DTC Offer Strategy: Raising Your Price Without Losing Conversions | Brian Ng
from Scalability School
36m 18s
The transcript highlights how pricing and offer design are critical drivers of profitability and conversion in e-commerce. Poorly structured offers—confusing pricing, cluttered layouts, or excessive discount tiers—undermine customer trust and decision-making. In contrast, strategic pricing psychology, such as ending at $99.99 or increasing the MSRP to make discounts more appealing, can boost profit margins by 40% or more without reducing conversion rates. Brands that use structured offers like "buy one, get one free" or subscription bundles see higher average order values and repeat purchases. Creative input is also vital, with successful brands leveraging multiple external agencies to diversify content and messaging, ensuring each agency focuses on specific creative pillars. The most effective creative output is not volume-driven but concept-rich and purposeful. Testing these offers through A/B methods—using UTM parameters or dedicated learning pages—is essential for validation. Ultimately, the transcript emphasizes that offer optimization is often the missing link in business growth, with even small, intentional changes leading to significant financial improvements. Case studies show that raising prices slightly and adjusting discounts can reverse losses and unlock new revenue streams, proving that profitability hinges on how offers are designed and tested.
Why have your price at $35,99 when you can have it at $39,99?
Why have your price at $37,38,99 when you can have your price at $39,99, right?
It's something that also, that's how you can squeeze a couple of dollars of profit per order or whatever.
And something like, for example, a lot of people run the buy one, buy two, get one, buy three, get two.
And then you run the sub offer on top of that, right?
And so after 15%, you get your prices at, let's say you start at $29,
you get your prices to like, I don't know, $22,99 or something like that.
Why not make that like, after the discount, after the sub discount, $24,99?
The same thing, you're gonna make more money off that.
You're gonna get the same conversion rate, a higher rate for user one.
And now, let's take a listen to the scalability school podcast.
Welcome to another episode of scalability school with a rare appearance of
Zach Brad and myself back on the podcast together, although I will be leaving early in this podcast
because I'm in Europe and it's late. Brian's in Singapore, it's 4 a.m. Brian, cheers to you for
getting up our guests and Zach and Brad are in a time for them that's totally normal and makes sense.
But Brian, um, Brian, I'm just gonna say Brian. So Brian is a great guy, a member of our community,
has been a member for three years, uh, totally an incredible growth expert, somebody who is
an agency owner who has recently gotten into being a brand owner, somebody who I respect and who
I turn to a lot. He has always been somebody that doesn't settle for just the baseline. He always
is pushing and I know somebody is really great when I introduce Brian to Zach last year at a
Foxville Founders event. And then Zach texted me after and goes, you were right, Brian's insane. And
I was like, correct, he's awesome. And because every time I talked to Brian, I'm like, what do you
got going on? And then you send me these like 35 minute looms of all the stuff of like, it's like
watching that scene from a always sunny in Philadelphia where the lines of string are going between
pieces of paper and that's you, that's you man. So I'm really glad to have you on the podcast and
I'm glad to get some sauce for our listeners for you here. So on to the, since we had the longest
intro of all time, sorry about that. Anyway, so Brian, super glad to have you here, man. Also
background, one of the reasons I think you're killers, because actually you were a killer in
the Singapore military. Is this correct? Oh, that sucks. I was like the, the best person. I wasn't
actually holding the rifles. Um, before we hit, before we hit record, you were kind of telling us
about the agency journey a little bit. And you said, kind of over the last three years, you've
onboarded a handful of clients. And it sounds like you've intentionally been thoughtful about
how many you onboard. But the thing that was really interesting and I think that what was at
the stage for kind of what we're going to talk about today is just give us, give us like a little
bit. You were running through examples of like, client was here. Now they're here. They were here.
Now they're here. So just like, yeah, brag for a second and kind of rifle off a couple of the
results that you've seen. And I think that'll help us like set the stage for compensation overall.
