iPhone Calculator Business Model
Episode 36 of Seconds and Cents, I'm having a wonderful time today recording these, today, we are going to talk about a business model using an iPhone calculator. This is a phenomenon I've been watching for probably about six months now. And it's something that I kind of want to caution a lot of people away from, I am seeing a lot of entrepreneurs, I'm seeing a lot of people do this, they're starting a business, and then they're using their iPhone calculator to calculate how much money they're going to make and how much time it's going to take for them to be rich. And and this is something that I think it's just not, it's not worth it, everybody don't do it. So what is what is the iPhone calculator business model. So let's say, I write in ebook, and my, I'm gonna sell my ebook for $3. And then after somebody buys my ebook, I'm going to take them to an upsell page where I'm going to have a course and I'm going to have two more other kind of written resources. And they'll get a one hour coaching call with me. And so it's a $3 ebook, and then I'm going to upsell them a $97 course plus two other resources plus a one hour coaching call, I'm making this up. This is not this is not necessarily real for me, although I have done I have fallen prey to this or fallen victim to this mentality. Okay. So this is the iPhone calculator business model, it says, The firt The question is, for every 1000 people that hits my e book page, how many are they going to buy? For $3, right, so how many people are going to buy, and then they go to Google, click, click, click, click, click, click, click, click, click, and they discover that a good sales rate is 10%. So that would mean okay, for every 1000 people that hits my hits my sales page, then 10% of their going to buy. And so that's going to be 100 purchases. But But let's, let's just be careful for a second. Let's say that only 5% of people buy, just to be just to be careful. Okay, so for every thousand people that hits my sales page, then then 5% of people are going to buy that's going to be 50, people are going to buy my $3 ebook, that's going to be $150. So I made $150 for every thousand people that came to my site, and then they then they go to the upsell page, right? They already purchased and they go to the upsell page. And then they ask, Well, how many people are going to buy my upsell page for $97? How am I going to make back my thousand dollars? So for 97, they look it up and, and a really good upsell rate is 10%. Again, hypothetically, just for easy math. And so they say okay, well 10% of 50, that's five people that just bought my $97 upsell. We're gonna assume that that stays flat, because we were because we were so conservative with our initial estimate of how many people were going to buy. So for every thousand people that hit my website, I'm gonna make $650, right, because you have five people making, making a $97 purchase, we're just gonna call it 100 for easy math, and then you have 50 people that are that are making a $3 purchase. And so the math that they do is, well, what's the cheapest way that I can get 1000 people to my website, and can I get 1000 people on my website for less than $650. And then they say, well, we're just going to get 1000 people that we're going to send out emails, we're going to do Facebook ads, we're going to do Pinterest, we're going to do search, we're going to do X and Y and Z to we're going to do podcasts, I'm going to launch my own podcast that's going to get a listener, and we'll probably I don't know, we'll probably get like a couple thousand listeners in the first month or two and then and then we'll be able to send them to our website. And so we should be making about 1200 or 1300 dollars per day, within six months. And so we'll be doing about $30,000 a month in revenue, and then we're going to be able to reinvest all those profits. And so we will, because you know that $650 they made is all is all margin, right? So we're going to be able to reinvest those profits, and then we're going to double our advertising. We're going to double our Pinterest presence. We're going to double the number of podcasts that we released in our marketing budget. We might even hire a marketing person. And we'll be doing 60 to $100,000 a month within eight months using my projection. I have heard this so many times. It starts with I'm thinking about writing an E book and creating a course. And then it turns into how fast Am I going to be a millionaire without doing any work. And what this says is this is your business model using an iPhone calculator,
because you took a look at what the industry averages are an air quotes, which for anybody who's not watching this, you can't see. So you took a look at what the industry averages are. And then you decided that you're going to be conservative with those industry averages. And so you're going to cut those in half. But I mean, you're still pretty good, right? And so you cut them in half, and then you're like, Okay, well, once we cut them in half that and this is just what's going to happen, because the industry average, totally not taking into account that less than 20% of all the businesses are successful, and they carry the entire industry average. But there are more zeros than there are there are more companies making zero dollars, then there are companies making a million dollars, using the exact same methods that you're talking about. So what is the business model using an iPhone calculator, it's where you just say that you're going to get the industry average divided by two and then you're just going to make all this money and it's going to be done. What inevitably happens, nobody purchases. nobody buys the product. Why? First of all, you haven't figured out how to talk about the product yet. Second of all, you haven't figured out the audience for the product yet. Third of all, you haven't figured out if people want the product yet. Fourth of all, you don't know what you're doing. Right? Like we and I'm looking, I'm saying you I'm also meeting me here, you look at this stuff that other people put out and you say, well, other people can do this, I can do the same thing. But what you don't see, or you don't see the five years of iteration that went into that thing becoming really profitable machine, when I look at Russell Brunson, and Russell Brunson Traffic Secrets funnel, and.com secrets funnel. And I know that they're doing like 100 million dollars a year, that doesn't just mean that I can launch an E book, I'm going to do 100 million dollars a year, or cut it in half, or cut it by 10%. or cut it to 10% or cut to 1%. Right? Like, that's not how it works. There's this big compound effect that takes place. When you iterate over and over and over again, you have a success, you figure out what led to the success, and then you do it again. And then you change things. And then you have a success again, and you figure out was this more successful than the last one? Right, but just saying this thing is gonna work? Because that's what the math says. That's not a data driven approach. That's hope as a strategy. Why? Why am I talking about this? Right now, I have heard of two entrepreneurs in the last two weeks that are completely shutting down their business, because they did their business model using an iPhone calculator. That's just in the last two weeks. I mean, I've probably, I've probably sat in conversations with 25 or 30 people that have done a similar type of thing. I have done a similar type of thing.
