What do you think of this business plan? Can it work?

I'm coming up with my business plan to sell a new product on a e-commerce store. The product is a set of 2 posters, movie size 27"x40", black and white, quality paper, cool copyright design.

The challenge is that my store will be a single product store with 4 differents SKU... I'm planning to sell it for $24.99 per set + shipping at real cost ($6.50). My cost is $5 per set. I'm planning to spend 10$ of the selling price into Adwords to reach my target. I have more than 500,000 keywords and phrases ready for it, log tail keywords phrases...

20 Sales a day = 600 a months = $15,000 in sales:

$3,000 in my cost of the product plus paiement fee per month
$6,000 in Adwords per month.
$6,000 for me in profit per month...

With $6,000 in Adwords, I'm planning to generate 85,000 clicks at $0.07 max.

Out of these 85,000 clicks, I need to generate my goals of 600 Sales, which is a conversion rate of 0.7%. Sounds good?

WHat do you think? Thanks for your Help!

DP ROCK!

 

Not really a business plan, but I think your numbers look good (sort of). I think your price seems a little high - can you find these posters on ebay or http://www.allposters.com/? I also wouldnt just focus on adwords too (what about buying links for seo, advertising on forums, banner ads, myspace, facebook, etc). Also, what about the development of the store (logo, website and graphic design, custom programming)? Legal costs of registering the company? Inventory and shipping might need its own separate room if you are running it out of your home - 1000 tubes for shipping is a lot! Why not start a little affiliate program as well. Id also be very cautious about having only 4 products - not to much diversification there. Hope this helps you out a bit.

 

well, considering that the CTR for most adsense users is in around 5% (and the visitors only have to click the ad, not pay 25$ to buy a product) I think a 0.7% conversion rate is way too optimistic. I think one sale for every 1000 would be a much more realistic conversion rate

 

Well, I disagree. The CTR has nothing to do with the conversion rate. A high 5% CTR will mean that I need to generate 1.7 Million impressions to generate 85,000 Clicks. It's out of this 85,000 Clicks or visitors that I need a conversion rate of 0.7% to hit my goals. Which seems a reasonable ratio...

Do you agree?

 

one out of every 143 people will buy a product is what those numbers are saying. For that you need some pretty targeted traffic.

 

$.07 per click is also very low for most keywords. Did you check it on google to see how it will rank? https://adwords.google.com/select/KeywordToolExternal

 

Why is the price so high? Are you doing this through a POD publisher? I'd say diversify your product line if you honestly want to make 20 sales per day, and consistently. Even if you could pull it off, it wouldn't be long term. One product will get old fast... especially a poster. There's no "need" in a poster. You have to convince your market that they need your product if you want to keep consistent sales, especially with only one being offered. So not only do you need highly targeted traffic, and a lot of it, but you have to actually be able to "sell" your potential customers on it. It involves a heck of a lot more than adwords to get them there. I don't think it sounds terribly realistic, and isn't thought out as a viable long-term business model.

 

Well said Jenn. I agree completely!

 

Have you considered a CPA Affiliate firm? You're willing to spend $10 per lead, so the CPA turns the offer over to it's network of affiliate marketers at a fractionally smaller price to get their cut.

You just focus on the operations of the business and let the affiliates do all the dirty work... Same money spent but minus the headache.

 

I would suggest possibly increasing the number of products you offer. Your conversion rate will probably be much higher than if you are only selling one thing. Also, make sure your product is perfect before you open the site. Good luck with the site!

 

Thank you Jenn for your reply.

No, this will be print at a local printer... The set of poster is truly unique and it does not exist, it's a new concept. The challenge is the copyright because I can not copyright the concept, I just have a trademark of a name for it.

I don't see how I could expand my product line, this is a unique product e-commerce store concept, the key is to convert my visitors into buyers and I believe the poster will do a great job a selling by itself...

Regarding the price, I guess I could sell one of them for $19.95 + shipping. Same for the second one. The set of 2 for my targeted price of $24.95 + shipping. Plus another SKU of a set of 2 sets for $39.95 + free shipping. So this is a total of 4 SKUs for my store...