Yeah, maybe I can get started a little bit about the company itself. So digital right, like Andrew,
as mentioned, we do like brands and as well the agency side of things. We actually started off
with brands, my business partner. This company is actually like 10 years old. But my business partner
was in like e-commerce drop shipping for like the first seven years or so. And an agency came all
back because we've been working like an email marketing agency, Haslam marketing. And they came over
and said, hey, you guys are doing pretty well at paid ads. So like, can you help help us do this
with some of our clients as well? And he was like, sure, you know, and we hand picked some of
the clients that we think could could work really well for us. And that's when I joined in actually
as a junior media by about like three years of experience past that. And so we've only taken on
eight clients over the past three years or so. We have grown them from like around 500 K to 10
mill, 500 K to two mill, 500 K to one mill, whatever the numbers are. And we really act as growth
partners to the kind of the brands that we work with, right? So it's like a more like a head of
growth, not a CMO but like the head of growth of the people that do all the that you work in that sense.
And so and we don't bring on a lot of clients because we really want the people to get results,
right? And there's always like so many factors. It's never just me buying. It's me buying creatives,
offers, and the landing page that you send to, right? Acquisition site. That's what we focus on
predominantly. And so yeah, that's kind of where how are we started and some of like the kind of
results that we've seen go. Yeah. And you mentioned a bunch of different growth lovers. I know we're
going to dig into at least a handful of those particularly interested in offers personally. I feel
like not enough people spend time talking about offers and actually how to craft it. So we'll come
back to that. But we so we have growth levers as options. But there's like some foundational work
that you can do ahead of time to help set brands up for success. And you mentioned forecasting is
one of those things that you have a unique perspective on and something that you you help clients with.
So can you just kind of walk us through like what is the maybe maybe the 10,000 foot overview of
like how you do forecasting and I'm sure we can dig into a bunch of different questions from there.
Well, I mean, I don't think it's it's a for forecasting piece a lot of times for us.
When you when you when you do things a certain way when you like creative as a certain way and you
have a certain amount of creative volume for a period of time, you're able to then kind of see the
seasonality of it. So like the forecasting that we do gets better kind of year on year just because
you know, you know, let's say in February, you have a completely shit month. You know, in November
to January is like a really good period. And then you know kind of what the trends are between like
maybe certain July and August are similar revenue numbers, right? So you kind of know the trend
trend of revenue that the brand is on and you can kind of forecast just based off year on year.
Right. So we just look at previous year and this year, how what do I forecast in terms of year and
years? Like 80% or 100% year on year grow, right? So like double, double grow. And then from there,
a lot of times that's where you start thinking of like, okay, I'm going to be growing like 120%
year whatsoever. I really want to push hard here. Let me just, let me on board creative agencies
don't disparate because that's like the biggest element. When you offer, it's kind of doubt
all you have a decent offer and you have a good offer page and all these things. It's like, okay,
I'm going to bring on new creative partners here. And that's when you need come in and it's like
going on attention. It's like you need to find a good, good, like good creative partners in,
you need to make sure you know how to bet them, etc. and come in like that. And so even with that,
when you're forecasting, you are able to know like, okay, during this period, we actually really
subtest because we, like, we didn't do these certain things right. We didn't plan for, I don't know,
Monday, probably or we didn't do any. And then that's when you add that in, you know that you have
more creative coming in. You know that you can hit your 120% year on year growth or something like
that, right? But every single month, we plan consistently like a person, like a percentage of
like year on year growth and we usually hit that number. And usually, and how we control this is
that we can go like, we actually can go past that kind of year on year growth. But because we
control it with bedcaps, we just like, we make sure we hit that pace that we need for that number
and we could go over, but you know, that guarantees us kind of like hitting the forecast in that sense.
So that's how we do forecasting right now. Usually when the brands first come in,
they don't have that stability. So it's more so based off feels. A lot of the things that we do is
are based off feels, but also is like, I'm always pushing like, you should never scale when you're
in your customer royes and your numbers are not like, I'm not there, right? Brand owners have like
a lot of clients sometimes come to me and it's like, we need to hit this number. We need to hit that
name is like, yeah, it's better to hit a low number with a better new customer royes. Unless
you need to clear inventory for cash, cash flow that then pays for your, for your loan that you
talk or whatever it is, then, you know, that is a case, but then you need to be like backed up by
something else as well. There was a case like that too, but a lot of times you don't need to push
to hit your forecast numbers. You should only push when you have something working in the creative
side with a decent offer. So yeah, more so, I was going to say that, you know, the most successful
partnerships that we've had with creative agencies have been getting them when they initially first
out. And it's really difficult to find that. And for example, one of our home runs was Harry,
when he first started his creative agency and getting that in and he got like a lot of wins
off that, a lot of the screen shots of it as well. A bunch of clients from that as well. So
that has been like a really, really great partnership. We're really happy with that. And then
we have some other ones. So we're still exploring when you have like three creative agencies
on the pipeline right now, but all like working with us right now, but it's all long-term
relationships. And that's kind of what we do with that brand. Less stories, creative threats, etc.
