The Visionary Files

Passive Income Series Part 1: The Most Important Things to Know Before You Start (That No One Tells You)

• Adriane Galea • Episode 68

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"Do passive income, they said... it'll be easy they said." Welp. 

As amazing as passive income CAN be, there is also a lot of stuff no one tells you before you get started. You go into the world of passive products bright eyed and bushy tailed thinking: this is IT, my ticket to cash! ...And it very rarely works out that way. 

So I've created the Passive Income Series, and in this first part, I'll talk through what you need to know before getting started. I want you to be able to make an informed decision on whether or not pursing passive revenue is right for you right now in this stage of your business. And if after listening to this episode, you decide it IS, then parts two and three will walk you through setting up your passive model and then come up with a promo strategy!

Quick overview of what we cover:

  • The irony behind passive revenue not actually being passive for quite some time
  • The ONLY thing that will speed up your process of moving into passive revenue (hopefully) more effectively
  • What you need to know about having an audience to sell to both now and later down the road
  • The sneaky way you can bypass having a large audience or using ads if you're willing to put in the legwork
  • The biggest caveat to running low ticket passive products which will destroy your profit margins if you address it
  • Why you absolutely must have a strategic, intentional, and well-planned funnel if you want passive products to work
  • Why passive products are best paired with high ticket offers
  • When the right time to transition into passive products would be if you're currently selling high ticket coaching or services

RESOURCES: 

  • Click here to join the Solopreneur to Scaling CEO no cost 3-day training for service business owners making $50-250k/year USD
  • Click here to join Sustainable Growth Lab
  • Click here to work with Adriane and the Soulpreneur Agency


ALL OF THE PASSIVE REVENUE SERIES EPISODES: 


LET’S CONNECT: 

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This episode was first published at soulpreneur.co/068

Speaker 1:

And it's going to all of a sudden, like you developed this $27 or $37 or $47 thing and you get 100 people to buy it and all of a sudden that's a fun little cash injection of like $2700 or $3700. Wouldn't that be great. The thing that they're not telling you because there is an assumption that you're going to have to run ads to make this thing work is if you break even, you're doing better than the majority of people who are doing this. Welcome to the Soulpreneur show, a podcast for a new generation of leaders, visionaries, disruptors and trailblazers who want to do business better. Our goal is to provide you with stories and insights into the strategy, systems and soul behind scaling, service driven, impact first, human centric businesses to help you create time, financial and lifestyle freedom. We want you to have a business that you not only love and pays you well, but that prioritizes what you want for your life, so that you can take actual unplugged vacations, you can step away from social media and you can spend your time doing things you love with the people you love. Let's get to it.

Speaker 1:

A month or two back, I did a survey. I do surveys kind of often. I like just sort of finding out what people are into right now and what's on their mind. I don't really use it for messaging. I don't know why I feel the need to clarify that right now, because that's not at all what this episode is about, but I know that a lot of people do surveys, just like market research, for how to write things for an offer, so that their copy can be more on point. That's not really why I do it. I do it so that I learn. It's for content for me, honestly, and so that is the point of why I'm bringing this up is I'm creating content out of what people told me they wanted. And what the people said they want was very clear was that they wanted more information about passive revenue, like all the way across the board. That's what I was seeing in. I don't know. I think probably 20 or 30 people responded and like probably 80 or 90% said something somewhere about wanting passive revenue and like that either being a focus of something that they are working on right now, or that that's something that's really important to them in the next couple of months, or that it was a question that they had.

Speaker 1:

So I'm creating a whole passive revenue series and I want to approach this a little bit differently. I don't really have anything to sell you on passive revenue, so it's not like I'm creating this so that I can, like, take snippets of this and, you know, turn it into something that's going to help me sell something. That's not it at all. I'm doing this because I understand how to sell passively and I help clients sell passively, and I understand, like, the funnel side of passive selling, and I think that there's a lot of misconception about this. So, just for starters, I want you to have a really good understanding of what you're getting yourself into Should you choose to go down this road. This is the stuff that, like the people who are teaching passive revenue, they're not teaching you this stuff, they're not telling you this stuff, and it's like that. It's like that meme where it's like oh, do passive revenue? They said it'll be easy, they said, and then you realize, like wasn't actually all that easy. So I'm going to tell you the things that they're probably not going to tell you, things that you should be very acutely aware of before you choose to go down this road. And let's get to it.

