Eric DeeranOne mission — help agency owners build businesses they actually love running.

Here's what you should shoot for when it comes to gross profit on your product/service...

9 Apr 2024 · 1 min

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Short excerpt from a YouTube video by Eric Deeran advising that a product should target about an 80% gross profit margin to allow for downstream costs. The speaker enumerates typical subtractions: salesperson (~10%), setter (~5%), and acquisition costs (~10%), which can reduce the margin to roughly 50–60% after those expenses and advertising.

Questions this video answers

About 80% gross profit.

About 10%.

About 5%.

About 10% of total contract value.

Approximately 50–60% total margin.

Chapters

But with the like, the actual product should have about an 80% gross profit. Because when you start running ads and you start like adding, that's going to chunk away from that 80% it is. So, like, that's why you got to start with 80 and then you have 20% to the to actually fulfill on it. And then you start to chunk away because, like, when you hire a salesperson, that's 10% usually, right? You hire a setter, that's another 5%. You have an acquisition cost that's typically 10% of your total contract value. So, like, that would typically bring you back down to like a 50, 60 total margin.