How to consistently generate revenue and profit
So you’ve got an idea and you’re on your way to building your expertise and authority system.
(Missed the overview of the Authority System? Check last week’s post).
But in the famous words of Office Space…
“So what would you say… you do here?”
In early internet times, you could post anything on social media, run cheap ads, and it feels like people would buy what you’re selling.
But your customers are savvier now. There’s more trust involved in a purchase. There’s more competition, from people and from evolutions like AI.
And the cost of customer acquisition and team members are higher - thanks Meta ads cost and overall inflation!
So in order to turn that expertise into profit, you need a system that has the capability to bring you the profit you want from your business. It’s important to know how your business will make money!
In a revenue system, you’ll design a business where you can actually reach your revenue and owner pay goals without having a marketing plan that’s unsustainable for you or having to work 60+ hour weeks to deliver on all of your client work.
We approach the revenue system in two parts:
Business Design: the overall business model, capacity model, and profit model to meet your target financial goals, within your desired working capacity.
Offer Design: the offer suite and individual pricing/promise that builds to those revenue and profit targets.
Business Design: Design your profitable Business structure
With your expertise, you can make money in a large number of ways. We need to design how, generally, you want to profit from your business - that also meets your desires for how you want to deliver, market, and sell.
Business Model: What business are you really running?
Almost all advice for building businesses is lumped together in the same bucket - whether you’re a startup, freelancer, creator, influencer, consultant, agency, or service-based solopreneur.
But these business models are not all the same.
And if you follow the advice geared to the wrong business model, it’s going to cost you time, energy, attention - and money implementing tactics not designed for you.
I’ve identified three broad categories, and seven archetypes within these categories, of business models for expertise-based businesses:
Delivery-model businesses focus on delivering a service, either through yourself or through a team. Delivery model businesses have fewer customers with deeper and potentially longer-term relationships than creator or brand models.
Creator model businesses focus on creating and distributing content around a point of view. This is the business model you’ll primarily see with online influencers, speakers, and content marketers. Compared to delivery model businesses, these models are characterized by requiring larger audiences, yet are seen as more scalable because the revenue is not tied to delivery hours. Most group or community models, even group coaching, fall in this zone.
Once you’ve refined and “productized” how you work (delivery model) or refined your content and teaching style (creator model), you might start selling the brand. Instead of working with clients or creating new content to sell directly to individuals and companies, you will be training others to deliver your frameworks or selling/licensing/franchising your IP.
You can identify your business model here.
You might have more than one business model - but remember that each different business model likely requires a different marketing and delivery system.
Capacity Model: How many customers (and eyeballs) do you really need - and can support?
Once you’ve defined your general business model, you’ll need to know how many customers you need to hit your revenue targets.
Even within these broader business model archetypes, how you choose to structure your work and your value proposition may lead to needing a whole lot or just a few customers.
For this framework, you’re considering
Purchase Price: are you selling high or low-priced service or products?
Purchase Duration or Repeatability: are you selling one-time or recurring offers?
Offer Capacity: Is there a limit on how many of a given offer you can sell/deliver, based how long it takes to deliver or the offer promise?
Offer Scalability: If you want to “scale” your business, do you have a model that can be delivered 1:many or delivered in part by someone else?
You’ll want to know how many customers you need, and based on conversion patterns, how large your audiences/network will need to be to reliably bring in that many customers.
If you sell something short and/or lower-cost? You’ll need a consistently high number of new potential customers.
If you sell something higher-priced with an indefinite duration? You can make the revenue you want with a limited number of clients per year.
Check out this post about the power of duration in scaling your business, or watch this YouTube video.
Profit Model: How much do you need in revenue to take home the salary or profit you want?
Once you generally know how many customers you need by defining your business and capacity model, it’s time to ask how much revenue you need to bring in based on how much it costs to run that model. Because if you’re making a lot, spending a lot, and not taking home what you want - something is off in one of these models that we need to address.
Some business models by their nature cost a lot:
Agencies because you’re paying for team members
High-volume businesses like one-time course purchases, lower-priced communities or digital products where high traffic is required to make the numbers work. These are often relying on paid advertising or marketing support to get that distribution
Products businesses with a physical cost of goods sold
Some models are less expensive to run:
1:1 coaching/consulting/advising
Small group programs
Recurring done-for or with-you services as a soloist/Craftstman
Learn approximately what percentage of your revenue you might target for your take home pay, and then how much revenue you then need to meet your needs.
Once you’ve outlined the general outline of how many customers you’ll need to hit your revenue and profit targets, we can start to design the offer suite.
