Pat Flynn
Part of my mission here at The Smart Passive Income Blog is to teach you not only how to succeed online, but also how not to make the same online business mistakes as me. I’m not happy when I’ve learned I made a mistake, but I am happy to share them with you.
Every businessperson and blogger will have their own stories. Here are mine. I hope you find them useful.
1. Not Starting Earlier
I’ve said this before, and I’ll say it again: Every day you don’t have something online for sale is a day of potential profits lost. This may seem obvious, but what isn’t obvious is how much money that could actually be.
I started selling my ebook study guide on my exam prep blog in October of 2008. In my first month, I had earned a total of $7,906.55. Now, please understand that I had this blog up and running for a number of months beforehand, which enabled my site to rank high in the search engines, as well as help build a community of loyal followers.
Anyways, my income kept growing each and every month since the launch. It went from $7,906.55, to $9,782.89 in November, and even peaked in March of 2009, which alone earned me a total of $30,328.48. I felt very lucky to have landed on a great niche and create a product that proudly and honestly served it’s consumers. However, let’s rewind for a second and get into my head.
I had launched my ebook in October of 2008, but it was an idea I had in my head for over 6 months. As soon as I knew traffic was coming into my blog, I knew that I had the potential to write and sell a book for this market—but I didn’t. I waited 6 months to finally do it, and it took 5 of my blog readers to tell me they would pay for a study guide if I wrote one myself. 5 people had to tell me!!! No one should of had to convince me. I should have convinced myself.
Here’s a screenshot of some of those generous comments:
If I had launched that eBook just 2 months earlier, I would potentially have earned $50k to $100k more, just from those two months! Maybe instead of peaking at $30k, I would have peaked at $50k or even $75k in March of 2009.
It’s hard to understand exactly how much more I would have made, so let’s take a look at similar scenario that can provide us with some concrete numbers: compound interest and saving for retirement.
If you’re 25 years old, and you make $50,000/year and contribute 10% ($5,000) a year to a 401k plan that earns 9% interest, you’d have $2.3 million in your account by the time you’re 65.
If you wait just 5 years (what’s 5 years going to do, right?), and contribute the same amount each year getting the same rates, you’d only have $1.4 million by the time you’re 65. That’s almost a million dollars less, just from starting 5 years later.
That’s $456 a day!
If You Haven’t Started Yet—Don’t Worry!
Although I wish I had started earlier, I’m glad I didn’t start later.
The truth is, we can’t go back in time and there’s no use in beating ourselves up over not starting earlier, no matter what it is we wish we did. You are here now, and you have the option to do whatever it is you want.
“The only too late, is tomorrow.”
2. Under-pricing
When my first ebook was completed, I had a hard time trying to decide how much I should sell it for. I was scared of pricing my guide too high because I didn’t want people to be turned off by a higher price point. So, I began selling my guide for $19.99.
There were other guides in the market (all hardcopies), which were anywhere between $50 and $125, so I thought this was an excellent price that would definitely catch people’s attention. Plus, since my guide was an ebook instead of a hardcopy, I figured they wouldn’t be willing to pay as much as a hardcopy anyways. As a side note, I didn’t sell physical products because I wanted to keep my business model as passive as possible. Printing, packing and shipping products definitely is not a part of that model.
I was selling a decent amount of ebooks, but then I received an email from one of my customers saying that he thought my guide was priced way to low for what it was worth. He emailed me to thank me for making the guide virtually free, but he also added that if he were in my shoes he would sell it for more. Again, it took another one of my readers or customers to get me to take action. I immediately updated my ad copy and sold the book for 33% more, for $29.95.
Within the same time span, I didn’t sell the same amount of ebooks—I had sold about 30% more! The higher price attracted more customers, which was a weird thing to me, but it make sense. When people shop, they immediately conceive some kind of value in their head about a product just based on the price alone. If you went shopping for furniture and saw a dresser for $5.00, you’d probably think something was wrong with it, or maybe it was cursed or something. Well, when I raised the price of my ebook, it was seen as having more value.
Pricing is always a difficult subject for people, especially for electronic products that are often free to make. Most physical products are priced based on production costs, materials, labor, overhead, etc., so it’s hard to come up with a price point for something like an ebook. Looking back, I probably lost out on a few thousand dollars before I switched the price. The crazy thing is, I probably could have raised the price even higher, and potentially have earned much much more.
