November 20, 2020
What is a product ladder?
A product ladder is a series of offerings priced in a graduated “order of magnitude” fashion (e.g., $50, $500, $5,000, $50,000).
(ASIDE: Despite the name, product ladders commonly contain a mix of products and services. Your initial product ladder might not include any products at all. A more accurate name would probably be Offering Ladder, but that doesn’t have quite the same ring to it.)
The idea of the product ladder is to make it easy to turn prospects into buyers regardless of the level of trust you have built with them.
In other words, people who have just heard of you will most likely enter near the bottom rung of your ladder. Assuming that they benefit from that purchase, they will have increased trust and be more likely to climb up the ladder to your more expensive offerings.
For a product ladder to work, the offerings need to be related such that someone who buys a lower rung would also be a potential buyer for a higher rung at some point in the future.
For example, if you are a web designer who helps Shopify stores increase their revenue, you would want all of your rungs to be attractive to people who run Shopify stores.
- Your bottom rung could be a $50 handbook on Shopify best practices
- Your second rung could be a $500 Shopify homepage teardown
- Your third rung could be a $5,000 comprehensive UX audit and roadmap report
- Your top rung could be a $50,000 custom Shopify theme development project
Shopify store owners who buy your $50 Shopify handbook and are delighted with it, will be more likely to climb up your ladder to the $500 Shopify homepage teardown. They might even immediately jump up the ladder to one of your higher tier offerings.
In contrast, if you are a web designer and your product ladder is disjointed, it’s less likely that buyers will climb up. Here’s BAD EXAMPLE of a product ladder for a web designer:
- $50 Intro to Wordpress video course
- $500 Shopify theme setup
- $5,000 5-day SaaS design sprint
- $50,000 Complete website rebrand
Yes, these are all things a web designer would potentially be qualified to offer, but they are each for different buyers! There’s no synergy. It’s hard to imagine any single person buying more than one of these offerings, never mind all four.
Yours,
—J
P.S. This is an excerpt from my forthcoming book “Ditching Hourly: 35 Ways To Make More Money Without Working More Hours”. If you’d like to add your name to the early access list for the book, please reply to this message with YES or a 👍. Thanks!_