Yes you read the correctly.
Starbucks sells an espresso machine for $2700.
And you thought paying $5 for a latte was crazy.
Let me explain their reasoning in a minute…
…with some help from Perry Marshall’s 80/20 Sales and Marketing book.
If you don’t have a copy I highly recommend grabbing a copy as soon AFTER you finish reading the amazing email.
Are you familiar with the 80/20 principle?
It’s also known as the Pareto Principle.
Richard Koch wrote The 80/20 Principle and Perry Marshall applied the principle to sales and marketing.
In a nutshell, 80% of your revenue comes from 20% of your customers (probably your favorite clients).
80% of your customer service complaints come from 20% of your customers (probably your "pain in the ass" clients who invested in your low-end products).
You can apply 80/20 to almost any scenario and the consistency is incredible.
To see this for yourself, Perry created an 80/20 measurement tool at www.8020curve.com.
Back to that $2700 espresso machine.
Let’s say 1000 people go to Starbucks.
The least amount they will pay is $2 for a cup of coffee.
When you apply 80/20, 20% will spend four times more than $2 (latte and a scone).
The top 1% of the 80/20 curve is willing to spend $537.
This is hard to do at Starbucks unless they offer high end products like the $2700 espresso machine.
This is why you need a high-end offer for your business.
Some of your customers are ready to invest in your high-end offer today.
It’s a numbers game so why not focus on your top 20% who you love working with and are ready to pay premium prices?