Ready to level up your business? It’s time to dig deeper. Get these deep dives in your inbox each week.
Offer Design and Pricing: The Offer Suite designed for consistent sales
Core Offer: What’s your repeatable, ‘bread-and-butter’ core service?
For most expertise-based businesses, you want a business centered around a core offer that makes up a bulk of your sales. You might also hear this called a signature offer, a flagship product, etc.
If you don’t want to dive deeply into a high-volume game (which I suspect is many of my readers), I suggest your core offer be priced at least $2,000 (or $2,000 per year), leading to needing fewer than 50 new customers per year to achieve $100K in revenue.
This offer should have a clear process, clear promise, and be something you feel confident in selling and delivering consistently.
This doesn’t have to be a set “package”, but it should be a service you can reliably scope and deliver so it’s profitable for you and a good experience for your clients.
Offer Suite/Portfolio Design:
Many in the online space advocate for having just that one core offer - which MAY work for you if that core offer is high-duration or recurring revenue.
However what they actually do? They have a series of offers that are designed to both ease people into their ecosystem and extend the long-term value of the customer journey. Because once they’ve had a good experience after purchasing from you, they are more likely to continue working with you.
Ultimately, you’ll want 3 key parts of your offer suite:
Lead Offer: Also called the trust offer, the gateway offer, the product for prospects offer. This offer is designed for new customers who either need hands-on experience with your work, a more accessible entry point, or need the first part of your process to help define the need and expand the scope. This is often a class/workshop, small course, assessment, strategy intensive, or short coaching program depending on your business model.
You’ll want to make sure this isn’t a stark departure from your business model for your core offer: if your core offer is a high-priced 1:1 service, your lead offer shouldn’t focus on a low-cost buyer, a huge group experience, or a high-volume marketing model. (This is also true in reverse).
Also, this offer is not meant to be a “tripwire” offer that doesn’t actually deliver on the promise until you buy a higher priced thing. The lead offer should stand alone as a valuable offer with a clear promise or outcome.
Core Offer: Usually makes up the bulk of your sales and/or the focus point of your offering.
Expansion Offer: This is designed for existing clients, and is designed to extend and expand the lifetime value of that client, or add recurring revenue and duration to shorter offers. You might see expansion offers like:
A higher tier of service or more access (like a “VIP” tier with 1:1 access in a community)
A maintenance plan once the core offer is completed
Additional projects or scope of work
A different level in their customer journey (e.g., the core offer is designed for beginners and there’s another step for more experienced customers who have been through the fundamentals)
It’s a lot easier to have stable revenue growth if you are able to continue serving customers who had a great experience in your core offer.
Each of these offers should have their own promise, their own offer design and feature/benefits set to be complementary vs. competitive. We don’t want to confuse our customers as to how to work with us.
And it’s important to not try and launch too many of these at one time. Focus on solid messaging and building of one offer at a time.
Pricing Structure:
And ultimately, you’ll need to price each offer in your portfolio so that each offer is priced to match the value AND the total amount of revenue and profit adds up.
Pricing may be the lever that helps you grow your revenue and your profit without adding more new offers to your suite.
Why is this a Revenue and Profit system?
It’s a system because these parts all work together as a whole. We can change aspects of the system design (higher or lower price, longer or shorter duration, new business model, new offer tier) that changes how the system operates.
But once you know what you’re selling as a whole…
… the price points, promise, and target persona for each offer
… the customer buying pattern through that journey
… and the targets for new and renewing customers to meet your revenue goals…
THEN we can design marketing, sales, and delivery systems that meets those needs.
Assessment Questions:
Business and Capacity Model:
Do you know approximately how many customers you need per year, per offer, to meet your revenue goals?
Can you meet your target revenue and profit goals within your defined working hours and with your audience size?
Profit Model:
Do you know the percentage of your revenue spent on marketing, operations, owner pay, and profit?
Are you achieving your target revenue and profit targets?
Offer Suite:
Core Offer: Do you have a well defined and documented core product/service that customers spend $2000+ on (or typically spend $2000+ a year on)?
Lead Offer: Do you have a lower-cost product or service that you offer to clients as an entry point to working with you?
Expansion Offer: Do you have a product or service designed to extend or expand your work with an existing client?
Offer Scalability: If you want to “scale” your business or create leveraged offers, can one of your main offers be delivered 1:few, 1:many or delivered in part by someone else?
Need support defining your revenue and profit system to bring in the money you need - that you can sustain over time? Let’s design your system together.