Yeah, I'm curious. So do you you don't have any in-house creative team for that brand?
It's all agencies that are feeding creative. We have like two marketing coordinators that
managed the the brand side of the agency side of things, whereas like the men
the content is coming in and reviewing and going feedback, et cetera.
- I mean, that's a really interesting call out, though.
So, like, this brand's doing 10 million a month,
and you have three creative agencies,
and no in-house creative strats.
Like, I think everyone always tries to go,
"Hey, we gotta build this house, you know,
in-house, it's always gonna be better."
I think it's good to just, like, say, like,
it's possible to build this all with, like, external agencies.
We at Marsmen have rotated through a lot.
Like, then we've probably hired and fired, like,
10 to 15 creative agencies at this point.
We currently are on with, like, three.
But we've, I think the one question that I have for you
is, like, how do you dictate?
Is someone, are you or someone dictating
what each agency is focused on?
'Cause I think that's the other part of it, too,
is, like, getting at least diverse creative,
getting different types of assets, whatever.
Like, how do you think about that for a brand
that has, like, three creative agencies?
- So, initially, I'll tell you a way
to bring on a creative agency at the start.
We usually just say, like, hey, just do what you think would work.
And that creative agency probably
has access to other data accounts.
They see what's working in the market.
They're gonna try different structures and kind of ideas
that are working for those accounts, bring them to yours, right?
That gives the biggest success in that sense.
Once you have that, and, you know,
one agency focuses on mashups.
The other focuses on YAP is, then this is what I have,
we brought on the third creative agency,
they could do everything.
I was like, I want you to focus on just these, like,
AI-pixel, or just AI-creatives in general.
So, can you please just focus in that?
And, you know, of course, you need to see
that they might have the talent for it.
You need to see the other creators
and what they have given to you, et cetera,
as a portfolio, but so ever.
So, that's kind of how we have split up.
Say, when coming into a brand
and bringing on a creative agency,
I'm just usually, I usually know what they are good at.
And also, I'm telling them, like, do what do you think would work?
Of course, there's guardrails, right?
We will see, like, we'll kind of know
what would work for the counter best.
If they give, like, some other box idea,
there's, like, really different,
then we'll probably, like, know, like,
we're not going to do that.
Can you, like, maybe go into this direction instead?
But it's like, I guess it's more of, like, managing.
There's also, like, just managing people in general.
You need to give them guardrails,
but let them, kind of, do their own thing.
And giving them, like, a, so we, Zach, you call it pillars.
Like, pillars is, like, the core message
that's being communicated in the ad.
So, it's like, how the example we've used 8,000 times on this
is, like, hunters versus compression or whatever.
Are you telling the agency, are you at least giving them
the parameters, so it sounds like, in some cases,
you kind of know, hey, makeupers or make mashups.
Are you also helping guide them with the direction
for, like, what they should be talking about?
Are you giving them the freedom to say,
hey, we see that this pillar angle, message, or whatever,
is working, and we're going to create within that.
The idea is that to start, we give them the direction,
like, muscle, wear, is needed.
Give them the creators that they need.
There's what best in all account.
Give them, kind of, the winning videos that we have
and the messaging that we have and what we say in the ad
and all this that makes it work.
And after we guide them and give them in,
but then, like, over time, after that,
three months, after that, that period of time,
like, I don't want to be managing the creative agency.
I don't want to be guiding them into the right direction.
They need to know what's working
and they need to iterate on that
and then get new stuff that's working
without my time, right?
'Cause then it becomes very, like,
I'm doing a job, basically.
So, it's like, they need to be able to do it themselves.
Maybe God real set the start.