Speaker 1:

So there are three primary things that I want to chat about today, and the first of which is that passive revenue is not passive for quite some time. I think that that needs to be said right off the bat, and I guess I should also preface like when I say passive revenue, I'm specifically talking about like passive revenue products. So, like some people consider real estate actually, I think this would fit into this example. Maybe it's like I know very little about real estate, but I think that it would actually fit into this at least this example, maybe not every example, but I know some people who are like oh, I'll get into real estate because you know you can buy, like you can buy and flip houses or whatever, and that's passive, that's passive revenue, except it's not really passive. Is that really passive, like if you're having to flip a house? I mean, maybe if all you're doing is like swipe in the card and then you list it on the market after other people do the work. I don't know, but I'm specifically talking about like you are creating passive revenue products, so you are delivering something to your audience that you are not going to have to do work for once. It's completed, unless you're doing updates or things like that with the exception of when it's a little bit higher priced. You might do like a call every month or something, but it's for the most part, it's largely passive.

Speaker 1:

So, to restate what my first point was passive revenue is not passive for a long time. You really have to be aware of this going in. There's a lot of misinformation out there that like why you can be making money with your passive revenue funnel in the next 30 days and you'll be a gazillionaire and you're going to make all this money, and it's such a lie. So here's the thing. First of all, it is not a quick fix for anything Like. You are going to have to be prepared to put a lot of work into this. You're going to have to be prepared to put a lot of your resources into passive revenue. That's the irony. I mean, it's ironic that, like, passive revenue is actually passive for quite some time, but it's all like it takes a lot of your resources. When I say resources, I mean time, energy, money and people. So it's going to take you a lot of time to get all this stuff set up.

Speaker 1:

First of all, there is a whole subset of marketing that is dedicated to selling passively, and that is a skill, it is a and it is very strategic. I also work with a lot of people who are more like whoo and energy and energetic, aligned and all that good stuff, to just sit back and be like I'm just going to magnetize this to me and lean back, selling and blah, blah, blah. I'm just going to manifest all this passive revenue. I mean, it's not really. That's not the way that stuff works with passive revenue. Like it takes real strategy, real strut, like you have to have incredible strategy around the messaging that you're using. The other thing that I would say that is a real point to make here around this particular point, as I make it like you've got to have strategy around things is do you know? I've just lost the point as I was saying it. Let me say it again, see if it comes back to me. This is like this is how you know I only write bullet points for my notes and then just like free form everything. So what I was saying was that you have to have a lot of strategy and you've got to have the right messaging in place. Oh, I know, I see that got me back. There is the thing about passive revenue. Is you?

Speaker 1:

There is a misconception that it's going to be easier to sell than high ticket when, yeah, like there's less friction, I guess Like it's more. When you think of the term like no brainer, which I don't like, I want you to use your brain before you buy something for me. I don't want anything to just be like a no brainer, but it removes a lot of. The point of that is it removes a lot of the friction between the like. It removes a lot of friction around the decision-making process. That's the better way of saying that. So there's this notion that, like you know, I could I don't know if anybody's going in saying like I could have a mediocre or a sub par sales page and because the price point is so good that, like I'll be able to sell it.

Speaker 1:

I think, even if you have like a massive following, like the story about the Instagrammer who had like two million followers as an influencer and she couldn't tell she couldn't sell a single T-shirt like that's a perfect example. And her people, I don't know they like her. Like I found the person, I've heard that story and I was like I need to figure out who that person actually is and at some point I went and Googled her and then led that led me to her Instagram page and people are all like it wasn't. Like, oh, she's an influencer and she doesn't really have much reach or she doesn't actually. Like people aren't super engaged with her like they were from everything that I saw. People were super interested in what she was doing in her life, but they weren't following her for her T-shirts or whatever she was trying to sell and so it didn't work. So there's this notion that, like, people will just buy it and that's so untrue. You've got to have skill as a copywriter. You've got to have skill with what is the actual promise of value. Like, what problem does this solve? Like, just from some really basic stuff here. But how do you articulate that in such a way that someone's gonna actually give you a credit card, especially in today's day and age, sounds so ancient. Saying that it's especially now when people are so mistrusting like they've bought low priced product.

