Ask Steph: Will lower cost programs be the way to go in 2024?

Today I'm answering a question from a listener who is wondering if lower-cost offers are a better approach in 2024 given the skyrocketing cost of living. In this episode I share my views on this topic.

– Why payment plans are more appealing in this tough economic climate – but a tripping hazard to beware of
– Why I believe we are experiencing ‘low-cost offer fatigue' and the impact of this on our business
– The growing trend towards programs with higher touch points
– The benefit of ensuring you are pitching the right offer to the right audience
– Why it's critical to factor in rising costs of living and increasing business operating expenses to your offer price point

Have a question you’d like me to answer on the show? Write in with your question at https://stephtaylor.co/asksteph

 

Today is another episode of Ask Steph where I am answering a listener-submitted question. So today's question was submitted anonymously. It's quite a short one, but I have some opinions on it.

So the question is:

“Is a lower-cost program and offers going to be the go in 2024 with the cost of living skyrocketing? Or will one-off payment options be better rather than continuing or monthly payments?”

So I'm going to start by answering the second half of the question first because I think that one's an easier place to start.

 

Why payment plans are more appealing in this tough economic climate – but a tripping hazard to beware of.

I think that offering somebody a payment plan option (the ability to pay it off over a longer period of time, if that is appropriate to your offer) I think that's going to be even more relevant this year than it has been in the past because people will need that ability to manage their cash flow a little bit better and maybe stretch their expenses out over a longer period of time.

Now the challenge is always ensuring that people complete those payment agreements. For example, if you offer a 12-month payment plan for a course where you are giving somebody instant access to all of the content, you might find that around month six people drop off, they might stop paying their credit cards. That kind of thing happens.

And in that case, it can be really hard to recover payments because there's no way for you to revoke their access. You might be able to revoke the access to the content, but they might've already accessed all the content and already completed it. So there's just something to be careful of that. 

 

Why I believe we are experiencing ‘low-cost offer fatigue' and the impact of this on our business.

So to answer the first part of your question, are lower-cost programs and offers going to be the goal?

Now, I think we've seen a real low-cost offer fatigue at the moment over the last few years, like we've all bought a lot of those $47 courses that Instagram ads have been showing us. And I think a lot of us have even forgotten what we have bought. 

I'm speaking for myself here, but maybe you resonate with this as well. Like half of the ones that I've bought, I've never even logged into. And the other half I have maybe used once or twice.

And typically that's because people's lower ticket offers tend to play the entry role into their business, into their funnel. It's the first step in solving the problem that you are looking to solve and you never find that full solution. But they're really good at selling them and they're really cheap. So you're like, of course, I'm going to buy this off an Instagram ad from somebody I have never, ever met before.

 

The growing trend towards programs with higher touchpoints

So then, what I have been noticing and the general feedback I'm hearing from my audience at the moment is that they are wanting to be part of programs where they don't feel like a number where they're getting more support, where it's higher touch, where they're getting more tailored guidance. 

Now, of course, that can't be delivered at a low price point because it's not sustainable for the business that's offering it. You can't sell a thousand people one-on-one support each month. That would just be exhausting. And probably, I don't think there are enough hours in the month to do that.

 

The benefit of ensuring you are pitching the right offer to the right audience.

But the thing is people are still spending money on higher ticket offers at the moment. And I was really nervous, to be honest, going into the launch of Freedom Fast Track last month because the program was 5,000 US dollars. But because it was the right offer for my audience at the right time, it went really well. 

I think people are really wising up to the fact that the price, most of the time does reflect the value inside the offer. Most of the time, not always a lot of the time people sell really expensive things that aren't very valuable. But I think people are realising that they're not going to get all of the solutions in a $47 course. They're a little bit more sceptical of how much value they're going to get from something that's at that lower price point. 

 

Why it's critical to factor in rising costs of living and increasing business operating expenses to your offer price point.

The next point that I want to make is that inflation means your expenses are going to go up as a business and you need to factor that into your pricing. 

Cost of living is going up. Inflation means your business expenses are going to rise. We see this a lot with physical product-based businesses, but not so much with service-based and digital product-based businesses, because it's a little harder to work out that cost to deliver. But this is still a fundamental pricing theory right now. 

Here's the thing, you are paying yourself a wage from your company. I hope you're paying yourself a wage from your company. And if your cost of living is going up, you might need to increase your wage to cover your cost of living. So your cost to deliver that offer is going up because your hourly rate is going up.

 

Key takeaways…

Now, my final takeaway from this episode. 

Ultimately it will depend on the outcome that somebody is getting from your offer. The pricing is going to depend on what they are getting from it and also who you want to attract into it. With anything pricing related, it always comes back to what problem are they solving. What is the outcome? What is that transformation that they are getting? And who do you want to attract? 

If they are solving a bigger problem or a more painful problem, or you are delivering them a larger transformation. Then it's most likely going to be at a higher price point. If it's a really tiny, quick win that you can genuinely help somebody achieve with a small $27 cost, then great. 

Maybe it is appropriate for a lower ticket item if you want to attract somebody who is really serious and it's going to be committed and take action over six months or 12 months. Then you generally want it to be a higher ticket because they've got more skin in the game, they're going to be more serious. They're going to be more committed.

Whereas lower tickets will often attract people who are just collecting courses and collecting cheap digital products and not taking action on them. 

So think about what are they getting from it and who am I wanting to attract into it? So that's my 2 cents on what I think about lower cost versus higher tickets this year.

 

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