What Is "Stacked Income"?

Stacked (Photo credit: emilio labrador)

An Introduction to Stacked Income Let's say you own a paint store. Your store sells quality paint at fair prices. You understand that your success relies on keeping your customers satisfied, so you do everything you can to provide the very best service. Your advertising is effective and within a few months you have a number of loyal customers. These are professional painters who buy a lot of paint, so your store is profitable. Then one day you decide you'd like to increase your profits. How will you accomplish that? You could open another paint store in the next town, but that would require leasing another building, finding and hiring someone to run the store, and spending more money on advertising. As you can see, that approach would cost a lot of money and require a lot more effort from you. Instead, you decide to add another product line in your existing store. You contact a paintbrush company, pay them some money, and they come to your store and set up some nice displays with quality paintbrushes. Soon your customers are buying paint AND paintbrushes from you. Paint is your "primary product" and paintbrushes are an "add-on product". You already had an income from your primary product sales. Now you've stacked another income on top of that income by selling an add-on product that your existing customers also want. How much extra work was that for you? None. Your profits increased simply because you arranged to provide another product to your existing customers. Could you do that again? Could you have another Stacked Income? Absolutely! Suppose you decide to add drop cloths and rags as another product category. The exact same customers who were already buying paint and brushes could then also buy the drop cloths and rags they need. That would give you another Stacked Income. It would probably cost you a little money for the additional products, but your profits would increase (again) without you doing any more work, so it would certainly be worth it. Then you could add ladders. That's another Stacked Income. Then paint sprayers. That's another Stacked Income. See what's happening? You're earning more money without doing any more work! You haven't increased your advertising or your labor costs. You didn't need to open another store and find more customers. You simply provided your existing customers with more products that they need and want, and your business became more profitable. In fact, with each new add-on product, your business became more profitable. How many add-on products can you have? Bernie Marcus and Arthur Blank applied the concept of Stacked Income by offering customers 40,000 add-on products and transformed one lumber store in Atlanta, Georgia into a $90 billion retail empire called The Home Depot. Sam Walton applied the concept of Stacked Income and 120,000 add-on products later, what began as one little store in Bentonville, Arkansas is now the largest retailer in the world with almost $1 billion in sales every day. Along the way, Sam Walton became the world's wealthiest man. As I mentioned before, that's Stacked Income in its most basic form. In its advanced form Stacked Income is even more powerful than that!

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