Speaker 1:

I remember the first e-book I ever bought. I think it was like seven bucks. It was by a guy named Dylan. I specifically remember that because that's my brother's name. His name was Dylan and it was on do you know what? I think it was, ironically on passive income products, I think, and it was like an 80 page guide that was gonna teach you. I don't remember what it was around. I specifically remember this, though, and everything was written in like I'm not kidding you like 48 point font, and every other page was just a photo. So take those 80 pages, narrow that down to 40, because it was every other page had a photo on it and nothing else, and everything was written in such large font, like I think if you were doing this in like a regular Google doc, it was maybe a page of text. Then I was like I just paid for this. Like what is this? And there was such crap information. There was nothing good in it.

Speaker 1:

So, when stuff like that exists out there, first of all, if you think you're gonna make a killing on eBooks, I know a couple of people recently who are like oh, I think, I think, like I've not been able to get other things to work for me, so I think I'm gonna just publish like an eBook and I'm gonna sell it for like $27. I'm telling you, no one's gonna buy it Right now. I'm telling you. I'm telling you right now, mark my words unless you hit some type of mecca of an eBook with some type of extraordinary selling point, I'm telling you that's I'm talking. Maybe like 0.1% of people will be able to find that holy grail of eBook topics and be able to write about it in such a way that makes people understand what these are. But like, ebooks aren't selling these days, no one's buying eBooks.

Speaker 1:

I sort of digress around that, all of that to say like it takes a lot of skill to be able to sell passively Just because you're selling something that's $7 or $27 or $47, because, of course, everything ends in a seven. It takes honestly. This is so cliche. So if you roll your eyes so hard, you already know what I'm gonna say. There's a good chance. You already know what I'm gonna say. It's easier to sell high ticket than it is to sell low ticket. I have sold both. I work with people who sell both. I'm telling you it's easier to sell high ticket and I'm telling you the easiest to.

Speaker 1:

When I look at, like the things I've sold that are less than 50 bucks, the thought that I had to put in around how do I position this? How do I work this into my funnel? And funnel's not a dirty word. I know a lot of people who think funnel's dirty word. How do I move this around in my funnel to like where's the right place to put this and how do I introduce it? The right way and what's the right? The thought that has to go into it when I've sold those products versus this has been on my podcast before, so I know I can say this is I sold $126,000 package.

Speaker 1:

That was the easiest thing I ever sold in my life, primarily because it was someone who was already working with me and like I had delivered a lot of value to this person, I think because she resigned and we're working together happily now and whatever. But it was just like, okay, you're renewing and she wanted extra stuff and we added it in and we total it all up and like she adds things from month to month anyway because like some of its agency hours and like this month alone she's got a launch. So I know that like we've already gone over her allotted hours for the month, so we're adding, so it's gonna be more than at the end of the day it's gonna be more than $126,000. When I have to think about the effort that I would have to put in to sell, let's just say so that's a hundred twenties. So if I was selling something for like $12 and had to sell so many of them in order to make up the same amount of money, like it just makes me wanna put my head through it. Like it's so much it was so much easier to sell, like the big thing, that it was to sell the very low ticket thing.

Speaker 1:

This is not to dissuade you from doing it, because if you can crack the passive revenue code, that's amazing. That $126,000 contract I have, I put in a lot of work for it, and the work that I'm not putting in I'm paying other people to put in the work for it, because a lot of it is agency service. So, yeah, if I could figure out cracking that passive income code, which is something that, for myself, I may or may not be doing at some point soon. Regardless of that, like it's not to say that you shouldn't do it, just you just should be aware of all the work that it's gonna take, which is why I've created this episode. So, getting back to that, you know I like to go off on tangents, so it's gonna take a lot of resources.

Speaker 1:

That was the last point that I wanted to make around this, and the only thing that's going to speed this up is money. If you have money to put in to this process, that is the only way to speed the process up of being able to make money faster with passive products. If you don't have money to put in to ads and I'm taught when you put money into ads you need to be willing to lose that money If you don't have money to lose to be able to put into ads and don't put money into ads if you're not working with someone to help you with ads, because there's a really good chance that you will just be throwing that money away because ads are a strategy and there's a lot of oh, ads don't work and ads are so expensive. Yes, they don't work and they're not expensive when you don't know how to use them. When you do know how to use them, they are neither expensive nor not working properly. I didn't set that sentence up correctly, but they work fine when you know how to use them.

