Return On Investment - ROI
This is where we get down to the nitty gritty. We have taught the Gunmuse Golden Rule now we are going to teach how to calculate ROI(Return On Investment)
Each and every product has its own ROI and a site can have its own as well all be it a Site is guaranteed to have a lower ROI number than a product. Huh?
Lets start with an example we are going to sell Widget brand over/under shotguns. Widgets cost us $900 and we sell them for $1250 Freight paid. Why Freight paid? Because we are a business and we don't give anything away for FREE. Freight cost money so I say "I pay freight" not "its FREE". So I know that to send my Widget Wonderlight deluxe to my furtherest shipping zone it will cost me about $29 bucks. So My cost is $900 plus my freight to me and freight to them. Lets Say $960 I will have to pay the 3% credit card fees on the $1250 so thats another $37.50 We will round our cost up the $2.50 to and even $1000 (hey that Cost got up there in a hurry didn't where did $900 go?) There is another average number that you need to add to your cost. Bills-VS-units A little shop usually costs around $4000 grand a month to function. That's rent, insurance, heaven forbid min wage for yourself(I kid you not I have seen the books of the 10% guys and they forgot to pay themselves even min. wage. oops) You move 80 units a month so thats $50 bucks a unit just to move them from point A to B.(If your working out of your house try using your house bills as a reference) Throw that in there. So our (REAL) cost is $1050 for our Widget Wonderlight Deluxe w/Polished Blue finish.
Hey that means we made $200 on a that Widget Wonderlight Deluxe w/Polished Blue Finish and hand checkering in the stock. The rule of thumb is Half your net profit to promote your product. That means your going to plan on spending at MOST $100 per unit to Insure a sale. Keep in mind the Gunmuse Golden Rule of 1% on Targeted traffic. That means you can Spend up-to $1.00 per click as long as your buying targeted traffic you will Sell at least one Widget Wonderlight Deluxe w/ Polished Blue Finish and hand checkering in the stock and the super recoil pad. Now odds are at this point(and I know this for a fact) NO ONE is buying those keywords. Usually can pick up Specific targeting from PPC engines for just a penny. That means for just $1 you can have the same 100 people find your Limited edition Widget Wonderlight Deluxe w/Polished Blue Finish and hand checkering in the stock and the super recoil pad.
As more people get to selling this wonderful shotgun online/offline whatever. Expect the price per click to go up its the natural progression of things. Meantime you take your Extra $99 and invest in your next product line and even more growth.
Now you may of noticed how my Widget got bigger and better as the story went along. This also is the natural progression of things. You need to be thinking ahead. All to often you get to putting up a product page and and products slightly change, part numbers change for no reason(Browning),Or distributor prices keep going up without notice. Hey if your selling Ar-15's for $600 on your website and another 9-11 happens guess what your stuck selling them at $600 Your website is an advertisement and a contract with the consumer. You can't just say oh well prices went up. Some try that Prices subject to change without notice. Guess what Wrong. Some anti-gunner gets a burr to take you to court over it and your in trouble. Plan ahead leave wiggle room. Its much nicer to just say Hey I don't have the plain blue but would you be happy with the polished blue finish at no extra charge? It may cost you more but it won't cost you your business.
I tell you this now because when you put this into action you can bet that your distributors are going to run dry of product long before you run dry of customers. Again this is why you should plan ahead. Guess how many Glock 22's you can sell when there are none in stock for 3 months at the distrubtors. That's right 0 that means you better turn off that advertising. Over the next few years EXPECT to have more customers than Guns to sell them. Make enough money to ride the slow times. Have enough money to buy quickly when that salesman calls with his 1 allocated gun.
This will be the biggest advantage you have with an online store. You can guarantee your one of the first calls by your salesman because you want whatever he can feed you. Instead of saying Who would want a 45-70 revolver. Findout who wants that 45-70 revolver and get in front of them. Guess what you can do that in Real time while on the phone with the guy. Use our keyword popularity tool.
Plan ahead and be flexible in what you sell until you can buy and store in Large bulk.
Author: GunMuse Date: Thursday Sep 23 2004 10:05:59 am
