Internet Marketing: The Selling Cheap Technique
Throughout most of the history of internet marketing marketers have been creating information products in the form of documents, eBooks and software of varous kinds. The idea being to sell these products to internet surfers and therefore to make an income from the sale of these products.
The 'High Ticket Item' Marketing Model
Almost without exception internet marketers use the 'Premium Product' model to market their products. They treat them as if they were premium commodities and charge high prices expecting low-volume sales. So an eBook can retail for anything between $39 and $300; a software system will retail for anything between $97 and $997.
This marketing model is based on the premise that very few units will be shipped but that the profit on those units sold will be sufficient to maintain the marketer's monthly income. Most internet marketers will also have a number of products in their portfolio and these products will be heavily promoted using systems such as Google's AdWords system. As a result the overall profit from the units shipped (over and above the spend on advertising campaigns) must be sufficient to maintain the marketer's income.
Does this marketing technique work? Well, obviously it does as otherwise the marketing strategy would have died out. But it has several drawbacks. The cost of many of these products to prospective customer means that few units are sold every month. In addition, any sales require strong ad copy to entice the purchaser to buy what is a high-ticket item. After all if you're going to shell-out over $100 for sometihng you will need to be persuaded of the perceived value of the item. But you also need to believe in the value of the item after you have purchased it. Because if you buy a high-ticket item and you are not satisfied then you will demand to get your money back. So, selling electronic (software or eBook) items at high prices also incurrs significant risk that the purchaser will want a refund on an item that they hare not satisfied with. This increases the seller's cost and lowers return. So, not only do you need to aggressively market your product, you also need to maintain a support network and continue customer care, which once again increases costs.
Indeed, the costs of customer care, marketing and after-sales are one of the reason that many marketers go for the 'High-price Ticket Item' strategy for internet sales.
Is there an Alternate Model?
If you look at the bricks-and-mortar (ie non-virtual) marketing and retailing world then you might be surprised to know that the #2 most profitable company in the US is WalMart... They have a pile 'em high and sell 'em cheap plicy that sells the things that people want at a price they can afford. Profits on a single item are small but the sheer volume of items sold ensures that overall profits are extremely high. In truth this should be a model that's eminently suited to the internet. After all, how much does it cost to create an eBook? Now look at the real quesion — how much is that eBook really worth? After all if a hardback book costs $30 on Amazon (and you actually, really, have that book in your hands) how much do you realistically think an eBook is worth when it's only virtual and the buyer physically has to print and bind it if they want a physical copy.
There is also the psychological value of prices. Most buyers think that anything below $10 is cheap (hence the profusion of $9.99 offers on the high street). Anything below $30 is considered 'reasonable' as long as there's a reason to buy it, but anything over $30 is 'expensive'. This is why internet marketers selling their products as 'high ticket price items' need the employ the hard sell technique to shift their products.
Why then hasn't the WalMart model taken off on the internet. Why not sell your products for, say, $8.00, create many of them and just watch the money roll in?
Pile 'em High, Sell 'em Cheap on the Web
If a technique works in the real bricks-and-mortar world where overheads are much higher then the same technique can definitely be applied to the virtual world of internet marketing. At least, on a conceptual level I was certain of that. It was only when I began the research for this article on models of internet sales businesses that I saw how scarce this sales model was in the virtual world. Then I came across the $7 Secrets eBook by Jonathan Leger. The eBook costs just $7 and it comes with php software that allows you to easily start marketing your own $7 products and the whole package is more than worth it for the software alone. So, I urge you to have a look at the $7 Secrets page now. Remember, just buing this for the software that comes in the package will more than make up for the $7 cost.
Obviously therefore there were people willing to use the "Pile 'em High, Sell 'em Cheap" model on the Web. It wasn't just a fantasy of mine. Moreover there was an affiliate site designed to just sell such products (to find out more click on the banner below):
I urge you just to look at the site and see what's there. Everything sells for $7 and affiliates make 75% of all sales with 25% going to site manager. There are almost no overheads for the hosting site as the products themselves are hosted by the original author. Though the original author effectively gives their product away to this site they make money by selling other peoples' prducts through affiliate sales.
Basically it's a rather brilliant but low cost business model and I'm sure that there will be many copy-cat versions popping-up on the net quite soon. There'll definitely be one appearing on this site!
What's happening here is the WalMart business model in action. Gain as many products as possible, sell them all cheaply and take just a small margin yourself. You affiliates do the hard work of promoting your site and the money you make is pure profit with little or no intervention on your part.
Be clever, exploit this sales methodology now!