Speaker 1:

So if you're gonna, if you're like, oh, I'm gonna set up some passive products, I'm willing to put some money into it like, please go find someone who can actually help you Do this. So again, it's going to take money. You're going to have to spend money on ads. You're going to have to spend money on something to help you learn how to run the ads. It costs money to be able to do this, so I guess that was like a two-point part or a two yeah, two-point part.

Speaker 1:

And number one, passive revenue isn't passive for a long time, but you sort of need to have money to be able to do this. Which brings me really fantastically, into my second point, which is passive revenue requires a constant stream of new people. There is no way around this, my friends. There's no way around this. You have to constantly get new people into your, into your ecosphere, whatever that is. Whether you are constantly bringing new people into your social media account, if you are constantly bringing new people into your email list, whatever that looks like, you constantly need a new stream of people, because, think about it, but the average person who's out there has an Instagram following of 1,000 people, maybe, like, not even for most people when they're just getting started, but like, let's say, 1,000 or less 2,000, or, for sure, 2,000 or less, like it's, I would say it's pretty rare to come across someone who is, who has a larger audience than that. That, whether you've been doing this for a long time or not. Anyhow, you've got to have a new as constant new stream of people. So, like for me right now.

Speaker 1:

Today, soulpreneur inherited a business Instagram account. I transitioned from a previous account into this account and it's got just over 1,700 followers as of this. As of this recording and I'm recording this to go out tomorrow I'm really behind on recording solo episodes so it's like, as of right now, we just crossed 1,700 followers. But I did do a massive cleaning out of email list, where most people who are on the Soulpreneur email list have only opted in for Soulpreneur things, and some of that was like, yeah, my previous business, I said I'm starting something new and there are opportunities to stick around and whatever, but there are nine. I'm just about to hit 900 people on my email list and that's after a year and that's with my having people to draw from already. Because I said, hey, I'm doing something new and I have done a lot of ads this year, I've done a lot of paid marketing strategy, so I'm probably above average of what somebody else who is only a year into their businesses. But if you draw just from my numbers, 1,700 people on Instagram, so less than 2,000 on social media, less than 1,000 on email. So, and there's probably some overlap, but let's give me the benefit of the doubt for the most part and say I've got access to about 2,500 people total. So like 900 plus 900 plus 1,700 people assume there's a little bit of overlap and I'm being very generous with that margin. It's probably a lot less than 2,500 people total. But let's say I've got access to 2,500 people.

Speaker 1:

How many people are actually gonna buy my passive product? Even if this is good because I'm thinking about doing this, if I were to, just, hey, I'm gonna launch this thing. First of all, your email people are going to be more engaged. We'll talk more about this. If you are interested in going down the road of passive income, we'll talk more about this in part three, where we'll talk about creating a promo plan for your passive product. A promo plan for your passive product, that is delightful alliteration, but so your email list is going to be a bit more engaged. So people are really distracted on social media.

Speaker 1:

So you might expect to like, if you knock it out of the park, you might expect to convert 5% of your following. I mean, knock it out of the park. That is incredible copywriting, incredible messaging, incredible blah, blah, blah, blah blah. If you knock it out of the park you might be able to convert 5% of those people. So what's 5% of 25,? What's 5% of 2,500 is 125 people. So that sounds cool 125 people.

Speaker 1:

You're selling something. Let's just keep it really simple and say you're selling something. Well, I can do math. So let's say you're selling something for, let's say, 50 bucks. Let's keep it less than that, so you're gonna convert 125 people. Let's say you're gonna sell it for like $37, let's say 40, so you'll make like 5 grand. If you sell it to 125 people, you sell a $40 product-ish. You're gonna make about 5 grand. Take credit card fees away a little bit less than that. Whatever you go, 5 grand, that's not bad. And it's not bad. Yeah, take 5 grand in a month, especially like. But when you think about all the work that you have to put in, then you make the 5,000, but to do it the next month if people who didn't buy the first time around, there's a lot less likelihood that they're gonna buy the next time around.

Speaker 1:

So let's say, the next month you go to launch this thing again and now instead of 5% you get I'm gonna be really generous here and say 4%, and that's still probably not likely. But let's say 4% of people wind up buying your thing 4%. So 4% of 2500 people is now 100. 100 people buy your fourth, your four. I'm cutting to the chase here. I'm doing math faster in my head than I can actually speak words. You have a hundred people who buy the $40 thing. Now you've made 4,000. And then it's gonna keep going down and down and down and down and down and you're gonna make 5,000 and then 4,000, and then 3,000, and then 2,000 and 1,000.

