Put a Price Tag on It

by Early To Rise (09/5/2007)

Issue #2139

ALSO IN THIS ISSUE:

  • Why "free" shouldn’t mean "valueless" (Bob Bly)
  • Turn a career failure into a blockbuster business (Suzanne Richardson)
  • It’s Good to Know… about facial-recognition systems
  • Add "agon" to your vocabulary

== Highly Recommended ==

The Ideal Vehicle For Getting Wealthy In The 21st Century?

Today you have a rare and exciting opportunity to take advantage of one of the largest industries on earth. And it is - most experts agree - the one that has the greatest growth potential.

I am referring to the Information Publishing industry.

Now don’t be intimidated by that phrase. You won’t need a printing press, typesetting equipment or even employees.

Information Publishing is simply about marketing products based on ideas (e-letters, teleconferences, special reports, etc) instead of hard goods (flowers, jewelry, computers, etc). And now, with the explosion of the Internet, it has the lowest production costs of any industry in today’s world.

Because of that low cost-of-entry and growth potential, it is the ideal vehicle for getting wealthy in the 21st century. Whether you intend to make your fortune on your own (as an entrepreneur) or within the context of a corporate environment (as an intrapreneur), taking advantage of these forces is the best and easiest way to achieve fast success and acquire great wealth.

Come to ETR’s October Bootcamp and we’ll show you how to build your own Information Publishing company that could make from $1 million to $100 million a year. (Register today and get a bonus “start-up kit” worth up to $5,000.)

- Patrick Coffey

How Good Is Joe’s Investment Opportunity?

By Michael Masterson

Joe and his wife have been running a salon for five years. Now Joe is writing to me because he has the opportunity to buy another salon - building, equipment, everything - for about $280,000 to $300,000.

"The new salon produces about $4,300 a month in booth-rental fees," Joe writes. The problem? Joe’s wife "does not believe in booth-rental salons."

"I tell her it’s a real estate investment as well as extra income if I work there and she continues to work at our existing salon, which does okay," says Joe. "How do I convince her that this is a good, sound investment for years to come?"

Joe’s enthusiasm is evident. But you don’t want to make buying decisions with too much enthusiasm. It’s a recipe for paying too much.

What I usually do in these situations is first analyze the business’s separate components, and then figure out the value of each in terms that I can understand. In this case, Joe is paying for a building and a business.

The building was appraised three years ago for $280,000 to $300,000. Today, it is probably worth less. How much less, I can’t say. If it were a residential building, I would say 15 percent to 20 percent. As a commercial property, it may have done better. Joe can - and should - have it independently appraised. Let’s say, for our purposes, that he determines the building’s market value is $250,000.

If that is true, it means the owners are asking him to pay between $30,000 and $50,000 for the business.

Joe says it has been operating as a booth-rental salon for 38 years. That is good. The income is probably very reliable. To find out whether it’s worth what the owners are asking, we have to evaluate the business on a net-income basis. So let’s look at it from that perspective.

The salon is generating rental income of $51,600 a year. That’s gross. Joe didn’t give me the net, so I’ll make some assumptions.

The cost of a $280,000 mortgage would be $19,600 a year at seven percent. Property insurance and taxes will amount to another four percent or $11,200 a year. Maintenance? It’s an old building, so we’d better figure that at five percent or $14,000. That gives us a total yearly cost of $44,800. Subtract our costs from our gross income, and we have our net: $6,800.

To figure the worth of the business, we’ll take that $6,800 and multiply it by a factor that represents about half of what we are pretty sure the business would generate if Joe doesn’t add anything special to it. That is to say, about how many years it could go on making that kind of money if it is allowed to operate as it has been all these years.

My guess is about 10 years. The main reason it has a chance to make it that long is because it’s already been operating for 38 years. Divide that number, 10, in half, and Joe is, effectively, splitting the future income of the current owner’s business with him. And that’s fair, because Joe still has to oversee it - even if he isn’t going to make improvements.

That gives us a multiple of five for earnings. Multiply the $6,800 by five, and we have $34,000 - a reasonable estimate of the value of the business itself, not counting the building.

So that’s it, short and sweet. The owners are asking a reasonable price. (Joe can show this article to his wife, but I’m not sure it will make her like the deal any better.)

Joe can make the deal easier on himself by attaching a payout to it: Offer the owners $265,000 now, with the remaining $15,000 coming out at $3,000 a month so long as he is still in business.

Joe’s opportunity is to ratchet up the business by making it better - especially by using the marketing skills he will be learning in ETR to bring in more customers and increase their lifetime value by selling them more services and products at higher prices. Joe and his wife - both in their 30s - are young and smart. So growing the business should be easy for them.

[Ed. Note: Get Michael Masterson's insights into becoming successful in your business and personal life, achieving financial independence, and accomplishing all your goals on his brand-new website. You'll find updates on all of Michael's books, news on upcoming ETR events, Michael's blog, and room to send in your comments and questions. Check it out today.]

