https://www.youtube.com/watch?v=Dh2vndx5fDw
TLDR Service businesses earn strong profits by delivering results clients value at a price their economics can support. Stand out with a hard-to-copy capability or a compelling promise, and balance price, delivery costs, and sales volume rather than simply charging more.
Businesses can charge more when they deliver something customers want but cannot easily get elsewhere. Generic services such as SEO, website design, and funnel building face heavy competition, which makes it harder to stand out or command premium prices. Look for a specific capability that is difficult to replicate or a customer problem that few providers can solve well. The more distinctive and valuable the result, the stronger your position in the market.
A service can be highly profitable when demand is strong and few providers can meet it, as may happen with emerging offers such as AI video ad creatives. However, scarcity can fade as more competitors enter the market. Treat an early opportunity as a chance to build expertise and customer trust, not as a permanent advantage. As the market matures, strengthen your unique capability or make a clearer, more compelling promise.
A service is easier to sell when its cost makes sense within the customer’s own business economics. For example, if a client sells a $1,000 product and spends $1,000 acquiring a customer, there may be little or no profit left to cover other costs. That client is therefore likely to view an expensive acquisition service as too risky or costly. Before setting your offer, understand what customers sell, how much they earn per sale, and what they can reasonably spend to get a result.
Customers often evaluate a service by its effective cost per result, regardless of how the provider packages it. If a $5,000 service guarantees five calls, the effective price is $1,000 per call. Make the expected outcome and its economics clear so buyers can compare the cost with the value they may receive. A strong offer connects a credible result to a price the target customer can afford.
Raising prices does not automatically increase total profit if it causes demand to fall. A business should consider delivery costs, the price customers will accept, and how many sales it can make at that price. Walmart is an example of a company that uses low margins to support high sales volume. For a service business, the goal is to find a sustainable price and delivery model that produces both strong demand and meaningful overall profit.
It must deliver something competitors cannot or will not provide, such as a difficult-to-replicate capability in a low-supply market, or make a compelling promise of a substantially greater result. Generic, widely available services tend to face more competition and less differentiation.
As a market matures, more providers enter and supply increases, reducing the advantage of being early. Providers then need a distinctive capability or a stronger promise to stand out.
The client needs to earn enough from each customer to justify the service’s acquisition cost and risk. For example, if a client sells a $1,000 product and spends $1,000 to acquire a customer, there is no money left from that sale to cover other costs or create profit.
They should calculate the cost per result, regardless of how the offer is packaged. For example, paying $5,000 for five calls amounts to $1,000 per call.
Not necessarily. Growth usually comes from selling more profitable results at a price the market will accept. Excessive margins can reduce demand and ultimately lower total profit; lower margins can sometimes support greater volume and overall profit.
It should identify the price and delivery cost for its result—such as leads, calls, or new clients—that create strong demand and substantial overall profit.
The speaker promotes the AI Client Acquisition Challenge, starting November 16 at $50 before the price rises to $250, and a program at go.clientension.ai for building AI marketing agencies.