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More playing with numbers

Category : revenue

Following up on the last post where we identified the target market by identifying pricing and market size most appropriate for Bought Products, things get better when we observe the power of monthly revenue.

Ways to Make $5M a year - Take 1

# of Products Sold Price Per-Product Monthly Revenue Consumables (3x per year)
1 $5,000,000 $416,667 $1,666,667
5 $1,000,000 $83,333 $333,333
10 $500,000 $41,667 $166,667
50 $100,000 $8,333 $33,333
100 $50,000 $4,167 $16,667
500 $10,000 $833 $3,333
1000 $5,000 $417 $1,667
5000 $1,000 $83 $333
10000 $500 $42 $167
50000 $100 $8.33 $33
100000 $50 $4.17 $17
500000 $10 $1 $3.33
1000000 $5 $0.42 $1.67
5000000 $1 $0.08 N/A

But, let’s take another twist. Let’s keep the price constant and instead think of how the numbers of customers change when we move to monthly, or any repeated sale per year.

Ways to make $5M a Year - Take 2

$ per sale # of Customers Monthly Customers # of customers (3 sales/yr)
$1 5,000,000 416,667 1,666,667
$5 1,000,000 83,333 333,333
$10 500,000 41,667 166,667
$50 100,000 8,333 33,333
$100 50,000 4,167 16,667
$500 10,000 833 3,333
$1,000 5,000 417 1,667
$5,000 1,000 83 333
$10,000 500 42 167
$50,000 100 8 33
$100,000 50 4 17
$500,000 10 1 3
$1,000,000 5 N/A 2
$5,000,000 1 N/A N/A

What makes this interesting is that consumable products… that is, products that provide only a short term value that then need to be replenished have excellent prospects.

To make $5M in revenue, all one needs to do, for example:

  1. Find 10,000 customers and sell them something for $500 once,or…
  2. Find 100,000 customers and sell them something for $50 once, or …
  3. Find 100,000 customers and sell them something $17 three times in a year, or…
  4. Find 8,333 customers and sell them something for $50 a month, or…
  5. Find 20,000 customers and sell them something for $21 a month, or..

You can see how that goes. Play with the numbers and use them to help determine whether your bought product strategy makes sense. Next step: figure out what product to sell, whether it’s a consumable or a one-time sale, or a monthly recurring revenue source. Personally, I like the 10,000 customers $500 a pop or 20,000 customers $21 a month plan… Hmm.

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This blog is a personal blog written and edited by me. For questions about this blog, please contact Rex at info [at] fourhourworkweekdiary [dot] com. This blog accepts forms of cash advertising, sponsorship, paid insertions or other forms of compensation. The compensation received may influence the advertising content, topics or posts made in this blog, including the article written above. That content, advertising space or post may not always be identified as paid or sponsored content. The owner(s) of this blog is compensated to provide opinion on products, services, websites and various other topics. Even though the owner(s) of this blog receives compensation for our posts or advertisements, we often give our honest opinions, findings, beliefs, or experiences on those topics or products. The views and opinions expressed on this blog are purely the bloggers' own. Any product claim, statistic, quote or other representation about a product or service should be verified with the manufacturer, provider or party in question. This blog may contain content which might present a conflict of interest. This content may not always be identified.

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