 "Time is at once the most valuable and the most perishable of all our possessions."

John Randolph

Put a Price Tag on It

By Bob Bly

Years ago, I called PF - a well-known guru in her industry - to ask a quick question. "I charge $200 an hour for my time," PF said without missing a beat, "but I will give you five minutes free starting now."

PF accomplished two things by telling me that before answering my question. First, she limited our talk to five minutes, preventing me from wasting a lot of her valuable time. Second, she let me know in no uncertain terms that her time IS valuable… and that, by answering my question without charge, she was giving me a valuable gift.

The math is easy to figure: If PF got $200 an hour, the five minutes she gave me was a free gift with a value of $16.67.

Although she may not have realized it, PF taught me an important lesson: Whenever you give something away in your business - a product, a sample, a service, knowledge, time - assign a dollar value to it. And be sure to communicate that dollar value to the recipient.

In this way, the folks you are helping get a clear picture of the value of your time, advice, or whatever you give them for free.

If they are prospects, the gift creates a sense of reciprocity that increases their willingness to consider becoming paying customers. If they are customers, this sense of reciprocity builds loyalty, goodwill, and the inclination to favor you with more of their business. If they are vendors… business partners… subscribers… website visitors… reporters… or shareholders, the favor you grant them gives them a lasting and favorable impression of you and your company. The impression is heightened when you gently inform them that your gift has value - and you communicate that precise value to them.

For instance, in my small Internet marketing business, CTC Publishing, we give away free 50-page bonus reports as premiums with many of our products. To communicate the value of these bonus gifts, we print a cover price of $29 in the upper-right corner of the front cover.

To prove that this $29 value is genuine, we also sell the reports individually for $29 each on my website (bly.com)… and we tell our customers: "$29 isn’t a made-up figure… we actually do sell these reports at that price on my site."

For decades, in my freelance copywriting business, I have given away 60-minute audiocassettes of my speeches as premiums to potential clients. A $15 price was printed on each cassette label. And we did, in fact, sell them at that price - originally through a print catalog and then online.

I have coached many independent consultants over the years, helping them to get more business. Nearly all of them had been marketing their services by initially meeting with their potential clients at no charge - to answer questions, explain their methodology, determine whether there was a good fit, and so on. The potential clients viewed these meetings as sales calls, and, as a result, placed little or no value on them.

I told the consultants: "If the meeting takes two hours and your consulting fee is $250 an hour, don’t say you want to come in for a sales meeting. Instead, offer them a ‘free initial consultation worth $500.’"

This approach - not original to me, by any means - invariably generated more appointments and consulting assignments.

Let’s say you are working with a client who asks you for a professional favor, which you know he wants for free. To build goodwill, you render the favor for free. But you should also send him an invoice in the mail - an invoice that shows your normal fee for the service rendered, and indicates you are giving him a 100 percent "courtesy discount," with a balance due of $0.

Why? Because it is a gentle reminder that you gave him a gift, and that the gift - of your time, skill, or knowledge - has a high value in the marketplace.

There are only two exceptions to my rule of placing a value on a gift or freebie and showing the recipient what its dollar value is.

Don’t do it when giving people free white papers or free e-zines. Reason: the free nature of e-zines and white papers is too well established. Therefore, to say that your IT white paper or marketing e-zine has a dollar value causes the recipient to disbelieve you - and therefore to distrust you.

And don’t do it when giving business gifts to important customers, prospects, employees, and vendors. To leave the price tag on a briefcase or a fountain pen is so tacky, it would negate the goodwill you are trying to build with the gift. And if it’s a leather briefcase or Mont Blanc pen, believe me… the recipient knows it’s expensive. And he both appreciates and values the gift.

[Ed. Note: Master copywriter and best-selling author Bob Bly is the editor of ETR's ETR's Direct Marketing Masters Edition. a program to help you start your own successful direct-mail business. Sign up for Bob's free monthly e-zine, The Direct Response Letter, and get more than $100 in free bonuses.]

== Highly Recommended ==

FREE Urgent Teleconference!

Join us on September 6th to learn about…

  1. Why the Fed isn’t able to rescue the markets this time…
  2. What you need to do to protect yourself from run away inflation and a falling dollar…
  3. How to make money as consumers cut back in fear of a future recession…
  4. PLUS, we’ll tell you about the only strategy you need to know to thrive during the credit market meltdown.

Registration is free – just click here

Just the Push You Need to Succeed

By Suzanne Richardson

Sometimes you need a big shock - some kind of life-changing event - to get you out of a rut and started on something exciting.

For three well-known people, that "shock" was losing their jobs. In an article titled "Pink Slip Millionaires," Inc.com points out that some of the world’s most successful businesspeople built their success only after getting fired.

