Welcome my friends to another exciting topic.
I’ll be sharing with you guys one of the most eye opening things I’ve learned as a Digital Entrepreneur and how this concept alone will allow other business owners to understand how a successful business like Apple became the first $1 trillion company in history.
Apple’s “Ascension” Business Model
Did you know that when you’re in line to buy the new iPhone, you’re on the doorstep of one of the most profitable business models in existence. The ascension business model is used by big businesses like Apple so you know it’s proven to convert.
Apple uses its low ticket item, in this case, the iPhone, to bring in new customers and build trust and credibility. Customers love their product (cutting edge technology that looks great & is easy to use), so they continue down their sales funnel towards the high-ticket offers where the most profits are generated.
– Have you ever walked into an Apple store with the intention to buy an iPhone?
Did you end up walking out of the store with more than just the iPhone? – Accessories, new apps, an iPad or perhaps even a MacBook Pro or Apple T…
– A different example would be when you go to a McDonalds drive through. You initially go there for the $1 menu because it’s cheap and on the go. Little do you know or realize, that you are just a victim of the ascension model.
You end up leaving the drive through with 3 burgers, a large fries, a large coke, 4 cookies, and a haupia pie.
- Let me give you another example. Costco! You go in for the low priced item, in this case, the Costco Food Court. That’s how Costco lures people to the store. They do not earn anything from their food court. In fact they are actually losing money on the front end.
But on the backend, inside the store they have products from all different price ranges. You notice how they also put all the necessities we need such as the milk and eggs to toilet paper and paper towels all the way in the back. That’s intentional so you have to literally go through every isle, guiding you to buy things you don’t even need.
That my friend is called a sales funnel and the Ascension sales funnel is the key to many of these big business’s success and that’s the power of having low ticket, medium ticket, and high ticket priced items, not just ONE!
Front End Products VS Back End Products
To help you understand the difference between front & back end products and why it’s necessary when structuring the foundation for your business. If you sold just one item for the same price, you would take a longer time scaling up. Having higher ticket items will allow the potential to earn more for a single sale!
01. Low Ticket Front-End Offers – iPod, iPhone
02. Middle Ticket Offers – Apple Accessories, iPad…
03. High Ticket Back-End Offers – MacBook Pro, Apple TV…
We are all consumers and we want MORE of something we want or desire. “I bought this, now I have to get that too!” This is how people think.
- If you buy Nike Shoes, you have to get Nike Socks too.
- If you buy a burger from McDonalds, you have to get fries and a drink too.
- If you buy a shirt from Ross, you have to get matching pants and a hat too.
Apple is definitely the King of getting customers to buy more, even if they don’t need it. FOMO or Fear Of Missing Out and Scarcity are one of the best marketing strategies out there and we fall for it every time.
Ascension Model Within The Ascension Model?
Now that you understand why the products are priced at different tiers, I want you to see another way that Apple used the ascension business model within each product. A simple, innovative way of advertising that no one ever talks about, yet is so powerful for scaling any business.
Whenever a new version of the iPhone comes out, Apple doesn’t just launch one phone. It usually launches three (3) at the same time. There’s the regular version, a pro version, and a PLUS or now with the iPhone 11, a Pro Max version.
So Expensive, Yet People Still Buy The iPhone?
About 70% of Apples profits come from the iPhone. The average cost to make an iPhone is $370 and Apple sells it at an average price of $720. To support this high price, Apple has positioned their products as luxury devices.
Simply put, everyone who has a smart phone has one. With the combination of great advertising and the creativity to fulfill people’s desire to own a beautiful and easy to use computer in your pocket, there’s a reason why people are willing to pay higher prices every year the a new phone comes out.
How Does Apple Make So Much Money?
Now that you understand Apple’s Business model, here are a few more things that you probably already knew, but never really paid attention to. This is genius.
- Along with Apple’s walled software garden, its brand loyalty makes the iPhone ideal bait for growing Apple’s service business. Apple’s services are things like the App Store, iTunes, Apple Music, iBooks, Apple Care, and Apple Pay.
Because Apple integrates all of its services in the most simplest form, from iCloud storage to iMessage to all of the other different Apple Products from the iPhone, iPad, and MacBooks, people love the simplicity so much, why would anyone go to or go back to an Android?
- Apple also makes extra cash from Apple accessories. You notice how they took out the earphone jack? Yup, that was intentional. They also took out the USB port, so now you have to buy a separate attachment or accessory to plug in your USB drive.
Apple wants you to buy more and more products and because we as human beings, we are natural consumers and most of us have the desire to own nice things and have the newest items on the market, we spend all our money on these devices.
- Another sneaky tactic that Apple does with its products is limit the amount of storage each phone can hold. You cannot add more date or a memory card to it. If you need more memory or data storage, you must upgrade to a new phone.
For example: knowing that you’ve used up all of 128G on your iPhone 8, you will be compelled to get the more expensive iPhone 10 plus that has 256G.