Speaker 1:

And all of a sudden no one's gonna be buying it anymore, unless you replenish that audience and you might say, well, that was a good run. Like, if I could get 20 grand out of this between now and six months from now, like that's not so bad, that's maybe enough. Like, maybe that's enough to tide you over to be able to do something else that you wanna do like cool, or you've got other revenue that can keep you going. But like, is it really gonna work? Because you have to continue to replenish your pool of buyers? So you are either going to have to number one, run ads there's that thing again, and I'm gonna talk about in a second.

Speaker 1:

I'm gonna talk about the thing that, like, really comes into play when we talk about running ads to passive income products. You can run ads or you can partner with people who have the right audience. Then that's the key they've gotta have the right audience. But now your revenue is no longer passive because it takes time to develop those relationships and you've gotta give them percentage of your money. So that's, if you partner with someone who, like they have a 10,000 person audience great, and you might, because they're not warm to you you might convert maybe 2% of those people, 3% of those people, so 2% or 3% of 10,000. So now you're going to convert 2% or 3% of 10,000.

Speaker 1:

My brain just completely blanked Is gonna be that is gonna be a couple hundred, it's gonna be 300. I feel like I don't know why I just forgot how to remove zeros to figure out that percentage. You're gonna convert like 200 or 300 people to your $40 thing. So you're looking at eight grand or so, which is great. If you can find one of those partnerships per month, then that could be worth it. But that's assuming you can convert actually the percentage of people that you need to convert, which is a big if. That's a big. If, if you've got your messaging dialed in and then let's say you do make eight grand from that, which that sounds amazing. If you do that once per month, then that's a six figure business.

Speaker 1:

8,333.33333 cents is $100,000 per year. But then you're having to give that the partner a percentage of your sales. So if you make 8,000, you're probably gonna have to give up like the industry standard is like 30% that you're gonna be paying out in affiliate commissions. If they have a really big audience, like they might say like I want more than that you can determine. I know some people who, like they, do this for like 50%. So you're looking at giving. If you got someone who really was keen to help you, like maybe 20%, but I would say 30 or 40% is that's pretty standard. So if you give 50% away, that means you're giving them 4,000, you're keeping 4,000, except you're actually giving them 4,000 and you're making a little bit less than that because you're bearing the burden of paying the credit card fees plus any other costs that might have been incurred. You're also you're paying yourself because you had to show up to do all this stuff, unless you've got a team which, at making four grand a month, like you're not really in the range of like hiring a team to help you with this yet All the way down to like, if you're doing like 20%, okay, then you're giving them 1,600 and you're getting to keep the other to 1,600, which, okay, that's fine, like that could be worth it to you. This could be, that could be, that could be a plan, but you have to be prepared for that to be the plan.

Speaker 1:

This is a good lead into number three, which is that low ticket passive income products are almost always tripwires. So if you are wanting to sell this $40, this $37 thing or this $47 thing or this $57 thing, or even the $79 thing or this $97 thing, whatever that thing is, if it is a lower ticket product, almost always 99% of the time, or if not more, they're going to be tripwires. And there's a lot out there that's like ooh, develop your, like your tiny income product or your passive, blah, blah, blah, blah, blah. And it's like this shiny object literally shiny object syndrome that is going to help you. That's the I'm talking like from the terms of what someone is promising that they'll help you with. And it's gonna all of a sudden, like you develop this $27 or $37 or $47 thing and you get a hundred people to buy it and all of a sudden that's a. That's a fun little cash injection of like $2,700 or $3,700, wouldn't that be great.

Speaker 1:

The thing that they're not telling you because there is an assumption that you're gonna have to run ads to make this thing work is if you break even, you're doing better than the majority of people who are doing this. If you break even, if you are able to, if you have a $27 thing and you are able to acquire a purchase for $27 per purchase, you are breaking even. You are probably almost never going to be able to acquire purchases for $27 each, unless there's a lot more work done elsewhere, in which case it is going to cost you more than $27 to acquire that lead. Like, for example, if I were doing this with you, like I'd probably have some type of cold ad going and then you'd retarget to all of those people who you'd create like a warm audience out of people that you were running cold ads to and people who engaged with it or whatever. Like you could retarget them, but it's gonna, and it's gonna cost you a whole lot less to get a purchase when you do it that way, but it's still gonna cost you money to make that purchase, to get that, to acquire that purchase. So it's probably gonna cost you more than $37. It's probably gonna cost you more than $47. Like, usually the average.

