“The business that can spend the most to acquire a customer wins.” — Dan Kennedy

Let’s get one thing out of the way.

Most businesses don’t have a traffic problem.

They have a math problem.

More traffic sounds like the answer — but if your funnel isn’t profitable now, adding more people to it won’t fix the problem. It’ll just amplify what’s already broken.

Thankfully, there’s a better way.

You don’t need more leads, more followers, or a bigger ad budget to grow. You just need to make better use of the people already paying attention.

This post is about doing exactly that.

How to leverage the power of economics to grow your business.

Economics can be simplified to the cost of acquiring a customer and the profit generated from that customer. Profit is key, as it reflects the health of a business more accurately than revenue alone. Overhead costs, which vary based on business context, industry, and size, are also a factor.

Dan Kennedy’s statement, “The business that can spend the most to acquire a customer wins,” highlights the importance of profitability in customer acquisition. Many businesses struggle with advertising due to poor economics — an inability to generate enough profit to sustain advertising efforts.

Customer acquisition is costly, but marketers can leverage various tools to maximize returns, enabling increased advertising spend and profitable business growth. Four primary methods for improving economics are pricing, conversion rate (CR), average order value (AOV), and customer lifetime value (LTV).

There are 4 primary ways to improve our economics.

• Pricing.
• Conversion rate (CR).
• Average order value (AOV).
• Customer lifetime value (LTV).

Let’s break these down.

Pricing.

All else being equal, raising your prices directly increases your revenue potential.

To understand the power of pricing, let’s examine the extremes of high versus low pricing. Pricing mechanics are deeply psychological, influencing perception and behavior. Here’s a simplified breakdown:

Kia vs. Ferrari.
Budget vs. Luxury.
Walmart vs. Louis Vuitton.
A $7 course vs. a $5,000 course.

Low or budget pricing often leads to a race to the bottom — a competition to offer the lowest price. This attracts bargain hunters, individuals focused on spending as little as possible. In contrast, high pricing shifts the focus from cost to value. It’s no longer about utility; it’s about delivering a desired future state, evoking a feeling, or reinforcing an identity.

For example, people who buy Ferraris or Louis Vuitton are not just purchasing a car or a handbag; they are buying status, exclusivity, and prestige. These individuals value entirely different things compared to bargain shoppers.

However, it’s crucial to ensure the perceived value matches the price. Charging $150,000 for a Kia would fail because Kia operates in the budget category and doesn’t deliver the qualities associated with high-end pricing.

The Opportunities of High Pricing

Charging higher prices changes the way you do business. It allows you to:

• Spend more on advertising.
• Improve the quality of your service.
• Build prestige and associate your brand with status.

It’s a virtuous cycle:

1. Spending more on marketing enables you to build a stronger brand.
2. A stronger brand increases perceived value.
3. Higher perceived value allows you to charge higher prices.
4. The cycle repeats.

Research shows that strong brands can often charge a 30% or more premium over commodity alternatives because of their perceived value. This makes consumers less sensitive to price changes and increases profitability.

The Rise of High-Ticket Programs

In the digital space, high-ticket programs and courses are increasingly popular. The reasoning is straightforward: hitting monetary goals requires fewer customers.

For example, if your goal is to earn $10,000/month:

• You could sell 4 people a $2,500 program, or
• 100 people a $100 product.

The two scenarios represent fundamentally different business models, each with its own challenges and benefits. Selling four $2,500 programs may involve deeper engagement while selling 100 $100 products relies on scaling volume.

Here’s an Example

Consider two clients offering similar coaching programs, including curriculum, support, community, and weekly calls:

• Scenario 1: The program is priced at $5,000.
• Scenario 2: The program is priced at $25,000.

This 5x difference in pricing allowed the second business to spend significantly more on customer acquisition. They could invest 5x more in advertising, leading to multiple advantages:

• A larger email list.
• Increased social media following.
• Stronger brand presence.

These benefits compound over time, creating a competitive edge that’s difficult to replicate.

Low-Ticket Products

Low-ticket products take a fundamentally different approach than high-ticket offerings. They rely heavily on volume, which in turn depends on reach. To achieve this reach, businesses often need a very large following, email list, or substantial advertising budget.

The principle, however, remains the same. The core economic factors of pricing, AOV, and LTV apply just as they do for high-ticket products:

1. The first sale might be easier with a lower price point, as the barrier to entry is reduced. This makes it more accessible to a larger audience.
2. Increasing AOV and LTV becomes critical for profitability. Offering upsells, cross-sells, or bundling products can significantly boost the average order value. Additionally, nurturing customer relationships through email marketing or subscriptions can extend the lifetime value of a customer.
3. Adding high-ticket offers on the backend can create a balanced business model. For instance, after gaining trust with an affordable product, you can introduce premium options that address deeper or more complex needs.

In essence, while low-ticket products depend on scale, the foundational economic levers of AOV, LTV, and strategic pricing remain pivotal for driving profitability.

Where to Begin

If you’re considering adjusting your pricing, start by asking:

• Can I test different pricing strategies?
• Can I add value to justify a price increase?
• Can I improve my positioning to enhance perceived value?

