MBA1586 Should You Offer a Lifetime Deal?

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PCs like the Dell 14 with Intel Core Ultra processors will help you do more faster and with a premium suite of monitors and accessories, you can upgrade your whole setup with amazing savings. Visit Dell.com deals. Hey O. Welcome to the Hundred Dollar MBA Show. Because your business means the world to you. That's why we deliver daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online. And in today's episode you will learn should you offer a lifetime deal? Many businesses consider offering a lifetime deal to customers when they launch their business. This is somewhat common in the software world or any product that has reoccurring billing like a membership or a community or coaching. Many people do this so they can get an influx of customers at the start to get some popularity, to grow their audience and to bring in new customers after that. But are lifetime deals a good idea? Will you regret it? Will it cost you your business? We get into all of that in today's lesson. So let's get into it. Let's get down to business. I want to start today's lesson by explaining why businesses consider offering lifetime deals. The bottom line is, is that lifetime deals often generate a large lump sum of revenue of cash. It's a cash grab really. They might partner with a deal site or with large affiliates or or they may just offer it to their list. And because it's such an incredible Deal, it's a lifetime deal. They'll get lots of sales at the start. People see this as a way to kind of fund their business at the start. So that's kind of the motivation behind lifetime deals. Outside of that, it also gives you new users, new customers, people to give you feedback at the start and people that are invested. That's really the positives. And there's not really much outside of that that's positive. Just being frank. But for many people, that's a lot. You know, making a lot of money at the start to fund the business can really help them and really propel the business to a viable full time option for them and allow them to make some hires and scale quickly. The issue is, is that most products and services have a running cost. So even if you say, for example, sell a lifetime deal for $1,000 per customer, yes, you will earn $1,000, but each customer will have a cost for each subsequent year to come. That could be 30, 40, 50, 60 years for as long as that person is alive. Right? And some of us don't really do the math. And that leads me to my first tip. You got to do the math. How much does it cost you per customer per year? And a lot of people are like, well, I kind of sell my product. It's a course, it's, it's a forum. It's something that really has a minimal cost on my end. And that's pretty much it. No, you gotta dig deeper. You have costs, phantom costs that you're not counting, like how much it costs you per customer for your web hosting, to host your community, to host your app. How much does that cost you on a monthly basis divided by the number of customers, it costs more per customer. It's not a once and done kind of thing. The more traffic you have, the more you have to pay. What about customer support? The more customers you have, the more support staff you need, the more time is taking from them. You need to factor that in. Are there any other costs? Whether it's your time or money that's involved, every time you have a customer, break it down. Because you might find out, yes, this might be a very small amount per customer and it's worth to offer the lifetime deal. But often more times than not, when we do the math, you're like, wow, we start to break even after five years. And after five years we're losing money. Then after 10 years, we're really losing money. So this really is a red flag that you can raise before you offer a lifetime deal. My Next tip is you have to make sure that if you're going to offer a lifetime deal, you don't offer a deal or a plan or a product that they will not outgrow. The point here is to get them onto your platform, onto your product, and therefore get used to it, love it, enjoy it, but at some point they're going to outgrow it, whether they need more contacts in your app or they want to get access to more training. Basically what we're talking about here is you want to offer them the basic of basic plans. It's still valuable, it's still something that you would charge a monthly or annual basis for normally, but you want to push them towards upgrading. Anytime you're running a lifetime plan, you should aim for 70% of the people that buy will upgrade out of the lifetime plan. So lifetime is something that's basically temporary. This takes a bit of planning, this takes a bit of branding and packaging when it comes to offering this lifetime deal. So don't rush into a lifetime deal. If you're not ready, make sure you're crafting the right one so you know that people will be graduating to different plans off the lifetime. The third thing I want to mention is that often in my experience, lifetime customers in general, not all of them of course, but in general will tend to be difficult customers to deal with. What I mean by that? Well, people that don't invest much will actually cost you more time and more headaches. People that actually pay you a lot of money, they do the work, they get the most out of it. And they're professional, they get it. They understand the onus is on them to make it happen. But those who pay the minimum and go for lifetime deals, they're people that maybe don't really take action, but they will complain about every little thing if they have the opportunity. Of course, I'm speaking in generalities. Of course there are lifetime deal customers that are hard working, that are serious about their business and they are great and they're not headaches. But if we're talking about a percentage or a majority of the users, higher paying customers are lower maintenance customers. That's just the facts of business. So I want to give you some direct advice. If you do the math, you have a graduation plan, a plan to get them to upgrade at a lifetime and everything pans out and it's a very, very minimal cost on you. Even if you stretch it out to 20, 30 years of this customer being active, then go for the lifetime plan. If not, avoid it if you can even if it means growing slower. If you're still looking for that cash grab, my advice is limit the number of lifetime members, whether it's 100 or 200 people max, and then you close it. This will create scarcity and it will also allow you to say, hey, this is the amount of money I will get from this lifetime offer. I can work with that. It's the influx of cash I need. And from there you're only dealing with a minimal number of customers that are dealing with the lifetime plan that you have to pay for for the longevity of your business and for their life.

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To wrap up today's lesson. Lifetime deals can be attractive and lucrative, but you got to be very careful about what it means for the future of your business. It can really cost you a lot of money in the long term. It can actually cost you your business. It can cause you to close your doors because your cost gets out of hand because you're still paying for people that are not paying you right? They're not continuing to pay you and you have reoccurring costs and it's like trying to fill a bucket that has a hole at the bottom. I'm not saying hell no to lifetime deals, but I'm saying do the math, do your research, have a plan and limit. Limit the number. Thank you so much for listening to the $100 NBA show. Make sure you hit subscribe on whatever you use to listen to podcasts, whether it's Spotify or Stitch Radio or Himalaya Apple Podcasts. We're on every single one. Hit subscribe right now and you'll get access to our 1500 episodes in the archives. It's the only way to get access to the archives to hit subscribe. Before I go, I want to leave you with this. One of the reasons why I encourage you to limit the lifetime deals to a certain number of customers is that you want to be always profitable in your business that you're never in the negative. You want to be in the surplus constantly, and you need reoccurring revenue to do that. So you want to limit yourself to a number of customers and pass those customers. You're making reoccurring revenue. Thank you so much for listening, and I'll check you in tomorrow's episode Freeride Friday. I'll see you then. Take care. Of.

ADP knows anything can change the world of work. Like what if a blocked shipping port caused a worldwide coffee shortage? Suddenly, businesses are scrambling to manage an increasingly drowsy workforce. Productivity slips 20% just due to the extended time it takes to conduct a job interview while yawning. Anything can change the world of work. From HR to payroll. ADP helps businesses take on the next anything. ADP always designing for people.