I don't think $19.95 is too high for a 27x40 poster printed on high quality paper. The price of $24.95 for both of them as a lot seems pretty good to me. Or should I set the price to $29.95 with free shipping for the set of 2?

This will bring the total price to pay for a single poster to $25.90 with shipping, the set of 2 for $31.90 and 2 sets of 2 for $39.95 with the free shipping.

Thank you in advance for your suggestions.

 

I don't see people paying $20 / poster 20 times / day for any significant period of time. It doesn't matter if it's unique. There are a LOT of unique posters, photos, prints, and other types of artwork that are out there. Why would they want yours? I'm not saying they won't... only that you'd better be able to tell them why they need it.

If you can't expand your product line with other posters, then get some accessory products to try to push as add-ons (like frames for example).

As for protection, I don't know if it's an actual image or just text. Either way, it should still be protected by copyright if you actually created it.

If you're printing in bulk and you have to charge $20-25, then I'd say you're getting a raw deal from the printer, and need to look elsewhere. Either that, or it sounds like you're marking it up far too much likely for the quantity you're hoping to move and maintain.

 

Have you done any marketing research to see if people even want this PARTICULAR product? And if so, what's the market cap, acceptable price range, etc?

$15,000 in sales doesn't mean much if your profit margin is 1%. Have you factored in all possible costs? With appropriate markups, are you pricing yourself out of the market?

While you might not, your target market might. You won't be successful if you simply build whatever you want and price it how you want.

Have you conducted any surveys or focus groups? You should be able to write a paper on what your target customer looks, acts and thinks like.

Like I said, first see if there's even a market and go from there. And no, just saying people buy posters isn't research.

 

I wonder where you got that info that the CTR for most adsense users is around 5%. I would guess that it would be rather around 1%.

 

I first need to take care of my profit! The total cost of the poster in a mailing tube, with labels, plastic sleeves and end caps is less than $5. I have to add up $10 in marketing-cost of aquisition. $10 is left for my profit and other cost...

What's an appropriate mark up so?

 

Appropriate markups depend on the product and industry. Yours looks very much too high. As Jason said, you might be pricing yourself right out of the market. It's not about what you think you should be earning from each one. It's about what the market will bear. I think a part of the problem with your plan is that you plan to spend twice the cost of production on marketing. You need to reevaluate your marketing tactics and find methods that won't cost so much. Then lower the price. I can't comment on your specific market, b/c you haven't shown us the design, so I can't begin to imagine who it would appeal to and why.

Just as an example, you may find that you'll earn more profit by offering it at (hypothetically) $10 / poster if you have a $5 production cost. Spend $2 on marketing per poster, and keep $3 as profit. (That would obviously mean you'd have to rethink your strategy and market in other ways than advertising - and there are many more cost effective ways, so it can be done). Will you make as much per poster? No. But if a lower price lets you sell 10 times as many (and price is a vital component of any marketing mix), you'll earn significantly more. You have to find a balance, and I don't see that in your plan. It's not to be harsh or anything, but too many people just jump into things in business without ever truly thinking them through. You need to look at every angle, and knowing your market is more than a little bit important.

 

web2074:

Your google numbers look pretty optimistic. It would be wise to plan for the worst case scenario as opposed to the best.

How would a CTR of .2% affect your numbers, and your financial planning??

 

I have more than 500,000 keywords and phrases ready for it, log tail keywords phrases...

20 Sales a day = 600 a months = $15,000 in sales:

$6,000 in Adwords per month.


Keep in mind that each AdWords campaign is limited to 2,000 keywords or phrases. In my experience, you cannot expect to spend $200 per day on Google and get 20 sales totalling $500 each day. And, depending on your keywords, you may not even be able to play in the game at $.07 max CPC. One website I market for needs a max CPC of $10.00 to use the keywords that it would like to focus on.

 

Market research
market research
market research

Build products and services to fill needs of consumers at prices the market will bear.

What are your numbers based on? Who's your competition? Do you have an angle over them?

And so on and so forth.

 

Ok, thanks for all the great advice. I agree that I need to do more market research...

How much would you pay for a black and white, artistic, 27x40 poster? How much will you pay for a set of 2 that complete each other?