Monitor your conversion rates closely during testing to ensure that pricing adjustments positively impact overall profits. Pricing is a powerful lever, but it must be aligned with your market, audience, and value proposition.

Conversion rate.

As you increase your conversion rate, more people purchase.

This is powerful because it doesn’t require you to generate more traffic, more leads, or spend more on advertising. It generates more customers from your existing traffic or lead flow. It optimizes your efficiency.

Your conversion rate will be most heavily influenced by your offer and your positioning. Other elements that play a role are your funnel, design, and perceived value to mention a few. Even your traffic — As your traffic quality improves your conversion rate can improve.

Testing is paramount when it comes to improving your conversion rate. Adopting a “testing” mindset and understanding that there is always room to improve. The businesses that see the greatest success and the ones that are always seeking to improve and therefore always testing.

Here are a few things that you can test:

• Ad to landing page relevance.
• Headline.
• Specificity.
• Offers.
• Funnels.
• Sales pages.

And the last thing I want you to know is that every step of your customer journey has a conversion rate.

• Your ad.
• Your landing page.
• Your checkout.
• Your sales page.
• Your order bump and upsell.
• Your emails.

Everything has a conversion rate — The number of people that proceed to the next step.

Therefore, every step can be optimized.

Average order value (AOV).

The math is simple.

You make more money when people spend more money.

This provides us with opportunities like spending more on advertising, or buying yachts 😉

Increasing our average order value (AOV) is a high point of leverage. AOV is the amount of money someone spends when they order or buy something.

The most common example of this is McDonald’s.

“Would you like fries with that?”

1 phrase, 6 words that take advantage of the impulse buy.

Once you begin opening your mind, you see this everywhere.

The grocery store, the gas station, and pretty much every store you enter has ‘impulse’ buys while you’re waiting in line or making your purchase. Grab-n-go items, sale items, gum, and magazines.

The goal is simple.

Increase the value of every purchase.

These seemingly small items produce millions of dollars in revenue worldwide and can be the difference between a company growing year over year or closing its doors.

In digital marketing, here are the most common purchase boosts:

• Upsells.
• Quantity.
• Cross-sells.
• Order bumps.

This can vary by industry. E-commerce stores will have contextual differences compared to someone selling digital courses but the principles are the same.

Amazon is one of the best examples.

• “People also purchased” (Cross-sell)
• “Frequently bought together” (Cross-sell)
• “Spend X and get free shipping” (Upsell)
• “Buy 5 and save 5%” (Quantity)

When someone is filling out their information to purchase a product and sees a little box “Add this for XYZ”, that’s an order bump. Designed to be an impulse and no-brainer ‘Yes’ to boost revenue. This is an order bump.

Upsells typically come after someone has submitted their order.

“Wait! Before you complete your order, I have this special offer for you.”

Often we see anywhere between 1 and 3 upsells. Specifically crafted around what the person just purchased and the other problems they now may need to solve. They’ve just purchased and now they are more likely to spend a little extra.

It’s the modern-day infomercial → But wait! There’s more!

In 2020–2021 I worked with a client selling a $97 digital course.

I was brought on board to run Facebook Ads to sell his course. He had no social media presence, email list, or other means to sell. It was exclusively paid advertising.

We managed to break even with our advertising spend.

The problem was that a business cannot be built off ‘break-even’. Many businesses accept break-even, or even a loss on the first purchase knowing they will make money on the backend. We only had 1 product to sell. A problem we needed to solve.

The client put together a second product. We turned this into an order bump. And we went from break-even to 1.4x return on our ad spend overnight.

In order to put the business in a better position to scale we needed to increase AOV and in this clients’ case, it required putting together a second product to do so.

Eventually, we put together a 3rd and 4th product which brought us from a 1.4x to a 4x through increasing LTV which we’ll dive into next.

Customer lifetime value (LTV).

Profits don’t stop after purchase #1.

The most profitable thing a company can do is acquire customers.

They will often accept break-even, or even take a loss, because they understand the concept of customer lifetime value.

This refers to how much money a customer or client spends over their ‘lifetime’ with you. The sole purpose of coupons and companies like Groupon is to acquire buyers. They know (or hope to) generate a profit in the future.

Examples of how to increase customer lifetime value (LTV):

• Cross-selling.
• Re-selling/re-fills.
• Product line extension.
• Subscriptions and memberships.
• Customer retention (churn reduction)
• High ticket programs, coaching, or masterminds.

In digital marketing, this is often done through email marketing and/or paid advertising.

It’s quite easy to visualize with retail or e-commerce stores. You purchase a T-shirt, and love it. You come back to buy additional colors or try different styles. You purchase vitamins, and you re-buy once you run out or setup a subscription.

Sometimes you have everything in place to execute on this. Othertimes, you build it.

A client of mine worked as a very successful life coach.

After years of running this business, he noticed that many of his clients were looking to start an online business. Since he had done so successfully, they began to ask him questions about what he did. This eventually led him to create a new program.

Along the way, he started and built a successful podcast. This podcast became one of his primary marketing channels. And led to a 3rd program–how to start a podcast.

