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4 things a good add-on needs

by | Aug 8, 2020

Hey, I’m Michael Eckstein 👋, and this is ‘Ordinary & Necessary’, a weekly newsletter about the boring business topics that don’t get enough traction on the web, but will help you manage and grow your business. You signed up on my website. If you’d like to unsubscribe, just click the link at the bottom of this email. No harm, no foul, I’d love to have you back sometime.

Month’s theme: add-on products or services

Your main services pay the bills. They bring in the bulk of your revenue, are very profitable, and take time to deliver. They clearly make economic sense. You’ll almost always make money on a main service.

Add-ons are the opposite. They won’t bring in a ton of revenue on their own, are somewhat profitable, and are quick to deliver. The economics aren’t as clear and everything has to go right for an add-on to make sense.

A good add-on could add thousands to your bottom line. A bad one could cost you thousands or waste time that could be better spent elsewhere.

All good add-ons have certain things in common.

Easy to deliver: Deliverability is the most important part of a good add-on. You should be able to easily and efficiently deliver your add-ons so they have a high effective profit per hour/effort. That means delivery either needs to be automated (eg, the client pays and it triggers a backend automation to send a product or start a service) or quick to manually process (eg a few clicks on your end and you’re set).

Easy to sell: Add-ons should sell themselves. The benefits should be inherently obvious to your client. To do that, add-ons either need to directly compliment your service and be easy to explain without a long salespage. You don’t want to waste time pitching the add-on at the end of your sales process (thereby lowering its profit per hour).

Cost <25% of your main service: It’s not an add-on if it costs as much as your main service. Then, it’s just an additional service you managed to sell. Add-ons should be comparably cheap. When you get a burger, adding fries and a drink is comparably a steal.

Only makes sense at volume: Because add-ons are so much cheaper than your main services, they won’t look like money makers in and of themselves and you would never sell them on their own. The best add-ons look silly on their own but make sense at scale.


Have a great weekend and stay safe!
Michael Eckstein

 

P.S. I typed this on my phone because I still don’t have internet after the last storm. Sorry about any typos 😬

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