Travis Nichols on January 15th, 2014
Nathan Barry is a designer, writer, and teacher. He’s the author of The App Design Handbook, Designing Web Applications, and Authority. He’s the founder and designer of ConvertKit, and he was an early seller on Gumroad. Two of the most redeeming (and valuable) qualities about Nathan are his transparency and his desire to teach others. Here’s how much I made doing ___. Here’s how I did it. Here are some things you can do.
Nathan recently spent a few days at Gumroad HQ, and he dispensed an amazing amount of insight and experience. We’ll be releasing it over the next few months like the controlling board of a precious metal monopoly. The best way to stay apprised of these types of updates is to sign up for our weekly newsletter. We’re bringing you all sorts of tips and tricks to build your audience and sell smarter. Sign up through the links on this page.
Here’s Nathan Barry.
A little over a year ago, while trying to find a platform to sell my new design book on, I got an email from Ryan Delk. In his well-crafted pitch to get me to consider using Gumroad he ended with, “and the UX is exponentially better than other marketplaces.”
As a user experience designer I had to check It out. Marketplaces and payment providers are famous for having a terrible checkout experience. PayPal tries to trick your customers into thinking they can’t pay with a credit card and e-Junkie looks like the experience hasn’t been improved in a decade.
After using the checkout process for the first time my professional opinion was, “wow!” The “exponentially better” part of Ryan’s comment was an understatement. Gumroad’s checkout process was—and as far as I know, still is—the best checkout experience anywhere on the web. Since my book was about designing great software it would be hypocritical of me to use a payment with a second-rate checkout process.
Anyway, that’s the story of how I came to Gumroad. In the 16 months since that initial conversation with Ryan, I’ve sold $355,759 worth of books on Gumroad. In the process I’ve learned a few tips that I’m certain can double your revenue—no matter what type of product you are selling—if implemented correctly.
Lesson 1: Be able to contact your customers
Before writing books I made all my product revenue from selling iPhone apps on the App Store. Each day I would look at the previous days sales numbers. Unfortunately that’s all they were: numbers. I would be informed “You sold x copies of this app in these countries.” That’s it.
Without customer information I had no way of contacting any of my users. That meant notification about updates, asking for feedback, and any other contact had to be done through custom code through the app—something I hadn’t taken the time to build.
That’s when it really hit me: the people who bought my app weren’t my customers, they were Apple’s. Apple was just giving me a little bit of money from each purchase, but not the customer.
I often get asked why I, as a full-time author, don’t sell my books on Amazon or the iBooks store. The biggest reason is the lack of customer information. I want to sell directly to my customers so that I can email them to ask how they like it, know who is buying it and where, and be able to build on that relationship to make my next book launch more successful than the last.
Through Gumroad I get all the information on my customers—I can teach them through other emails and promote future products to them. Without that, I don’t think I could have built a business to the same level that I’ve been able to.
Lesson 2: Price based on value
How much is a book worth? The most common way to answer that question is by comparison. Print books often retail for $20, but Amazon will sell a copy discounted down to $14. Mine are just digital, so we should probably knock at least $6 or $7 off just because ebooks aren’t worth as much.
So is your newly published ebook worth $7? Well, those ebooks at that price are by professional authors from major publishing houses. You’re just a first time author who hired your mom to proofread your book (luckily, my mom is actually a professional proofreader). So your book should be priced at just $3 or $4.
But remember those stories of authors hitting it rich on Amazon by selling their books for $0.99 or $1.99? You want to sell tens of thousands of copies, so is that the right price?
Seriously, stop thinking this way.
Whether you are selling books or any other product, comparison pricing like this is a great way to be a poor starving author/artist/creator/etc. Don’t do it.
What’s the value?
A designer or developer at a software company who buys my book Designing Web Applications can get thousands of dollars of value out the ideas in the book. Just implementing the ideas on designing first-run experiences could radically improve their trial retention rates and generate a lot more revenue. So is that self-published book worth $2? No, it’s worth hundreds. Maybe not to everyone, since people working on small projects without many users wouldn’t get the same value out of each improvement, but it’s okay to price some people out of the market.
A Photoshop plugin that saves a designer 10 minutes every work day isn’t worth just $15. If it’s core to workflow, you could easily charge $50. After all, good designers charge over $100 per hour for their time, so a good $50 plugin would pay for itself in a couple days of saved effort.
If your product is focused on business customers you can—and should—charge far more than you think. Since my business is teaching and training I like to think of it like this:
You can charge premium rates if you are teaching a skill that makes money to people who have money.
I teach design to professional designers and developers. They use those skills to make their companies easier to use and more profitable.
Whereas if you were to teach knitting to middle-school kids, they not only don’t use the skills to make a living, but also don’t have money to spend on your product.
Value based pricing doesn’t work as well when focused on consumers (they tend not to not think about purchases based on a return on investment), but you should still probably increase your price to focus on the higher end of the market.
A small audience
I’m going to make an assumption that you don’t have a massive audience (10,000+ fans) that is eager to buy everything you produce. More likely you are in the early stages of your online business empire and are working on those first 500 or even 100 followers. The percentage of any following that will actually buy is quite low—so you need to maximize revenue from each one.
If only 10% of your audience will actually buy from you, I doubt lowering the price by a couple dollars will encourage significantly more people to purchase. Conversely, in most cases doubling your price won’t cause you to lose 50% of your sales—meaning you come out ahead on revenue.