Another client used this principle to generate $50,000 of profit within single week. After successfully selling a $5,000 program, they introduced a new $10,000 12-month program and soft-launched it to their existing customers. Five of them immediately signed up. As existing customers, this was 100% profit.

These changes increased the LTV of their existing customers/clients and made a dramatic impact on their profitability.

Marketing Math

Everyone wants to hit a 10x ROAS.

Except there’s something more valuable than ROAS.

And with a little math, the picture becomes clear where we should apply our focus.

I helped a client hit a 7x ROAS.

Except we only spent $2,000. Cash collected was $14,000 netting $12,000 in profit.

People often cringe seeing a 3–4x ROAS.

In reality? It could potentially make you more money than 10x.

Let’s say we spend $20,000.

And our 7x dropped down to a 4x.

While this seems like our performance fell off a cliff, we collected $80,000 with a net profit of $60,000.

While our ROAS almost dropped in half. We made 5x more cash.

Let’s take it one step further.

Imagine that we spend $50,000 at 3x.

Generating $150,000 and leaving you with $100,000.

I know these are hypothetical scenarios that don’t specifically addressother factors like overhead, expenses, etc. But it’s not far off of what I’ve seen play out when I work with businesses.

Someone brags about high ROAS…

While ad spend is low, or it’s for warm traffic.

This doesn’t usually scale.

And it’s kind of shocking how simple this math is and how few people take the time to do it. Instead we see companies decreasing ad spend at the slightest sign of decreases in ROAS. Not realizing it could be generating more profits, or generating byproducts such as elevated brand awareness, more customers, more leads, that can increase future profits.

We can fixate on high (or increasing) ROAS…

…Or focus on the bottom line — cash in your pocket.

Don’t get me wrong, though.

As a small business or solopreneur spending $2k and rolling a 7x is incredible.

But the economics change when you’re looking to scale.

And if expenses remain fixed we can often afford a lower ROAS if our spend is increased.

This isn’t to mention all of the brand benefits that we will cover in Chapter 8.

ROAS vs MER in Advertising.

The Halo effect.

Not the video game but a common saying within marketing.

It describes a ‘halo’ of things that happen as a by-product of investing in marketing. Things that cannot be tracked.

Marketers get caught in proving their worth — How much they made you. Because their job is on the line. The truth is, it can’t all be tracked.

Shifting from ROAS to MER.

Instead of looking at your Facebook return. You look at how much you invested in marketing and how much money your business generated. It’s a more holistic approach. And it allows for things that cannot be ‘tracked’ or in marketing terms ‘attributed’ to your ads.

Here’s an example to demonstrate this.

During a period of 4 months we increased advertising spend by 30% compared to the prior period. However, we noticed an incremental increase in the sales generated from ‘organic’ (not paid ads). This can be attributed to the halo effect.

Being short-sighted, someone might say “we can reduce our ads because we’re generating organic sales” but the reality is that those organic sales are a by-product of your paid ads.

This is very common. And amplified by the difficulty of tracking and attribution.

I’ve spent countless hours researching tools and have never found something that satisfies every need. The truth is that not much beats a basic spreadsheet and a proper analysis.

We can’t track it all. Trying to do so or viewing marketing in silos leads to poor decisions.

Often when I start running ads for clients using webinars to book sales calls, we see:

• Email list grows.
• The follower count grows.
• Calls get booked through email.
• Calls get booked through Instagram.
• DMs flow in requesting details on the program.

Not all of this can be directly tracked back to the ads. But it may not have occurred if their ads didn’t.

Here are 5 Prompts you can use to improve your economics.

Prompt 1: How can I improve the conversion rate through offer design?

Your offer and positioning will determine the conversion rate. When this is low, evaluate the relevancy and specificity of your offer(s) and search for opportunities to improve it.

Prompt 2: How can I improve the AOV?

“The person who can spend the most to acquire a customer wins.” — Dan Kennedy.

Can you add an order bump, upsell, cross-sell, etc. or improve the conversion rate of the existing ones.

The economics of your funnel and customer journey cannot be ignored. Improving your average order value (AOV) will always be beneficial.

Prompt 3: Where can I infuse authority, credibility, and social proof?

Adding these proven psychological buying triggers improves our conversion rates. Incorporating them into our ads, landing pages, sales pages, automation, and follow-up can improve performance.

Prompt 4: Can I improve customer lifetime value (LTV)?

What mechanisms or offers are in place to boost LTV after purchase #1?

Prompt 5: Can I decrease my overhead to improve my profitability?

Are there opportunities to decrease COGs or your operating expenses that would allow you to increase profits or spend more to acquire customers.

Here’s what I want you to take away from this.

Here’s the thing:

The brands that win aren’t the ones with the lowest lead cost or the highest day 1 ROAS.

They’re the ones with the strongest economics.

Because when your AOV, LTV, and conversion rates go up — even a small amount — you suddenly unlock more budget, more scale, and more freedom to grow.

And that’s how you win without chasing more traffic.

Start there.

Then scale with confidence.

Hope this helps.