Is Your Profit Potential Acceptable
In-a-Rush Tip
If you are satisfied with your potential profits, as calculated in the previous chapters, you can skip this chapter.
So now that you’ve established what buyers are prepared to pay (Part 2), and what your costs are (Part 3) , how does it look when you subtract your costs from the potential price range Are you dancing in the streets over your pending wealth? Great! Then you are almost done. Just some critical
Fine-tuning to go or did your numbers show low or nonexistent profits? No need to bang your head against a wall or swear. There are a number of ways you can turn this around, and you are about to see them all in this chapter.
If You’re Happy with Your Potential Profits If you can make a healthy profit given your costs and the price buyers will pay for your combination of benefits, negatives, and price position, you’re still not quite finished
There are enormous differences in buyer demand based upon pricing
Psychology, which we cover in the next chapter. You can skip there right now, or read the rest of this chapter to find possible ways to increase your profits even more. If You’re Not Happy with Your Potential profits Yes, it’s disappointing to see low or no profits for an idea you have spent a lot of time developing. But there are still a number of choices available to you Best of all, you discovered the problem before you spent a bundle launching something that wouldn’t be a financial success. When you can either back out of it or change it so that it can be profitable
Option #1 Dump the idea and move on
This chapter will give you a lot of ways to turn your problem into a potential winner. But if you review them and don’t find any that would work for your situation, then the best answer is to kill the idea and move on. That’s the difference between an entrepreneur who tries a couple of ideas Before finding the one that leads to success and a bankrupt entrepreneur without the funds to start his or her next idea: The next one that might actually become success It is really hard for entrepreneurs, given our self-confident makeup, not to think we can be the exception. I do understand because I have been there.
Example: After two successful launches (a magazine and a newsletter), I got test results for a different newsletter that were so-so. Not a terrible failure, but not a success-more like in the “breakeven” area. I was sure I could make it happen because the idea was so good and so needed.
(Hint: It was needed, but it wasn’t wanted enough. People don’t buy what they need unless they also want it!) So I launched it, and the results were exactly like my test, despite all my “improvements” that were supposed to make a difference. It lasted three issues, until I cut my losses. Lesson learned? Trust what the market tells you, even if you don’t want to.
Not launching a product that can’t succeed is not a failure; it’s a success. You saved your money. Here are some examples of companies that faced this same choice:
• Porsche AG stopped developing its Porsche 989 when it was discovered the cost would be 30 percent higher then the price that could be achieved in the market
• Spalding’s pump baseball glove was considered a great idea, but a $100 (required) price tag soon put an end to all market chances.
• When Mercedes-Benz introduced its new S-class in the early 1990s, sales fell significantly short of goals. Analysis revealed that the gap between the customers’