Upon entering the world of business, my initial research and general intuition had me convinced that selling higher-priced products was much more desirable than selling lower-priced products. I would find myself thinking about how dollar stores have to move so much volume of product to be able to afford rent, labor costs and other expenses. That type of business – with a low selling price and high volume – just didn’t appeal to me. I was more excited by the opposite model: selling higher-priced products, where only a few sales were needed to cover costs.

For example:</p>



Profit Margin


Quantity Sold














A quick note regarding the above table: when I refer to low-priced products, I do not mean cheap or low-quality when compared to similar products. I am referring only to the price of the item relative to other products in the universe of all products. This is why I am comparing a Medium-End-tier pair of shoes with a Medium-End-tier car.

My initial thinking was that – profit being equal – selling cars is much more desirable than the shoes.

My latest experiences in and around online business have really made me reconsider that initial thinking, primarily because of two opportunities that lower-priced products provide.</p>

Opportunity #1</p>

Lower-priced items, which inherently require more volume to be moved, provide more touch points, or connections, with customers.  Zappos refers to these touch points as opportunities to wow customers. These touch points are opportunities to win a customer for life and to enlist an evangelist of your product.</p>

Opportunity #2</p>

In an online setting, a customer’s entire social graph is as close as one click or even zero clicks (if you automate things with your customer’s permission) away from the point of sale of your product. That touch point can be very meaningful if the customer decides to share information with their social graph about their experience with your business.</p>

My hypothesis is that – assuming that you take advantage of Opportunities #1 and #2 above – marketing costs for the next increment of revenue ($60,000 in the example) will be more improved – relatively speaking – for the lower-priced item over the higher-priced item, due to the power of social media and viral loops.</p>

The hypothesis, if true, isn’t incredibly groundbreaking or even very useful, because there is always a product priced lower or higher than yours.  The point is not to switch to selling a lower-priced product.</p>

The take-away would be to make sure you are taking advantage of every touch-point or opportunity to wow your customers, and make it easy for them to tell their friends about their experience dealing with your company. For what it’s worth, if you’re ever envious of other businesses selling higher-priced items with lower volumes, just remember that – thanks to your higher volumes and more touch points – you can tap into a faster viral loop than the higher priced guys.</p></p>