Speaker 1:

I don't know what the what this is like, depending on exactly what industry that you're in, but to say like it's going to cost you $100 to acquire a low ticket purchase through ads. Well, yeah, when people say what I said, what did I say a minute ago? I was like ads are inexpensive. Yeah, if all you're doing is selling low ticket product, then our ads are expensive. They're going to cost more than you're ever going to make and you have to be aware of that. Then the thing that comes on the back end of it is you have to have tripwires.

Speaker 1:

So whether it's that you can mitigate some of this, it can be a little bit less money to acquire the cost of a purchase when you are tripwiring off of something free, because right now you're able to, if you're able to get someone into your free lead magnet, then you can probably get them for somewhere between five and fifteen dollars per lead and then on the back end of that you can upsell them into something. But even still, you're probably between the between the initial lead cost and then what the conversion rate to the upsell is. You're still probably not going to make enough money to break even. In the long run. You might come close, like right now I just I have one that I started over the weekend for this. So it's like way too soon to be able to tell.

Speaker 1:

And I looked this morning and I've spent a hundred sixty five dollars so far and I've made a hundred twenty five of that back. I will take that all day because it leads into something that it's a tripwire for something else. It's going to lead into something that's like fifteen grand. It's a. It's a. It's an event that leads into a product that's a fifteen thousand dollar product. But I'm trying to really squeeze down the cost of my ads and that's exactly what it. That's exactly what it's doing. Instead of acquiring my actual ad cost I'm able to acquire, I'm acquiring leads for this for around ten dollars per person. So it's shrinking that ad cost down to being more like pennies on the dollar per person that I'm paying Not quite pennies on the dollar, but it's really. It's really inexpensive and I'm happy to do that all day long.

Speaker 1:

And I'm OK acquiring those leads going from free opt in to the register for this event into an upsell which if you buy it on the upsell, it's twenty five bucks. If you wait, then it's ninety five because it's twenty five dollars. Twenty five dollars only for the first fifteen minutes, not false scarcity I don't ever do false scarcity, which that's the. That's the homework of a tripwire is you're giving them. Hey, I want to present you this, this cool deal.

Speaker 1:

Like you're clearly already interested in this thing, let me present you with this interesting deal that might also appeal to you, that you'll put a little bit of money into. In my instance it's twenty five bucks. Like what's twenty five dollars? Especially like this is meant for someone who's already like, probably got like a six figure business. So are we, are we really going to get all been out of shape over spending twenty five dollars for something that's probably going to help grow my business even more? Like it's, it removes a lot of friction where I said that earlier, removes a lot of friction from the process. So it's, it's doing well, but it's a tripwire. And then the real asterisk on this is it leads into something that's a fifteen thousand dollar product. So I'm not worried about like I've. I've technically lost forty dollars on these ads, but if I make one sale, then it's going to more than cover itself. It's easy and I'm very confident in my ability to be able to do that, so I'm not all that worried about it. But it's it tripwires into something else.

Speaker 1:

So you've got to have a funnel Like that's. What's clear about the story that I'm telling here is you need to have a funnel, you need to be able to, in order to do passive income. Well, you've got to have multiple products. So if you are, if like, if you think that you're just going to have your thirty seven dollar thing, your twenty seven dollar ebook, please don't, please, please don't, please don't make your ebook free and into something else. No one's buying ebooks these days. Even like a five dollar ebook Like. People just aren't buying ebooks these days.

Speaker 1:

But I lost my train of thought because I decided that I needed to say that again. So if you decide that you want to have like a twenty seven or thirty dollar, forty seven dollar or whatever nonsense, or you want to really go against the norm and you're like I want to have a forty eight dollar product, congratulations, I approve of that. I'm to see I'm distracting myself all over, all over the place by adding in these little comments. But if you decide that you want to do this, you have to be prepared. And this takes me back to point one. You have to be prepared to have other products to sell.