Pricing is something that is flexible and hard to get right. Experiment with it. But if your goal is to maximize revenue think about increasing your prices.
Lesson 3: Build a relationship through email
When I first started writing this lesson I wrote it as “Build an email list.” But that’s actually not what I want you to do at all. Instead each seller should be able to build a relationship with their customers over time, and email is the best platform I know of to do that.
The first step is to know how you are going to deliver value on a regular basis. In most cases, teaching is the best way to do this. For my books I teach design and marketing through blog posts, but just about every product has skills related to it that the owner will want to know. People love to learn, especially from a source they know and trust.
Let’s go with the Photoshop plugin example again. What does someone who is a good customer for a Photoshop plugin want to know? Well, how to use Photoshop for design of course!
So on your email list you are going to regularly (every week or every other week) share tutorials and resources to help designers. Once you have a basic strategy in place you need a way to stay contact your purchasers.
Choose an email marketing provider such as MailChimp, Aweber, or my own ConvertKit (best for quickly building an audience), then export any existing customers from Gumroad and import the list into your tool of choice.
If you don’t already have customers then you are in the pre-launch stage—and email works great for that too.
Using email to launch a new product
The first step when launching a new product is to put up a landing page with basic details about the product and an email opt-in form so that visitors can find out more information. After promoting that page like crazy (email friends, submit to link sites, share on Twitter, ask friends to share on Twitter, etc) you should have a handful of subscribers.
The next step is to write really detailed blog posts or tutorials teaching that content we already established your target customer wants to learn. I’m not talking about short list posts or fluff pieces—these should be detailed posts that deliver a lot of value and are worth sharing. 1,000 words is the minimum, but my best posts are usually 2,000-4,000 words.
At the end of each post should be an email opt-in form for your new product. The goal is to convert as many people as possible to get on your list. That’s where you will get a much higher conversion rate.
By promoting the landing page and more blog posts you will grow your list, but remember, we want a relationship. That means providing value on a regular basis.
So, take that blog post you just wrote and send it to your email list. They expressed interest in your product and your content is good, so why wouldn’t they love it? The best part is you can ask everyone on your email list to share it, then your list will grow even more.
Repeat that process several times. Write a new post, send it to your email list, use the post to grow your list, then start writing the next post.
When working on my first book, three really detailed tutorials—plus a lot of promotion—was enough to build an email list of nearly 800 subscribers. Enough to make $12,500 in sales on the first day.
Though the best part about email isn’t that first launch, it’s how your list makes your next launch so much easier.
Lesson 4: Sell in multiple packages
What if I told you one simple method could triple your revenue—would you pay attention?
I’ve used this method to triple revenue on two book launches and more than double revenue on two more. It does take some time to implement, but not nearly as much as creating the rest of your product.
What is it?
Selling in multiple packages.
You know when you go to subscribe to a web application and it asks which plan you would like? That’s tiered pricing—or multiple packages. They are segmenting their customers to allow those with larger budgets to pay more and get more value from the product. It’s common in software, but you can apply it to any other kind of product as well.
I do it with books. I sell just the book for $39 (that’s me pricing based on value), then for $99 I include video tutorials, expert interviews, and some other resources. Finally at $249 I include a top package that has even more resources (Photoshop files, code samples, and anything else that will save the customer time) as well as double the interviews and video tutorials.
I already spoiled the surprise by saying this method doubles or triples revenue over offering just the book at $39, but let’s look at exactly how.
For my book Authority (which is on exactly how to write and profit from your own technical ebook), I used the package method mentioned above. When looking at the sales count (number of copies sold) this was the distribution between packages:
The Book ($39) — 48%
The Book + Videos ($99) — 26%
The Complete Package ($249) — 26%
So just the book by itself sold nearly 50% of the copies. So was it worth doing the other packages? Definitely! Here’s the breakdown when we focus on revenue:
The Book ($39) — 16%
The Book + Videos ($99) — 24%
The Complete Package ($249) — 60%
Despite making up nearly 50% of revenue, the book only accounted for 16% of revenue. The real revenue came from the 24% of sales in The Complete Package that made up 60% of revenue!
Without excluding anyone
Raising prices almost always increases revenue. So why don’t we just keep raising prices to ridiculous amounts? Because each time you raise the price you exclude some people from buying. For some products that’s good: low paying customers have higher support costs in general. So in that case getting more revenue from fewer, higher quality customers is a good thing.
But with my books and training I want them to still be accessible. While businesses have plenty of money to spend, I don’t want to price freelancers out of getting my training.
That’s the beauty of tiered pricing. You can get all the benefits of selling a high priced product (the top package) to customers who have money (real businesses), but people just getting started can still afford a version of your product (the lowest package). Something for everyone—and you maximize revenue from the entire market!
One more thing
A really important, but very in-depth, topic I didn’t get a chance to cover is product launches.
I’ve launched a book to an email list of 800 and sold $12,500 in the first 24 hours, and I’ve also launched a design workshop to an email list of over 5,000 and sold zero seats. For the book I got the launch sequence right, and for the workshop I got lazy and screwed up the launch.
A good launch takes time to go through, so I’ve written a free, ten email course called Mastering Product Launches. It starts with topics like how to gather subscribers and build interest and finishes with using urgency to drive even more sales.
Sign up for Mastering Product Launches.
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