And even if they are not like,
they don't follow it as well, right?
I mean, that's usually a sign that's not gonna work out
for a creative set or a creative agency.
But if they don't, you know, we still give that three months
and we test them fully.
'Cause we own part of them in the first place,
which is then we know we trust that they're gonna produce
good creative and, yeah, kind of portfolio and all that.
But, you know, sometimes there's kind of the ceiling
in that sense, but after three months,
then you can fully judge.
And it's not really for a bigger brand.
It's not really a cost.
It is a cost, but, like, the cost of not doing it
is more expensive, so.
- Yeah, yeah.
And you mentioned, this has been the topic
of the Twitter discussion.
This is not gonna come out for a couple weeks at least,
but literally in the last, like, 48 hours it's been,
is creative value important.
Which we can, if you wanna share an opinion on that,
you're more welcome to do that.
But for the brand that's doing 10 million a month,
like what is, what kind of creative value
are they pumping up?
- I think it's like, lunch, like, maybe 60 to 75 concepts a month.
- It's not that.
- And not that, how many of them?
- How many of them?
- How many variants, like of that?
Is it like concept is?
- Okay.
- Usually five variants or whatever.
- So a couple hundred, couple hundred.
And like, when you say concepts,
like pretty distinctly different concepts,
probably across messaging as well as formats.
- Yeah, exactly.
So basically, like, you know, I mean, Harry has done,
I think probably has talked a lot about it on Twitter
and probably on podcast.
But he is one of our main creative partners right now.
And he really just changes the front end story of it
and maybe changes the mechanism,
like the unique mechanism a little bit.
Like, and so, but yeah, it's pretty diverse in that sense,
like really different stories.
- Got it, got it.
- So I can give a comment on the volume and create the--
- Yeah, please.
- Volume.
I think it's such a common problem, I would say.
Like, volume as of itself is not really that helpful.
I've seen like newer, like, which is on-boarded, a new brand,
maybe two months ago.
The founder was doing really well last year, August,
and he was making his own content, et cetera, blah, blah, blah.
And then after that, he started going into this, like,
if you guys know Tribe, Tribe has like TikTok Shop 4 better.
He went to that Tribe route,
bunch of creators coming in,
producing like hundreds of assets every single week.
And I'm like, dude, you're pretty small in this brand.
This is like, but his results have gotten worse and worse.
And so I see it in this way, it's, you know,
you need to have thought out like concepts, right?
And you need somebody to do it.
So you need, like, if you have a creative shred,
they need to be thinking out their concepts
and then producing it with intention.
And then you can do, like, maybe 10 to 15 iterations.
You do five, it's completely net new, right?
And the same goals for, let's say, Tribe creators, I would say,
or at least the creators that they're coming in,
they need to have thought behind it, you know,
if not, I test them a different way.
I'm not testing them in a ABO creative testing
where I really spend by joining out,
putting them as CBO and I'm throwing it in.
Just TikTok Shop, for matter like the Tribe thing,
the thing is, like, I've only seen that work with,
and this is my inexperience.
I've only gotten on the platform for like a few months,
like three months or so.
And, you know, I don't have that much experience in this,
but I'm starting to get way more,
'cause we have brands that are pushing this.
But it's like, those brands are like TikTok Shop,
they have creators that are producing stuff that's winning,
then they pull that over to Tribe,
and then they start posting that,
or they then pull them over until they own,
they have their own system of doing things
and that works for them, right?
But those are like top creators
and they're putting spend behind them, right?
Sometimes brands just use Tribe specifically
to use for like the payment processing of creators,
paying the retainers, paying the percentage of adspan
or revenue that they're doing,
and that is worth the fee that it comes with,
the 1.5% fee that it comes with, right?
So, yeah.
But going back to that creative piece,
it's also like, you need people of intention
to produce that, if not,
you need to find a different testing structure for them.
So if like creative agencies,
they need to be producing that with intention,
and that's the most important thing.
And the way they scale volume
is to have more creative agencies
and all more creative strategies
and to have the intention and push that through.
- Yeah, that makes sense.
Cool, I want to jump into offers
because I think you,
it sounds like you have some strong opinions about offers.