Speaker 1:

Someone, which means passive income is not actually passive for quite some time, because you've got to build out an entire product suite to ever become profitable. And when I say profitable, so like I'm going to, I'm going to get into something that's a little bit. I don't want to get into this all today. Like there's parts two and parts three where we're going to be talking about more, more of this stuff. But like, as an example, if you if you have we'll talk about this in the next episode If you have something that's like $37, so someone, maybe they opt into your lead magnet and then you present them the $37 thing or you just go straight to the $37 thing.

Speaker 1:

Whatever you're doing, that's probably going to go into another upsell that there's probably gonna be a whole suite of like 97 to $197 things or $197 to $297 things, so things that are like 100, 200, 300 bucks probably a whole suite to choose from. And you might sweeten the pot by offering some of those things for a much less cost if they're bundled together. So you might have your $37 thing that you wanna sell. But then you're gonna take that $97 product and say, if you wanna add it today, you can add it just this one time for 27 bucks. So your initial order value has the potential from going from $37 to being what did I say it was. You can get it for, I think, 27,. So you can get it for. So your product price could actually go to $64 and then so on from there.

Speaker 1:

And then on the next page you could go well, now do you want this $197 thing? And they could go oh, that'd be interesting. So now you've increased. If they took the order, if they took the products and the order bump the order bump is that $27 thing that they like check a box to say like, yeah, I do want the extra thing, and they pay for that all at once. You've now made $64 sale and then they come in and they do you want this $197 thing? Like it's normally $297, but I'll give it to you for $197 today. And so now you've increased $197 plus 64, so now you've got a potential order value of what is that? 251, 261, yeah, 261.

Speaker 1:

So, okay, now if you can do that enough times, then if it costs you $100 to acquire a lead, then that's worth it, because that $100 to acquire or to acquire a purchase, rather then that $100 to acquire a purchase, is you're breaking. You're not only breaking even, but now you've got a profit margin of about $160. Okay, now we're $160, now we're talking. Now we're talking. I'm doing all this math without a calculator. Someone's gonna write me and be like your math was off somewhere in this, but so that's all right, I'll spend $100 to get 160 every time. The thing about that is not everyone is going to take that every single time. So what you have to look for is I'm getting a little too in the weeds right now.

Speaker 1:

This was meant to just be like an overview, informational type thing, but what you eventually wanna be looking for is what your average cost is like. What is your average sale cost? So you know that on this particular funnel, that if they opt into the $37 thing and then they do or they don't take the order bump they do or they don't take the upsell is, instead of being the total value of $261, it might actually be like, in the end, between factoring in, like all the people who are only gonna take the $37 thing and that's it and they're never gonna buy anything else, that maybe at the end of the day, what you're actually making is more like $150 per person. Now do you wanna spend 100 to make 150? Like that's not a really good, that's not a very good return on ad spend. But I suppose, yeah, like you know, if you spend 100, but if you spend 100 grand in a year to profit, to make 150, and you're profiting 50 of it, but you're really not profiting 50 because you've gotta pay to host all of this stuff somewhere on a platform. You're paying for your email marketing platform, you're paying for your funnel service or whatever. Like you might be profiting at the end. Plus you're paying credit card fees. Like maybe you're profiting, at the end of the day, 40,000, like do you wanna spend 150,000 to make 40,000? You could argue, yes, sure, like those numbers work, I guess, like I think there's a better way, but they work. Now, where you really get into if this is gonna work for you, that sweet of things that exists between that like $100 and $300 mark is if you have something on the back end of that that's over $1,000, and that's the real key is that you've gotta be selling something that's higher ticket, because then that exponentially raises your ability to be able to recover the costs that you are going to have to spend on being able to sell this. So we'll get a little bit more into the next episode. We'll talk more about like how to actually build out a blueprint for this, so, but that's just some things to be thinking about.

Speaker 1:

Lower ticket products are designed to help you break even from your ad cost. They're tripwires, they're not products that you are going to profit off of, and that is by and large all the way across the board gonna be true unless you're selling like Ecom and I don't do anything with Ecom sort of providers, but I know that like Ecom, like they make their money back on ads by doing things like if the majority of the things in your shop cost 20 bucks, then they're gonna say you're gonna get free shipping if you spend 60. So if everything's like $19.99 and you add three things to your cart and that the order value is then $59.97, $0.96, however many cents, $0.90, whatever $0.07, you didn't hit that $60 threshold. So now they're gonna put you one item past that so that you get free shipping, and now they're making more money from it. So they want you to be spending more money Like that's.

