Watch the video, or read the Blog Post below.
A thousand dollars a day: that is what your goal should be when setting up an online store or a dropshipping store. It's not about being too optimistic, and it's not about wanting to stay on top of your competition; it is about being able to pay for everything and everyone working behind the scenes and still be able to take home a good percentage of your revenue as profit. Today, I am going to show you why this figure is important to reach such that at the end of the day, you are able to pay your expenses and still be able to take a great percentage home.
So, let's get to it, then. In this video, I am going to show you why $1,000 should be your quota for each and every business day.
The Thousand Dollar Challenge
A thousand dollars a day is a realistic goal and is definitely doable. We're not only setting a high bar to raise our standards, but we're also trying to increase our revenue for as much as possible in order to pay for advertisements, manpower and all the other elements of our business without having to sacrifice a ton of profit.
To help you better understand the calculations, here are some of the terminologies and formulas used in the equations to follow:
- Net profit. (Selling price - buying price). The profit you gain from selling 1 unit of a product.
- Percentage margin. (Net profit / selling price). The portion of the net profit in the selling price (in percentage). The higher the percentage margin, the better.
- Ad spend. (Daily gross / 2). The amount you will be spending on advertisements. Usually calculated as 1/2 of the daily gross.
- Percentage cost of goods (COG). (1.00 - percentage margin). The portion of the cost of goods in the selling price (in percentage).
- Cost of goods. (daily gross x percentage COG). The total cost of purchasing goods from suppliers.
- Merchant fee. (Daily gross x 3%). The amount paid to online merchants such as PayPal and Stripe for their services. Usually calculated as 3% of the daily gross.
And with that, let us begin with the maths!
Determine the buying price for your product and a set a fixed selling price for it. Subtract the two to get the net profit. Then we are setting our daily gross to $1,000. And let us now calculate for your product's percentage margin and percentage cost of goods.
% Margin = [Net Profit] / [Selling Price]
% COG = [1.00] - [% Margin]
The percentage margin determines whether your set price is enough to be able to give you a decent profit. Let's set the bar: a % margin value of more than 50%, and a % total profit of more than 20%. Below that is unacceptable; you need to adjust your prices or else you can't consider your business to be a profitable one.
Meanwhile, what we are actually after is the % COG, as this would be the factor we'll be using for the real calculations. Once you've got your value, multiply it to your daily gross to get your cost of goods. And as mentioned before, ad spend can usually be calculated as 1/2 of your daily gross.
Subtracting the ad spend and COG to your daily gross will result to your total profit -- the amount that you get to take away once everything has been paid and accounted for. Divide that value to your daily gross and you will get your percent net profit.
In this calculation, we have set the following numbers as a sample:
- Buying price: $8.00;
- Selling price: $29.90;
- Daily gross: $1,000.00.
Using these numbers and our profit calculator, it can be seen that our total profit for the day would amount to $232.44, which equates to 23.24% of the total daily gross -- which is actually good! You get to take home an amount which can be considered as a week's worth of salary to some others in just one day, and you've already paid for everything else!
Scaling up to a full month, if we will still hold onto these numbers, our total profit would amount to $6,973.24, and when scaled up to a year, $83,678.33! And this is just for one product; if your business is selling a variety of products, think of how much more you can make!
In addition, to compute for the daily sales you need to make (which is the number of units of a certain product you need to sell in order to meet your daily gross), simply divide your your daily gross by your selling price.
Daily Sales Needed = [Daily Gross] - [Selling Price]
If we take merchant fees into account, our calculations would look like this:
Notice that there is a significant change in the % net profit, but still meets our 20% minimum. That means regardless of the additional fees for platforms such as PayPal and Stripe, so long as our products are priced right, we can still have a good amount going straight into our pockets!
If at one point you felt left behind by all the talking and calculations, you can use this spreadsheet we have prepared for you. Don't worry, everything we've discussed so far is already there; you just need to fill in your values and you'll get results instantly, so you can quickly assess your business' current financial standing and make the necessary adjustments.
BONUS: Email Marketing Needs?
If you are in dire need of an email marketing management platform, Klaviyo is, without a doubt, an easy option.
We help businesses of every size — from entrepreneurs to iconic brands.
Klaviyo simplifies your eCommerce store's email marketing campaign process through its many different personalization, targeting, analyzation, monitoring and optimization tools and features. Basically, Klaviyo combines email marketing with social media campaigns for an effective and efficient target reach.
A Klaviyo subscription will introduce your business to the following features, as per their official website:
- One-click integrations;
- ROI-based reporting;
- Powerful segmentation;
- Facebook advertising;
- Pre-built autoresponders;
- Website tracking;
- Dynamic data blocks;
- Email personalization;
- Product recommendations;
- Custom activity fields;
- Drag-and-drop email design; and
- Responsive email templates.
Just a heads up, though: according to an article by Omnisend,
If you're really just getting started, it can work well. However, scaling with Klaviyo can get expensive quickly. At 1001 subscribers, Klaviyo jumps to $45 per month, and at 2001, it's $60/month. You can expect your subscription to go up by $25 for every 500 subscribers you add up to 3000 contacts.
That said, the Internet offers many different alternatives to Klaviyo, but if you want to go with the "tried and tested", spending a little extra on the original isn't much of a bad idea. After all, at the end of the day, it comes down to proper funds management and only the best administrative skills.
Let’s Wrap It Up!
Setting a daily sales goal is an effective method for guaranteeing the success of your business in terms of profit. In the first place, a business is established because the owner/operator wishes to make money, so why would he/she sacrifice what they have worked so hard to make just to be able to pay off bills and other business-related expenses? With that being said, at the very least, a 20% daily profit goal is the most optimistic one, for starters. And if you are able to reach up to a thousand dollars in sales per day, you are guaranteed that your business will thrive and you can even expect it to expand and improve in the coming days.
Before we end this post, I would like to invite you to my monthly membership group, The Pirate Club, where you can get everything you would need to build a successful online store. By joining in and becoming a pirate yourself, you gain access to the following:
- The Pirate Academy;
- The Pirate Product App;
- The Pirate Community; and loads more!
Intrigued? The Pirate Club is now open with an early-bird pricing plan, so be sure to grab this super affordable deal before it expires!
If you have any more questions about this video, feel free to personally contact me via email at [email protected] You can also leave your comments and feedback below, and our team over at WagePirate will definitely get back to you with a response. For more reviews, news and updates, don't forget to subscribe to our YouTube channel!