Don’t sell yourself short.
3. Taking the Lowest Bid
Back in late 2008, after my exam prep business was doing really well, my buddy and I decided to go into the iPhone app business together. We had a lot of novel ideas and decided to outsource the development of the applications via elance.com.
We received about 15 bids for our first application, iPopit, which ranged from $3500 to $6000. We looked at all of the individual bidders and read each and every one of their profiles and reviews from other clients. To our amaze, the one with the best reviews and the most feedback was the profile that bid $3500.
After a short interview with the company’s owner, it seemed like we had a great match, so we awarded that company the project. We were so excited to get started.
After a couple of weeks we checked to see how the app was coming along, and it seemed like everything was going well. We saw a video of what it looked like, and it wasn’t close to being finished, but we were totally satisfied at this point. We couldn’t wait to get the final product into the app store for sale as soon as possible.
A month later, we received a completed “beta” version to test out, but it didn’t really meet our standards. We sent the developer a list of features that seemed to be missing and the changes that needed to be made.
Two weeks later—”still working on it.”
One month later—”we’re almost done, still working on it.”
Another month later—”it will be finished tomorrow.”
Then tomorrow came—”give us one more week please.”
We were so upset! An application was supposed to be in our hands and in the app store 2 or 3 months ago at this point! All I could think about was: every day you don’t have something online for sale is a day of potential profits lost.
Apparently, they weren’t good at going back and fixing things they already coded. It was more complicated than starting over, and I wouldn’t be surprised if that’s what they ended up doing, considering how long it took them to finally get us the application we had specified. We went though a couple more rounds of revisions, but better managed our developer this time, and we were finally able to get a completed app that we were satisfied with—5 months after awarding the project. Ridiculous.
We learned a a valuable lesson here: You get what you pay for.
If we had awarded the project to one of the higher bidding profiles, the application would have probably been done a lot faster and the end product may have been even better too. Although the team we picked had a lot of raving reviews, after closer investigation, they never completed an application that was quite like ours, with animations, use of the accelerometer, and timed scores. Their low bid came as a result of really wanting to try a more complicated application. Unfortunately, this was at our expense.
If you’re taking bids on websites such as elance.com, rentacoder.com, or odesk.com, be aware of the lower bids. They are low for a reason.
4. Not Testing as Much as I Should
I think I’ve dedicated 4 or 5 posts on this blog just to testing and how important it is. I’m not going to go into detail about testing because I think you get the main idea: in order to optimize your online business or blog, you should be running split tests 24 hours a day, 365 days a year. Just a half a percent difference in sales or lead conversions can add up to hundreds of thousands of dollars over time.
5. Not Adding More Products
This one is huge.
Going back to my exam prep website, you already know I launched a successful ebook. A few months later, I also added an audio guide, which I sold separately and in a package with the ebook at a discounted rate. It was a hit, and it’s exactly what skyrocketed my monthly income to averaging nearly $25,000 the months prior to the new version of the exam coming out.
Looking back, I could have earned so much more if I created videos to go along with my existing products. It would have been really easy too. I could have even used the audio I already had and sync that with a power point presentation, for example. I sold nearly 2000 ebook + Audio guide packages at $44.95. Imagine adding video in there and selling it at $69.95.
Hmm…$90k vs. $140k.
Or how about selling it at $99.95 (to go along with mistake #2)?
Hmm…$90k vs. $200k.
And then adding a webinar and two teleconferences at $149.99?
Hmm…downpayment vs. buying a house without needing a loan.
Get the picture?
There are a couple of important things to know that go long with this:
First, people who buy from you once are more than likely to buy from you again. You can add products to your arsenal, shoot an email out to your existing customers, and you’ve got yourself some sales, for sure.
The second thing is that bundles sell. Combine two or more products together, offer that at a discounted price, and immediately your potential customers turn into actual customers because they notice something is “on sale.”
Not adding more products was a costly online business mistake.
Mistakes Are A Part of Life
Your business or blog grows with you over time, and as it grows you’re going to make some mistakes, just like me. If you can follow these three rules, you will be successful no matter how many mistakes you make:
- Learn from others so you can avoid making the same mistakes as them.
- Put away your pride and admit to yourself when you do make a mistake.
- Learn from your mistakes so you’ll never repeat them again.
Have a great week everyone!
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