Speaker 1:

I have never worked with a single Ecom provider, with the exception I guess that's not entirely true the person that I've worked with one, but she was already making like $5 million a year. She's now making eight figures a year and totally like I wasn't teaching her ad strategy. It's definitely not what I was doing. I have no sense of like how to sell Ecom, but I know that much. I know that that's how Ecom makes their money back on ads and it's very it can be very profitable when you were selling digital information products. It doesn't work that way. You've got to have an entire suite of things that you're going for.

Speaker 1:

The last thing that I want to touch on I think in the beginning I said I'm gonna tell you three things. So to recap those three things is number one passive revenue isn't going to be passive for quite some time. Number two is that passive revenue requires a constant stream of new people coming in. And number three is that low ticket passive income products are gonna be tripwires 99% of the time.

Speaker 1:

As we were talking about all that, I thought of a fourth thing. So I'm gonna tell you and it really is something that most people aren't talking to you about and this is like all of your group coaching stuff where they're telling you go more passive, go more passive. Okay, you've got your like one-on-one product or you've got your done for you product and maybe you're even doing some group coaching, and now you want to add in like some real passive revenue. Now you want to create your course, now you want to create your template shop, now you want to create your blah blah, blah, blah, whatever that thing is. Here's the.

Speaker 1:

Here's the fourth thing that they're not telling you is that in order to do that, you are going to have to let go of some of your active revenue. So if you want to transition from one-on-one coaching or done for you service, you're going to have to let go of a couple of your clients in order to make room in your schedule to be able to do this properly, because, like I said in the very beginning, it's not passive for quite some time. It takes a lot of work and a lot of time. So, unless you've got a whole team that's doing this behind you. That would be the exception to this rule.

Speaker 1:

But, like, if you are, if you're still in a place where you're doing a hundred, two hundred, three hundred four hundred thousand, not a month a year I started to say a month. If you were doing a hundred thousand a month, yeah, you'd be able to just get some people to like help you build this out. But if you're still in the in the like, if you're under three or four hundred thousand dollars a year, like, you will, more likely than not, have to give up some of your revenue to be able to do this and you have to be in the right place to do it. So you've got to have a, you've got to have a little bit of a safety net built in and you've also got to be willing to like you're just it's just a really strategic decision.

Speaker 1:

I don't want to go too far into that because, honestly, like it's so specific. I don't want to give blanket advice on what that looks like, but it is 1000% the truth that for you to switch from high ticket coaching, high ticket services into passive products, you have to be prepared to let go of some of the work that's that you're already getting in order to make that transition. Either that or it's going to take. It's going to be like a big increase in the time that you're spending in your business, so that, like, if you can get your, if you can get your business down to where you're only working like 20 hours a week and you decide, okay, I'm willing to do 40 hours a week for the next year, so I'm going to put 20 hours a week into each, then that's feasible and you can do that and you don't have to give anything up. But it's just something to keep in mind. So that fourth thing was if you are already selling high ticket and you want to start selling passive revenue products, you are more likely than not going to either have to see any significant increase of time that you are spending working or you are going to have to let go of some of your revenue somewhere so that you can make time to be able to do this. So, with all of that said, if that sounds good to you, if you are not scared off from doing this, because passive revenue really can be amazing If you're like, yes, I want to learn more about how to do this, I understand, I understand what it's going to take.

Speaker 1:

I understand blah, blah blah. I understand the risks and the rewards and the like, because there really are there really are some rewards. There really really are rewards, especially if you can get an, if you can get your your funnel suite to like once it really converts, and if you've got the right products in the right places. If you've got this with the right strategy to be able to do this like, you really can make some. You can really make some money from doing this.

Speaker 1:

But you've got to know what you're getting into before you get into it, and I am a big proponent of making sure that people have all the facts before they get started. So those are the facts before you get started. If you want to learn more about this, the next episode that I'm going to release is going to be part two, where we're going to talk about creating a blueprint for pass your passive revenue model, and then the episode after that is going to be part three on creating a promo plan for your press passive revenue products. So if that all sounds good, then I will see you in the next one.

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Adriane Galea

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