Price can be a powerful signal… and potentially not in a good way if your product is“low cost”
In a Harvard Business Review article titled,“Why you should charge clients more than you’re worth,” consultant Doris Clark claims that“price is often a proxy for quality, and when you put yourself at the low end, it signals that you’re unsure of your value — or the value just isn’t there. Either can be alarming for prospective clients.”
We’re actually pretty clear on what our value is. Math helps.
If we can help a person start investing at 25 instead of 35, they stand to retire with twice as much in the bank. My slightly over-simplified example below should help illustrate.
A 25-year-old(let’s call her… Yolga) making $60k annually, invests 15% of her income into the stock market every year. Her investments average a 7% annualized return until she turns 50 and then 4% between 50 and 65(fewer stocks, more bonds, less risk, lower return). She will enter retirement with about $1.5M and hopefully a big smile on her face.
If Yolga started to invest at 35(all other things being equal), her retirement fund would be approximately $730k. Gulp. That’s two bottles of Château Cheval Blanc 1947 she's not gonna be drinking!
Our goal is to help young people take advantage of time in the market now, so they can enjoy an additional ~$600k(rough estimate after taxes) when they retire.
screenshot from a text with a close friend(she’s a nurse, which explains why she woke up 2:30pm)
To take this example one step further…
There are approximately four million 25-year-olds in the United States, 40% of whom can afford to invest some money but aren’t sure how to start.
If we can empower them to start now instead of at age 35, there will be an additional $960 billion in their retirement accounts(think of how many houseplants they’ll be able to afford!). Oh, and another 4ish million people will turn 25 the next year. And hopefully we can help that group too.
Back to my main point: $5 is the magic number.
As a team we discussed all kinds of pricing schemes(we weren’t“scheming” mind you)
Us, discussing the $5 price point of our product
Ultimately, $5 just felt right. If we want to eliminate the financial literacy problem costing young people hundreds of thousands of dollars in retirement, we have to be accessible to every young person. Asking you to sacrifice one 20pc order of Chicken McNuggets was the way to go.
If $5 is too much to ask right now… send us an email and we’ll figure something out.