Vince Reed walks through a calculator showing why three-step funnels often fail. With $3,000/month ad spend at typical conversion rates, you get 8 sales and $1,000 profit. Most advertisers never do the math on their actual numbers.
May 24, 2024
$2 per click
$500
$100 per day → $3,000 per month total ad spend
30% opt-in rate (noted average is 20%)
So we created this tool, which we use before we launch anything to give us a realistic look at, like, if we launch this funnel, okay, how much money can we make right before we even get started? All right, now we're taking into account that you've got a good product, right? Because if your product sucks, it doesn't matter if Jesus was, like, created it. Okay, Jesus probably doesn't create bad products, but you get the point. It's a bad product or service. You're not going to make money regardless if you know the coordinates of the math. So step number one is like, what does it cost? And we're. And we're speaking to you advertisers out there. What does it cost to get one person to click on your ad to land on your page? So this calculator.
Three step funnel.
Yeah, let's start with the three step funnel.
All right, price point, do like, what, 300?
We'll say. No, let's just say the clicks are $2 a click. Let's put that in.
Well, for the product price, just for.
The calculator, okay, so the product price. Let's say a $500 product for fun. Okay?
And then $2.
$2 is the average cost per click. Actually, I've heard it's gone up, but let's just leave it at $2. That means if you send 100 people at $2 a click, that's $200.
Yeah.
All right, so what we're gonna do is let's say you're spending a hundred dollars, okay? So total ad cost, notice $100 a day times 30 is 3,000amonth. So go ahead and put 3,003 total ad spend. Okay? All right, now as you go down the calculator, all right, on average, on the brick wall funnel, 20% opt in. But let's just be generous and let's say. Cause I know there's a guy out there watching right now, I get 30%. Okay? So let's just do it for that guy. Even though the average is 20, we'll.
Keep it at 30.
Let's do 30%. Okay, right now, this is standard numbers. On average, 35% will watch the video, whether it's live or evergreen. So put 35%. Watch the webinar VSL.
Yep, got that.
And let's just go. It's normally 2 to 3% will click and buy. So let's just put it at 5%. Let's just go high. Everything's higher than average.
We'll go. We'll go higher.
5%.
5%. Okay.
All right, so what are, what's the numbers in terms of revenue and leads and all that right there?
All right, so for the, the standard three step funnel, in terms of the traffic, you drove 1500 people. And in terms of sales, eight sales.
How many people saw the presentation?
So 1500.
No, saw that. Saw the brick wall page or opted in. Saw the brick wall page was how many?
15.
So how many people saw the presentation?
Oh, okay, 100. Well, 450 opted in and then 158. Watch the webinar VSL.
So let's just take that for example. Yeah, let's. Before we move forward. And this is what I, what I want to get at here in terms of understanding the math and the numbers. Like we know the numbers. Like I've written that formula down. We've done ads slapping stuff. If you look at our last episode, people know the math in terms of the percentages, but they aren't looking at the actual numbers. Right. Because if you want to make more money, okay, the amount of money you make is in direct proportion to the number of offers you make. Right? Right. So if you have a product and you sell your product to 10 people and I have a product, the same product, and we're selling it the same way and I sell it to a thousand people, I'm going to make more money. Yeah, right. Because more people saw what I had to sell. So what we're doing right now is how do we guarantee profitability? So how many people saw the presentation for the traditional. So not percentage that opted in. Saw it. Right. 35% are going to watch. So what's that number?
158 saw the webinar or the BSL.
Okay, so 158 saw it. And how many people clicked?
How many people click? 1,500.
So just say that out loud. Just this. Let's just, let's sit in that for a second.
1,500 people click. Just got to.
Got to the page.
Yeah.
And158. This is over a month. Saw what you have to sell.
And we're saying this assuming that they gave you the real email address. Right. Because a lot of those people won't even don't give you the real email.
They're just probably opting out of curiosity.
Curiosity and like clicking on their side. Right. So of the people that sell, we put it at 5%. And by the way, this is 30%. This is high numbers. Normally it's 20% opt in. So it'd be even less. 5% buy. What's that number.
So that's eight sales.
Eight sales.
And the cost per sale is $375.
So you're. This is again, getting into the math. So $375 is the cost per sale.
Per sale.
So let's go through the math. What's the revenue on that?
So the revenue is $4,000. Cost, of course, is the 3,000 ad spend, and profit is $1,000.
Thousand dollars. Thousand dollars.
This is why I think we can stop the video right now. This is why most people don't run profitable businesses.
