Response to Yesterday's Video – What About Hostess Benefits?
by John SanPietro
One of my clients forwarded a response to the video I made yesterday regarding selling $20 in retired product in exchange for $20 in free new catalog product.
The response points out the following:
- I didn't include hostess benefits
- I should have assumed the full, retail price of the retired stamp set was being charged (no discount)
- I wasn't taking into account the value of cleaning up the space
All good and valid points. Again, though, even when you take all of the above into account, the numbers for this type of event don't crunch. In the situation described above:
- Someone pays you $20 (full catalog price) for a set you paid $16 for (you're up $4)
- You give $20 in new catalog product to customer (you pay $16) – down $12
- Assuming MAX volume rebate (you get an additional $4) – down $8
- Hostess benefits kick in at $150
- If you're down $8 for every $20, you'll have spent $60 of your own money by the time you hit Level 1 Hostess Benefits
- No Hostess Set makes up for that loss
It's not that you're not making a profit. It's that you're actually spending your own money to clean out your stamp room.
And while you certainly do have the freedom to run your business the way you'd like, why choose to lose money when you can do accomplish the same goals and MAKE money at the same time?
Again, just because an idea looks good at first glance, or because you see a 'successful' stamping business owner doing it… or even because I suggest it… run the numbers to make sure it works for YOU!
Respectfully, though, I don't think you should ever have to spend your own money to sell your product.