And so I'd be very curious,
maybe where we start is,
it sounds like maybe even recently you've pulled up,
you've started looking at some ad accounts,
and like one of the first things
you're looking at trying to diagnose
is just like offers in general.
What does a bad offer look like?
Is maybe a good start.
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- Know this code?
It's like 30% discount tier.
It's really not really incentivizing any action
on like the middle or bigger bundle.
It's really difficult.
I think the visual of it is very important.
When you land on the site
or the PDPR off a beach,
Now it's the same thing, you need to understand what's going on.
A lot of brands they have it designed so badly, like in a way where it's like things are so messy, right?
The paragraphs that they have is like four paragraphs under the image carousel and it's like that whole, like, and it looks super bad, the four paragraphs in, and then you have like another offer which is like four blocks long, you know, or like five blocks long of like the different tier of discounts, for example, and that does thus, like extremely horribly wide, because when customers land, they don't know what's going on.
They don't know what you stand for. It takes too much time to read, read what is like what you're saying, and takes too much time to understand offers, so one of things is like simplify the offer, try and put that that higher kind of discount threshold as well, like raise your your MSRP bigger discount, you know, so like that, and they're like standard offers that you can run nowadays with like, like supplements is like buy one by two get one by three get to for any type of multi skew or single single product model.
multi skew or like different color brand, you can run like more of the jabby style of beer, so it's like, I'll go to right now, yeah, so bad offers it's confusing, there's like way to many things like the customer has to do math to try to understand the economics, like that's good example that and then, like the low percentage.
Yeah, it's too confusing and doesn't look like a good deal, it just needs to feel like a good deal, they land on it.
You're at least to do all that persuasion, it makes them like really want to per and then you then see what you have, maybe some reinforcement, but then you see your offer is like, okay, this makes sense.
You know, I want to then the question is like, do I want to fork out this dollar amount for what I just, you know, hurt to add.
Yeah, and so you mentioned a couple things that I was interested in, so like the idea of like stacking and you can kind of do that with buy more, say more, while also like playing with the MSRP value.
And I think particularly in the supplement space, like there's a couple of outs of people are going right now, it's buy more, save more or subscription only or some kind of like blended version of the two.
I think that's that's pretty common, but when people are doing the Bogo, well, I guess this is actually true of the subscription offer as well.
To kind of like, it's like, okay, what is all in that first order? It's like, okay, we're going to throw in, you get, you're going to get the base products, you're probably going to get a couple free gifts, then you're going to throw in free shipping or you're going to throw in shipping, which has a value assigned with it.
So it's important to actually calculate that entire MSRP and then you do your markdown on top of that.
Is that kind of value in the right direction?
Yeah, I mean, I can talk about the office that work right now. Technically, there's only like three different offers that brands that are really scaling hard are doing, right?
It's that buy more save more, which is you buy one or you buy two get one and you buy three get one or get two.
The other one is more of like, what? Massband does, which is like, you do the like a subscription only at the front end. We're actually going back to the buy more save more. That is like the one time version that you can run and then you can run that 15, 20% discount as well on top of that for subscription.
And usually you see like a 60% take rate on that, right?
Use that force catching bundles is the easiest to do it. That's why the drop shipping demons do it use fun. And then you have the one that mask man runs more so it's like that, like a bigger discount up front $39.
I think you get a higher take rate from that for sure. And then the subsequent orders are like $59.59.
And then the last one which is more of like what better body core runs and like we drew in that like those two companies they're like last I saw it was like a buy one and then you buy two and then you buy three.
And then it's like $10 off something off and then like $30 off something like that. But also not sure how well that is doing for them, but doesn't seem to have they haven't seem to have grown that much from from the past couple of years.
Yeah, I don't know. It's looking at traffic was are you testing this like how are you testing in the add account is like in the add account you're doing separate adsets and doing a bill are you doing intelligence on the back end.
Like I think there's there's so many ways of people try to test and feel like offers is like a really complicated thing to test.
It is some well there's two ways right you either throw it in like you you add like a UTM parameter that triggers this experiment like in a convert or intelligence.
Or you can shoot it to like your best ads to and the new kind of offer feature online page itself right I still fall into the lines of like convert experience I'm a bit old fashioned that way my business partner does all of the test now true.