  • When David Neeleman sold his first budget airline to Southwest Airlines, he stayed on as executive planner… then got the boot. He turned right around and launched JetBlue, and now his net worth is in the neighborhood of $100 million.
  • J.K. Rowling, creator of the Harry Potter juggernaut, was fired from her secretarial position for writing short stories at work. She lived off her severance pay while working on her first novel. Now, with a $1 billion net worth, she’s the second-richest woman in the entertainment industry (after Oprah).
  • In 1981, Michael Bloomberg (now the mayor of New York City) lost his job at Salomon Brothers as the result of a corporate takeover. He founded his eponymous financial-information company (now part of a $20 billion media empire) on the Salomon Brothers stock he sold after being laid off. Bloomberg’s own net worth is around $5.5 billion.

Clearly, getting laid off is not the end of the world. But you don’t have to go through anything that traumatic in order to have a "transforming experience." Sometimes, it’s enough to realize that you aren’t entirely happy in your current career… or that you simply feel the need to expose yourself to some new ideas.

Come to our Info Marketing Bootcamp in Delray Beach, FL this fall, and we’ll show you a whole new life that’s just waiting for you.

[Ed. Note: ETR can help you start your own Internet-based information-publishing business. At this fall's Info Marketing Bootcamp - Making a Fast Fortune on the "Other Side" of the Internet, Michael Masterson and a group of the world's top marketing masterminds will teach you how to create a business that can make between $1 million and $100 million a year by using techniques that virtually everyone else is overlooking. To learn more, click here.]

Surviving Hell: Breathe and Relax

By Dr. Matthew Anderson

Try this experiment: Sit straight in a chair. Place one hand on your lower stomach and the other on your chest. Take a very deep breath through your nose. Which hand rises? If your chest rises instead of your stomach, you are breathing incorrectly and are restricting your oxygen intake.

When we are under extreme stress, our physiological/mental/emotional systems react to it the way they would react to an actual physical threat. This unconscious reflex causes our muscles to tighten to prepare us for making a life-saving "fight or flight" response. Most of us automatically tighten our stomach muscles and diaphragm - and, as a result, we stop breathing normally. We begin to breathe with our chest muscles, which does nothing but expand the upper chest. This causes shortness of breath, a decrease in our oxygen supply, and anxiety. And if the anxiety is severe, it can diminish our ability to think or act effectively.

To alleviate this problem, practice the following exercises.

  1. Learn to breathe properly. Lie on your back on your bed. Place your hand on your lower stomach. Breathe deeply through your nose, focusing on directing the breath to your stomach. When you breathe out, press gently on your stomach to push the air out. Repeat the process, taking a break after every third breath. Practice for five minutes a day.
  2. Practice deep breathing throughout the day. Take a deep breath every time the phone rings, before you start your car, every time you look at your watch, when you wake up, when you go to bed, before you eat. Your body will be more relaxed, your mind will be clearer, and you will have less anxiety.

[Ed. Note: Dr. Matthew Anderson, author of The Prayer Diet, is a counselor and national columnist/expert on weight loss, motivation, self-management, and relationships. Read more of his articles on healthy living at ETR's brand-new natural health e-letter. And to find tough-minded, outside-the-box guidance for taking charge of your life and/or your weight, click here.]

It’s Good to Know: Facial-Recognition Systems

It may seem like technology straight out of a James Bond villain’s lair, but facial-recognition systems now in development will be used in real-world applications such as protecting secret or private information and preventing identity theft.

Researchers at the University of Houston are working on a process to make a unique three-dimensional biometric signature of a person’s face - to be used for authentication purposes online, at ATMs, etc. Such a system would be much more difficult to compromise than the multitude of user names, passwords, and PINs currently in use by the average person, because the biometric signature could not be guessed, faked, or replicated.

(Source: Computational Biomedicine Lab, University of Houston)

== Highly Recommended ==

Is It Possible To Lose Weight On The Couch?

For years, Early To Rise has been informing our readers that traditional “aerobic” exercise is a waste of time. After all, why spend hours on the treadmill when you can shed more fat, build more lean muscle and lose more weight through resistance training and high-intensity short interval exercises.

Now one well-respected doctor is daring to challenge the preconceived notions many of us have about exercise. 

Do you need to go to the gym to lose weight?

Click here to read Dr. Douglass’ Full report and decide for yourself.

Word to the Wise: Agon

"Agon" (AH-gahn) - from the Greek for "a struggle or contest" - is a conflict, especially between the protagonist and antagonist in a literary work. The word is related to "agony."

Example (as used by Lawrence Osborne in Salon): "It is the irresolvable love-hate agon between men and women that drives all cultures."

[Ed. Note: Become a more persuasive writer and speaker ... build your self-confidence and intellect ... increase your attractiveness to others ... just by spending 10 VERY enjoyable minutes a day with ETR's new Words to the Wise CD Library]

Michael Masterson
Copyright ETR, LLC, 2007

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