Pricing Yourself Out of Business

There was a recent post on Amthrax referring to a post on MLM Punisher’s blog on how much money you want.

The original post by Punisher is about the costs in Monavie. Its similar to a post I wrote about costs in Amway in Save First Spend Later.

Punisher estimated $496.90/month for Monavie and I estimated $476.90/month in Amway. Wow! Very close! $20 difference. The thing is both of us estimated these to be minimum monthly costs for a “serious business builder” and its likely much higher once you add in other costs such as meals and gas for the car. I estimated you’d have to set aside $700/month to be involved in Amway and maybe get a $10 check back each month from Amway for all the effort and money invested.

Hmmm. Spend $500 to $700 and get back $10. SCAM!!!!

Actually the real point of this post is getting back to Amthrax’s post about Punisher. One commenter said something about figuring out how much money you want to earn and dividing that amount by the hours you want to work to come up with an hourly wage. Mowing lawns and house cleaning was used as an example so it brought back another memory of the first time we were in Amway/WWDB.

We live in a small house about 1300 square feet, 2 bedrooms, 2 baths. There was another IBO in our line who’d been unemployed for awhile and thought that Amway was going to be the answer to all her financial troubles. She’d fallen several months behind on mortgage payments and I’m not certain if she had any income coming in at all. Alimony? Unemployment insurance? She was offering to clean houses at $15/hour. We felt bad for her and had her in to clean our house once a week or maybe every other week. I don’t recall the frequency. Took her about 2 hours to clean it or maybe it didn’t take that long because she was always yack yack yack and we paid her 2 hours anyway. Our house wasn’t that big to clean and not filthy dirty either. She didn’t do a good job. I mean if Ambot comes home and points out the counter is dirty and has to clean it himself then that’s pretty bad!

She’d been cleaning our house for maybe 2 months and one day she left a message on our answering machine that her rates were going up to $17.50/hour.

If she did a better job of cleaning maybe it would be worth it but we were only letting her clean our house out of pity. Its not like I couldn’t manage the housecleaning. Its not like she came into a filthy house that had to be scrubbed to death. Basically she was dusting, vacuuming, and washing the tile floors, wiping down counters and cleaning the baths. How that takes 2 hours I don't know.....Ambot left her a message letting her know we got her message and that we’d decided we didn’t need her to clean our house anymore.

The funny thing was she phoned back and left a message on our machine saying she was sorry we couldn’t afford her housecleaning services!

Ha ha, that was a laugh. She’s talking about who can afford what? Our mortgage payments were up to date. We were in a better financial position than her and hadn’t gone too deep into Amway debt at that point. We felt she wasn’t worth it at $15/hour because she didn’t do all that good a job cleaning so she really wasn’t worth it at $17.50. Priced herself right out of business. Using the philosophy of the commenter on Amthrax’s blog she must have figured out how much she needed to earn an hour to meet her monthly expenses and pay back the missed mortgage payments and that was her number and she was sticking to it. Didn’t work out too good for her though. I don’t know how many housecleaning clients she had. Only one other that I knew of who was also in Amway and had a HUGE house.

Predictably the bank foreclosed on her house and the last I heard she’d moved to another state to move in with her daughter. I wonder if Amway got the old heave ho too.....

That’s something for every business owner to keep in mind whether they sell products or offer a service. If you price yourself too high customers will go elsewhere. If you currently offer substandard products or services and jack up the price you’ve just given your customer the excuse they’ve been looking for to ditch you. Everyone who is not a brainwashed IBO knows Amway products are outrageously overpriced. Amway’s sales reports show that less than 5% of their sales are to people who are not IBO’s. So that tells me normal people who are not brainwashed ambots know a shitty deal when they see one.

Price yourself out of business and customers disappear.