To the true true new ads new ad of best ads to that learning page more or found is that different ads perform to that learning if it's a different learning page.
But office wise usually same as I think I presume the same ads perform but that's two ways that that's the two ways I honestly just like.
Like do a convert experience is like just wait easier like I just throw it in put the URL parameters I launch it and then it just tells me like 20% up right by user and I'm like cool that makes sense.
And then I try and to call profit profit as is does that make sense okay make sense great you know it's a winning thing like that's how we do things but my best fun now has gone into the route of muscle like.
So like at set and after that to new new learning pitch yeah how much are you thinking about like offers if you are like on the on the the rebuild side so like from a subscription perspective like.
Are you charging like thinking about charging a shipping on on a rebuild it's a price going up is it going down either I'm in free gifts like are you are you thinking about the retention piece and the offer for rebuild so many of the clients.
They were skill right now just like more so one time so like a 10 mil per month client is the one time purchase kind of thing very small subscription after.
We also have skincare but you know like we're starting to push this like piece a bit more in terms of the retention site one great piece of advice that give me was to like you know free shipping upfront but after that you charge them 8.75 or something like that.
And that we have implemented so this new brand that we just unbought it is the one that stop off like this is like they were losing money for a lot of months now went from like negative 24k and then like the next month was 10k net profit then the next month this month should be like 50k in that profit based off what we've seen.
And that that was just all based off like an author change right we modeled that Javi framework multi skew different different flavors and then the MSRP were just too low the company like I think the price is too high or like I don't even think we can charge it much like fuck it just let's let's let's run it and see and you know this this is literally what your competitors charge you're charging way less than them.
Why don't you increase your prices and you know so they went from a one time author which was by one by two save like x percent by three save x percent by four save x percent which in a for itself is like so big and long screen.
We moved it to that Javi off a page style you know and and that is sub first and after one time purchase option.
This is like if you click on it and go to the site no free gifts we raise MS as MSRP to like 74.95 and then we gave it a 50% discount and then the sub the the interesting thing is is that the conversion rate has stayed roughly the same like like the Converter has stayed the same as it was a 4% increase in conversion and like 18 or 15% increase in wherever user and we're getting subscriptions like every single day they like we're going to get most.
Like in two months time I'm going to get the entire subscription thing that they have been doing for like the past year plus year to two years and it's a script and usually with subscription you see like a negative 10 15% rank per user so it's like this it was like a insane win and it was also pretty only by increasing price now we're going to get free gifts and the gifts are going to be related to kind of the product that they sell and it's going to like convert even better and so then there are lot a lot of split test you can do especially on the Javi stop page.
We can talk about that if you won. Yeah, the MSRP thing is so interesting because that the same event that like whatever a year ago where we were all in the same room but we didn't meet.
I was like I'm sure we sat down with like a handful of brand owners like I watched you talk to them about their offer and they were like they were really hung up on like MSRP and changing it and you just I don't know if you remember this conversation but you're basically like you just need to change it until
it like the offer makes sense and like the offer looks compelling enough. Yeah, you sat with them and it was like you just have to continue to like
manipulate some baby an aggressive word but like you have to continue to manipulate and like don't be afraid to change the MSRP.
That really stuck with me because like people don't like they don't they don't change the base price because Brian to your point like they're worried that it seems too high maybe by comparison to like what the market is saying or like they don't think that they can they can
justify that. Zach, I don't know if there's anything else that you remember from that conversation or offer. Yeah, I mean I just I gave them the example of hollow which is like dude like we shouldn't be charging 50 $60 for a single pair of socks but to hit the to hit the discount and offer that we want to to make a
compelling enough to buy to hit the AOV versus the NCAC that I have to have to back out to the math works like you sometimes have to increase prices that you can play with offers.
And yeah, their performance wasn't hidden where they needed it to be. I'm like it's not going to fix by you by you not messing with this like this offer dynamic you just have to try.
Yeah, so yeah, I mean that's that's usually the brands can't believe that are stuck at that like sell.
a few hundred K a month in revenue.
And they're like, I just like can't break through
or like we're just not profitable
and just can't get to work.
Almost always, it's like an offer problem.
And then obviously like, you know,
creative is a huge piece of this.
