When to Invest in Premium Products and Services
Jul 11, 2024Today, we're diving into a common dilemma: When should you invest in premium products and services?
Investing in your business is a balancing act. While premium products and services offer incredible benefits, their price tags can be daunting. The key is to determine when the premium option is truly worth it. Inspired by a discussion with my colleague Jason, who's been in business for nearly two decades, I've developed a three-factor framework to help you make these decisions wisely.
First, consider if the product or service will help generate revenue from a proven offer. For example, investing in high-quality software to deliver an online course can be worthwhile if it’s a primary revenue stream for your business. If the product or service contributes directly to increased income, it’s wise to go for the premium option, especially if it's customer-facing.
Second, consider how frequently you'll use the product or service. Let’s say you invest in an espresso machine for your home office. If you drink multiple cups of coffee a day, a high-end espresso machine that you use frequently makes sense. In our own example, Jason and I deliberated over buying an expensive espresso machine that we loved during our stay in Grand Cayman. Given our frequent use, the investment paid off within a year and continues to provide value seven years later. Similarly, in a business context, if a software tool is something you’ll use daily, its reliability and advanced features can improve efficiency, making the premium investment worthwhile.
Third, evaluate whether the premium option solves a productivity problem. For instance, when my team and I upgraded our practice management tool, we opted for Asana’s top-tier subscription. The investment was justified because it solved many productivity issues, such as task delegation and team visibility, thereby unlocking massive growth potential for our business. Improving productivity can save time, reduce frustration, and help you retain top talent, making the cost worthwhile.
Interestingly, this framework also applies to hiring and retaining talent. Investing in top talent who can generate revenue, like a rockstar sales or marketing team, or solve productivity problems, like highly efficient operational staff, is often worth the premium. If someone’s role involves critical, repetitive tasks or significantly boosts overall productivity, they are worth the higher salary.
To make this relatable, consider the decision to buy a new iPhone. If your phone is essential for daily tasks, investing in the latest model with the best features makes sense. Conversely, if you only use an iPad occasionally, opting for a basic model would be more cost-effective.
Making wise investment choices requires a strategic approach. Weigh your options against these three factors: will it generate revenue, will it be used frequently, and does it solve a productivity problem? By carefully evaluating these criteria, you can make informed decisions that align with your business needs and financial goals. Investing wisely isn't about always choosing the cheapest or the most expensive option but finding the right balance to optimize both your resources and outcomes.
If you're inspired to streamline your business processes and make smarter investments, don’t let procrastination hold you back. As I mentioned earlier, our course creator Jasmine Jante offers a done-for-you service to help you create and film your course content within a weekend, eliminating excuses and accelerating your business growth.
What you'll hear in this episode:
05:47 Invest in tools that maximize productivity results.
07:33 Invest in productivity- efficient, valuable investment.
If you like this episode, check out:
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Is Productivity the Same as Profitability?
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