I've done it. I times. never worked. Why did it not work? Because when I didn't take into account was the fact that the people who were carrying the average actually knew what they were doing. It's not like they stumbled on to success. Success isn't an accident. Right? And so what they did was they said, this is the target that we want to be at to be profitable. How are we going to figure out how to get there, versus saying I'm going to put this thing out there. And then I'm just going to get to the target to be profitable, because that's what the numbers say. That's not what the numbers say. The numbers say that most businesses fail. The numbers today that most businesses never make enough money for the owner to be able to be a full time entrepreneur. The numbers say that after two years, the rate the like rate that a business goes out of business accelerates and doesn't decelerate. It is easier to keep a business open from zero to two years than it is from two to four. Why? Because you have less energy. Because it's been hard to get to your To Do you really want to do that again for two years. Right. So how do you be your business model on using an iPhone calculator problem? How do you be the research telling you what should happen in air quotes should and then when it inevitably doesn't happen, because you didn't actually do the work? You didn't actually iterate you didn't actually find your voice. You didn't actually find the sales pitch, you didn't actually find the value proposition. You didn't actually find the right audience. You didn't actually do these things. How do you beat that? Well, I heard a great quote, quote at Strategic Coach last week person said, a vision without a commitment is just a dream. In short, give yourself some time. If it takes five years for you to figure out how to make that business profitable. Isn't that great? Because now you have a profitable business for as long as you can keep it profitable. Now, if it takes five years to get it profitable, and then it's only profitable for two months, is that going to be a good thing? No, it's not. But if you think this business could be around for 10 years, this business could be around for 12 years, then, I mean, that's fantastic. It only took you five years to get profitable. Now you have twice or three times or four times five times as many times as much time to return that investment. But it takes iteration after iteration after iteration. So what happens? How do you how do you beat this? What's the trick to be the business model using an iPhone calculator dilemma? First of all, give yourself time, if you think your business can last for 10 years. Great. If you think that this business leads you to a business that can last for 10 years, great, right? Give yourself the long term vision. If this is a quick in and out business, you're in it for a sprint, I've literally done sprint businesses where I started the business and closed down the business in under 90 days. Surely, some of them have been profitable. But if you think that your business is a sprint business, this is not the method for you. Good luck, you're playing only an energy game, do you have enough energy to put into the next 90 days. But if you think this business can go for 510 1520 years, maybe more than that, then keep iterating first put out one version, establish a baseline, chances are nobody's gonna make a purchase, then you change it. And you and you say does the change, did the change perform better than the baseline? Literally, my digital sales funnel, we put out the baseline, zero purchases, changed it. Zero purchases, we changed it, one purchase. That's better. Now we have some of that we can work with. So we're continuing to change. And you change one variable at a time. one variable drive new traffic, one variable drive new traffic, one variable, change your audience, one variable, change your audience, one variable, change your offer change your price change or whatever, right? Like the goal here is to figure out using the scientific method, what is the way that we can achieve profitability in a clear and consistent way. That's what you're really looking for. When you think about the iPhone. When you think about your iPhone calculator business model, you thinking I want 5% of my people to buy and then 5% of those people to buy the upsell. And then all of a sudden, when we get our cost per website visitor to be 50 cents. Now we made $150 I didn't do any work, it was all margin, I'm off to the races, I'll see you in Florida or in California. So you establish your baseline you make a change, you make one change, not an overhaul, you make one change to your baseline and then you ask did it perform better than better than the baseline? Sometimes it will not you go back to the baseline, you make a different change. Sometimes it will, great, now you've got a new baseline, and then you'd make another change and you've established new baseline and you make another change, you establish new baseline. And then once it gets to where you want it, you stop. All you do is change the things that absolutely need to be changed in order for you to keep your profitability ratio, whatever that profitability ratio is. But what is the iPhone calculator business model, it is where you look at a bunch of industry averages for conversion in whatever field you're in, or for price, and whatever field that you're in the average six foot by 10 foot painting sells for $150,000. I made that up. And then you say, Well, if I could sell mine for 75, I only need to make one a year. But you never bothered to ask the question, how am I going to figure it out? That's hope as a strategy. Hope is not a strategy. So how do you get over the iPhone calculator business model, you build your product, and then you iterate on distribution. you iterate on product, you iterate on audience, you iterate on sales pitch, you iterate on value proposition, you iterate on price, all the way to the point where you get to the point where you have something that you really like, and you can set it and you can forget it. Have a great day. This was very, like procedural for Seconds and Cents. Alright, have a great day.