But almost always, I think it's like an offer issue.
- Yeah.
- So yeah, brands, brands, right, exactly how.
I mean, I think more brands need to be aggressive
when it comes to pricing and stuff like that.
'Cause yeah, if you're torching cash, it's not working.
Like an offer change can literally turn the business around.
- Yeah.
- Yeah, we ran a pricing test recently.
Yeah, it was a quick, quick up pricing test that we ran.
It's a high AOV in like the $400 range.
The MSRP kind of like close to $500.
And it's just like an awkward in between number.
Like I'll pick a random number.
Like for example, it was 297 or 279.
Like 279, like the 79 feels super random.
It's like not quite 299, but it's also not 249.
It's just like this awkward spot.
And so we pushed them to drop it
to just like get it below the next threshold.
Like they were running a $50 discount to get it to $2.29.
But $2.29 still feels kind of random.
So like, okay, I'm pushing into $1.99.
And we saw like a 40% lift in profit procession
while also being able to scale substantially further.
And then just like a couple of times throughout the month
for various reasons, which we don't need to get into.
It's like they go to full MSRP.
And it's like at MER gets shittier
and they lose 50% of their spend volume
for the course of that week.
Unless we try to hold it to like continue to like maintain
whatever funnel, and it's just like it's insane
what those small changes can do.
Even if it's like the change is not that meaningful.
I think it was a $30 change on a really expensive product.
And yeah, 40% increase in profit procession.
- Insane.
The, this is pricing psychology.
It's like, why have your price at 35.99
when you can have it at 39.99?
Like, why have your price at 37.38.99?
When you can have your price at 39.99, right?
It's something that also that's how you can squeeze
a couple of dollars of profit per order whatsoever.
And so your sub after 15%, you get your prices at,
let's say you start at 29, you get your prices to like,
I don't know, 22.99 or something like that.
Why not make that like, after the discount,
after the sub discount, 24.99?
You're gonna get the same conversion rate,
a higher rate for user, why?
Just 'cause like people view it the same.
That's why all the stores, they put it like,
end at 99.99 or 99.97 or something like that.
So it's like, yeah, it's like the pricing part,
it's so important.
I see so many people, they put like the price at $85.
I'm like, why not $89?
(laughs) $85.
So like that's how you squeeze.
Like this is where we like squeeze so much of the profit.
All these little small changes that we make onto the site.
And it's like so many more like CRO wins I can go through.
They're like super obvious,
but like I've really made a substantial difference
to our business.
Even though we don't run CRO, it's just like common sense.
You know, like we're not CRO agents either.
We technically run it like that.
- The Amazon thing is super interesting,
'cause what I just don't that,
I was talking about they did the, they intentionally did it.
Well, they intentionally left the MSRP higher.
They didn't like go raise the price, but like Amazon,
and I'm sure there's like some Amazon pricing things
you have to consider for this,
but their Amazon is listed at the MSRP
and then they have a nice little, you know,
that's not an always on offer on the website,
but same thing, like it launched on Amazon
and the website stayed the same.
Pricing was better on the website by a small amount,
even though MSRP was listed, so there was discounts.
And they saw like, okay, yeah, Amazon went from zero
to a couple thousand dollars a day, but the website went from,
you know, whatever, 50K a day to 60, 70K a day
because to your point, like the pricing psychology
and like, oh, now it feels like a better offer.
They saw the exact same thing.
Since we're going, since we're going bar for bar on test right now,
let me tell you about the loser.
It's pissing me off.
We launched a, we have a test rolling right now.
It's just a PDP test.
Well, the original version, they re-did the PDP,
they relaunched it with like an AI summary of the reviews.
And to me, I'm like, okay, that's interesting.
Like, Amazon's got the AI summary,
but like, I just feel like customers are kind of like,
averse to AI things.
Maybe not with reviews because it's on Amazon,
there's that summary, but there was no,
you couldn't read actual reviews.
And to me, I was just like, felt like, ah.
I feel weird, especially because there's tons of going,
like they have great reviews, 4.7 stars,
tons of awesome photos, everything is great.
So the test running right now is the summarized version
against the full review widget.
The summarized version is winning by 10% profit per session,
and it's pissing me off.
