Making a Million Dollars, 25 Cents at a Time

By the DoItYourself.com staff

Infomercials are famous for the “get rich quick” program that only costs $59.99. The way they present the commercial almost immediately discourages us from eagerly dialing to throw the money away. But why do these commercials exist in the first place? Somebody must be buying them or they would not spend the money producing these things. But is the “get rich quick” scheme really just that, a scheme?

How is wealth made? Part of wealth is not made, but rather, acquired through the endeavors of family members. This is the easiest type of wealth to attain, and honestly, the least fun to maintain. The second is earned through hard work, talent, and a pinch of luck. The third, and least likely way to become wealthy, is to simply stumble upon it. We have read in the papers about the person who bought $2 in lotto tickets and won the jackpot. Poof! They instantly had 26 million dollars. Or, someone invents a gadget that earns a million dollars – for an idea we contemplated! For most of us, inheriting wealth or winning the lotto simply is not an option. So, how do we achieve it through hard work and talent?

Making one million dollars 25 cents at a time is nothing new. It is a catch phrase often used by someone selling a gadget for 10 cents – one million at a time. But it leads to a larger context of wealth – and business strategy – that is often left out. Ask yourself, whenever you have thought of starting a business, did you think of something that would earn you $1 or $1,000 a transaction? It is human nature to think large. However, it is easier to convince 1,000 people to pay you $1, than it is one person to pay you $1,000. Many people make the mistake of pouring their energy into creating the “next biggest thing.” Yet, that same amount of energy could have poured into becoming efficient at one, small thing.

Often times, the large transaction is the least profitable way to make money. For example, think of a toy that sells for $100. Behind this toy is thousands – or even millions – of dollars wrapped up in research and development, marketing, sales strategy, salaried workers, etc. On the other hand, consider a small plastic toy that costs 3 cents to make including production, marketing, etc. This small toy may sell for $1, and after subtracting 3 cents for the items mentioned, plus 25 more cents for shipping, the seller is making 72 cents per toy. As a percentage, this offers a greater profit than the company selling their toy for $100. So, who is the real entrepreneur – the one throwing millions of dollars at a $100 toy or the person spending 28 cents to sell a toy for $1? It is all about perspective. People are conditioned to think big. Why bother with making 72 cents per transaction when they can make $100? For a number of reasons, the smaller transaction makes sense. It costs less to produce which means less risk. The owner makes a larger profit (as a percentage) than the more expensive toy. Finally, he or she has an easier time selling 100 toys at $1 per piece than one toy at $100. In order to think “big” you have to think “small.”

You can attain wealth, or financial security, easier with small bites. If you have worked in a business environment, you understand the largest accounts, biggest transactions, or most important projects take a lot of time to cultivate! These types of transactions take up valuable time and energy. As an example, picture a loan office trying to close a loan. He may focus on finding someone who wants a million dollar home – which means a nice commission check. He can spend hour after hour trying to entice this person. This time and effort (a finite resource) is being spent on the “big” fish – not the little ones. The most successful loan officers have dozens of transactions a month – but they are not the million dollar kind. They go “fishing” for the smaller fish, and in the process, earn more than their counterpart trolling for the trophy fish.

Becoming wealthy begins with perspective. If you are spending time and effort trying to sell the most expensive product or service, be prepared for trying times. Toyota sells less expensive cars than Rolls Royce, but which company has higher profits? Nike became a juggernaut by selling shoes, not booster engines for the space shuttle. These companies operate on the principle of making one million dollars 25 cents at a time. So, maybe the infomercials are not just a scheme. They are making one million dollars $59.99 at a time.

© Doityourself.com 2006