to 1 compared to this to our bottom line. And so, sometimes when

you make a move like this, if you were here and you had $80 and you were living your life on this 80, right? It's like, well, maybe your your your cost is 70 and you're taking 10 home. If you add this $100 in and maybe the cost on this is 20, you've got 80 left over. We 5x