“Turn $1 into $2” return on advertising is not the promised land that all the gurus are pushing on Facebook right now.
Not too long ago I went all in on my pivot from agency owner to selling high-ticket DWY offers. Best decision I’ve ever made.
I get it, it sounds amazing on paper. Drop $10K on ads and get back $20K in “profit”? Sign me up.
Hell, I’ll admit that things could be far, far worse than that. But again… it’s also pretty far from all the hype it’s made out to be.
How do I know? It’s what I’m in the trenches actually living right now. Scaling my DWY offers to a million dollars plus in just under 6 months. And I’d barely be putting any of that in my pocket if I was sitting at only a 2X return on advertising.
You know what? Here, let me prove it:
Say you go ahead and drop that $10K on ads. Right off the bat $500 is gone thanks to merchant fees (2.5%) and just about $3K goes to salespeople (15%). Already down to $6,500 left over.
Don’t forget about everything else you need to have in place if you want to make that $10K go anywhere at all:
- $297 for ClickFunnels
- $15 for ActiveCampaign
- $15 for Zoom
- $29 for PipeDrive (CRM for sales)
- $75 for Zapier to rig everything up
- $2K for a cheap copywriter (although I highly recommend paying more)
So all in all you’re in for a grand total of $2,935 for software and services… leaving you with $4,144.
Ok, still not all too bad… right?
WAIT: Don’t don’t forget our good ol’ friend Uncle Sam who wants his 30% right off the top. Better get that over with now before you end up behind bars.
Finally, we’re down to what’s left for you: $2,901. Just enough to make $35K a year.
Rough. I made more than that as a full-time chef without having to eat 5-figures of risk month after month.
Oh wait, almost forgot this part too: those numbers don’t even include refunds, cancellations, or payment plans!
In fact, let me give you a very real example on that note: This past August I put up just over $54K in ad spend for one of my courses. Wanna guess how much I put in my pocket?
It certainly wasn’t $108K… not an equal $54K… not even $2,901.
We collected $1,304.98.
Yeah, it was a rough month. An abnormal one for sure though, to be clear. But still, it can happen.
Here’s the thing though. I’m not at all trying to say that you shouldn’t pursue the DWY offer model. In my opinion it’s the best way to scale to 7 figures right now.
It’s just that the 2X Return on Advertising is a bit misleading…
Because what it really takes is around 3 to 3.5X if you really want to start pulling in some serious coin.
For example, if we redid the example above at 3.5X ROAS… we’d go from $2,901 to $11,563 in profits every single month — even after paying for our salespeople, software & services, and our pal Uncle Sam. Oh, and with the same exact $10K in ad spend up front.
Now that doesn’t sound too bad, eh?
Point is: Don’t fall for something just because it sounds nice. I won’t lie, saying “Turn $1 into $3.5” sounds way less sexy than “turn $1 into $2”.
If you want to pivot your agency into selling DWY offers like I did, I 100% recommend it. Just be aware of the type of numbers you need to be hitting to make it worthwhile.
Bobby is an accomplished serial entrepreneur with vast advertising, marketing, and business growth skills. Bobby is a business strategist who’s talented team will predictably grow and scale your business for you using his proven systems and chess move like thinking. He lives in Florida with his wife Rachel, and dog Boo-Boo. He spends his free time fishing, eating steak, and laying on the beach smoking cigars.