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Key takeaways
- 100 clicks to offer one, 100 clicks to offer two.
- And so if offer one gets 100 clicks, and let's say you convert 2% of those clicks.
- And let's say our conversion rate on our lifetime offer is 3%.
- And let's say that our lifetime offer is $50 uh one time.
Chapters
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0:00
Abschnitt 1 Could you please explain how to decide between a monthly Oh [ __ ] You a monthly subscription and what was it?
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1:16
Abschnitt 2 All right, our churn here, let's say that our churn on this is 10%.
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2:20
Abschnitt 3 Then again, people don't like monthly recurring compared to a onetime payment.
Full transcript
Locally archived YouTube transcript with timecodes. Speakers are assigned heuristically and may be corrected editorially.
0:00Could you please explain how to decide between a monthly Oh [ __ ] You a monthly subscription and what was it? >> I missed it. >> And a onetime payment. Yeah. Yeah. Okay, cool. Um it's actually just a math thing. So it's going to ladder up to something called EPCs, which is earnings per click. All right? And so you get your earnings per click by saying you have two lines on an Excel sheet. So this is pure math. 100 clicks to offer one, 100 clicks to offer two. And so if offer one gets 100 clicks, and let's say you convert 2% of those clicks. All right, I'll just do the math in front of you.
0:40>> You love when you do math. >> Yeah. All right. Right. I'll be fast with it. All right. So, we get 100 clicks on both of these. We've got A, which is our subscription, and we've got B, which is our lifetime. Okay. So, let's say our conversion rate on this is 2% here. And let's say our conversion rate on our lifetime offer is 3%. On the page, whatever. All right. Now, our price for our subscription is going to be, let's say, $10 per month. And let's say that our lifetime offer is $50 uh one time. All right, that's it. Now, our churn.
1:16All right, our churn here, let's say that our churn on this is 10%. Okay, that means our LTV is going to be $100. So if we have two clicks, 2% two clicks and we have 100 LTV, then we're going to make $200 in total on 100 clicks, which means our EPC is $2. If we're going through this one, our churn doesn't matter because it's lifetime. Lifetime value is going to be $50. And so we got three clicks, which means we got $150.
1:48So our EPC here is going to be 100 divid uh 150 divided by 100 which is I don't know one and a half I think. So this would be our winner. All right. Now the big caveat here is that it will take you 10 months to break even on that first offer versus getting five times the cash up front. So there's going to be a cash conversion cycle issue um that you're going to have to deal with. Now, these numbers actually don't make sense cuz realistically you might have higher conversion at a $10 price point than 50.
2:20Then again, people don't like monthly recurring compared to a onetime payment. It could be it could go either way. And so, if you're like, how do I pick which one? You test both. You look at your earnings per click. The one that has the earnings per click u that's higher is going to be the one that will make you the more money over time. And as long as you have the cash flow to sustain that, that's the one you do. If you don't have the cash flow to sustain it, then you have to start re-riggering the money model. Read the green book. That's what it was all about.
2:45Boom. Snapshot that.