Doubling sales doesn’t double profits

I was listening to an interview today. An ‘expert’ on making sales letters convert better was claiming that by doing a couple things you can double your sales. OK, I’ll agree. He was trying to show people that this is a good thing, and easy to do. That is possible, even likely in many cases. He then went on to state that doubling your sales would double your profits. Huh? This guy is supposed to be an expert. Doubling sales without adding much cost just about never doubles your profit. Let’s take a look.

Say you are selling an ebook on how great massages are. You’ve got a website, a merchant account, an office to work from, insurance and other overhead expenses. And, you are doing some kind of advertising. Maybe running pay per click ads, banner ads, a listing in the yellow pages or local classified. Let’s say that overall, your monthly expenses are about $2,000. And that is pretty cheap. And, your gross sales are $5,000. Delivery is included in your hosting fees, so you basically have no per item cost for manufacturing and shipping. So your proft is roughly $3,000.

Now, let’s double sales just based on better copywriting and conversion techniques. You aren’t buying more ads, your rent, insurance and other overhead costs are going to remain about the same. You’ll have a tiny bit of added costs for the transaction fees, and maybe a tiny bit of customer support, but that’s about it. So, doubling your sales brings you another $5,000 in profit.

Total of the original profit plus the added profit of doubling sales: $8,000 profit.

As I recall my math lessons, a profit of $3,000 doubled (increasing by 100%) is $6,000. Going from $3,000 to $8,000 in profit is a 167% increase. That’s a heck of a lot better than doubling profits from doubling sales. Keep this in mind when you are doing things to improve your conversions. A small increase can make a much bigger difference to your bottom line than you may think at first glance. In order to double sales in this case, you would only need to increase sales by 60%, not 100%. If your conversions are low to begin with, it isn’t really that hard to do.

Here’s to your profits!

Bill Shor