It's like, it makes no sense to me, because like, to me,
it's like, you would assume customers
on a high AOV product would want to read
real authentic reviews from other humans,
but apparently they like the summarized version.
And it literally says, AI summary.
No, no, but that's a really good idea.
That's interesting.
That'd be super interesting.
What's front row, front row MD just came out with that.
A bunch of people are testing this like clinicians AI thing.
I don't know if you guys have seen that.
I made doing it and I know a couple other brands are doing it,
where you land on a PDP and you can ask clinician AI
about the product, super interesting.
We tried to break it yesterday for IMA by asking it,
like, well, just cure my, whatever disease.
And it was, it was, it was pretty good about response.
Yeah, I'm sure.
- I'll follow Brian on X.
- Brian, B-R-I-N-N-J-A-H-O on X.
Brian, thanks for being here, man.
This is great.
Thanks, man.
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Guys, anything else you want to say on this?
- Yeah, please go check us out on YouTube,
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So please say something nice about all of us.
Thank you everyone. Thank you for listening, honestly.
Podcast Summary
Key Points:
Poorly designed offers—such as confusing pricing, excessive tiers, and cluttered layouts—hinder conversion and customer understanding, often leading to lost sales.
Strategic pricing adjustments, like ending at $99 or increasing MSRP to make discounts feel more compelling, significantly boost profit margins without affecting conversion rates.
Successful brands use structured offer models like "buy one, get one free" or subscription bundles to drive repeat purchases and increase average order value.
Creative agencies play a crucial role in scaling performance, with brands successfully splitting creative responsibilities across agencies to diversify messaging and formats.
Intentional, high-quality concepts and tested iterations are more valuable than volume; creative output must be purpose-driven and aligned with brand messaging.
A restructured offer—such as raising the MSRP and offering a larger discount—can dramatically improve profitability, as seen in a case where profit increased by 40% with minimal price changes.
Testing offers effectively requires clear metrics and methods, such as UTM parameters or A/B testing on learning pages, to measure performance accurately.
Offer optimization is often the root cause of profitability gaps; small, data-informed changes can reverse losses and drive sustainable growth.
Summary:
The transcript highlights how pricing and offer design are critical drivers of profitability and conversion in e-commerce. Poorly structured offers—confusing pricing, cluttered layouts, or excessive discount tiers—undermine customer trust and decision-making. 99 or increasing the MSRP to make discounts more appealing, can boost profit margins by 40% or more without reducing conversion rates.
Brands that use structured offers like "buy one, get one free" or subscription bundles see higher average order values and repeat purchases. Creative input is also vital, with successful brands leveraging multiple external agencies to diversify content and messaging, ensuring each agency focuses on specific creative pillars. The most effective creative output is not volume-driven but concept-rich and purposeful.
Testing these offers through A/B methods—using UTM parameters or dedicated learning pages—is essential for validation. Ultimately, the transcript emphasizes that offer optimization is often the missing link in business growth, with even small, intentional changes leading to significant financial improvements. Case studies show that raising prices slightly and adjusting discounts can reverse losses and unlock new revenue streams, proving that profitability hinges on how offers are designed and tested.
FAQs
Pricing psychology influences customer perception and purchasing decisions. Ending prices at .99 or 99 makes them seem lower and more attractive, increasing perceived value and profit per order without changing the actual price significantly.
A bad offer is confusing, cluttered, or hard to understand—often with too many tiers, long paragraphs, or complex math. This overwhelms customers, making it difficult for them to see the value, leading to poor conversions and lost sales.
Raising the MSRP to a cleaner, psychologically appealing number (like $1.99 instead of $2.79) can increase profit margins. A small price change can lead to significant gains in profit per order, especially when combined with a well-designed offer.
The top offer types include 'buy one, get one free,' subscription-only models, and layered discount bundles. These are effective because they increase average order value and encourage repeat purchases through incentives and clear value propositions.
Brands use A/B testing with URL parameters or different ad sets to compare offer performance. They track conversion rates, profit per session, and user behavior to determine which offer drives better results.
Yes. A small change—such as moving from $279 to $199—can lead to a 40% increase in profit per order, especially when the offer structure and perceived value are optimized for customer behavior.
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