Nice move with the aweber email John.
Thats a great tip I shall put away for a rainy day

I’m putting a new book together John and would be rather honoured if you would contribute.
As I have always seen you as a expert in your field your comments would be appreciated.:-)

Its been launched on the WF today so its hot off the press
http://www.warriorforum.com/forum/topic.asp?TOPIC_ID=194131

Kind Regards,
Mick Menesse
http://www.Easyincome247.com

“So now you know why so many marketers tell you ‘the price is going up‘ or ‘time is running out‘. They do it because it works.”

Its also a scam. The reason behind why real prices go up has to do with demand and supply. When there is reduced supply, or the operating cost of producing the content goes up, then the sales price nominally goes up.

Here in Internet Marketing land there is no real scarcity of resource. An ebook is an infinite resource in that as many copies can be made as needed. So there is no real reason to have a price increase – its just an artificial tactic that scares people into buying a product they may not really have wanted to buy in the first place.

At some stage, these deadlines are going to be widely seen for the scam they are. They are completely artificial.

“Lets say I wanted to launch a product and price it at $67 but I decide to offer it to my subscribers for $37 for the first 7 days. How can this be scamming someone? Sure, I may do this to initially have a lot of sales but this is not a scam. It is a genuine offer to my subscribers.”

The way you word your argument inflects the possibility that the true price of the product is $67, and you are offering a benefit to subscribers by generously offering it for $37. As you well understand, this is neither economically accurate nor a fair reflection.

There is nothing genuine by introducing a false impression of scarcity with a product that has zero incremental costs. Ebook authoring is like software development – the development costs are upfront, and that cost is made back over the lifetime of the product. The incremental cost of a unit is 0 because it doesn’t cost you anything to reproduce the product.

Of course, there’s a useful advantage to offer a subscriber-based price, but the time period is completely artificial. It creates an illusion of scarcity of resource, and you know quite well that there is no such scarcity.

“But the cold hard facts are that having an introductory offer does lead to more sales. And that’s what I and most readers of this Blog wants.”

There is nothing revolutionary about this. Firstly its demand and supply econonics – the lower the price the higher the demand. But where you get extra sales is by creating a scarcity of resource — in the real world this is done based on economic factors like per item manufacturing costs, loss leading, warehouse and transit costs, product depreciation. Ebooks have none of these factors, so the introductory period is a falsity (there’s no economic sacrifice, but one is implied). Its deliberately done by internet marketers to create a false sense of scarcity which forces an increased demand before the ‘deadline’.

Who gains by this: you do. Your fellow product marketers.
Who loses: your customers – over time they will see through your cynical ploys and tactics. This false scarcity is nothing more than a cynical way of increasing short-term demand.

You may couch this as a way of rewarding your subscribers, but we know full well this is a cynical ploy for generating a short term income stream based on scarcity of resource rather than on a quality product. Its not the way to build trust with your audience.

John,

Excellent blog by the way…great to see how it’s done.

I do have a question….why do you submit your articles to that particular site? It has Pagerank 3 compared to others that have 5 or 6?

I can see both sides of the argument, however I can’t agree that offering something at a pre-launch price is a scam.

I can see where you are coming from, however I think it’s important to differentiate between a pre-launch price that will be increasing to a new price and a product that is already on sale to the public that is also going to “Go up in price at any time due to xxx”

The idea behind a small pre-launch at a discounted price (like in this case) is normally to gather testimonials and feedback of the product before you offer the product to the masses. I think you’ve got to remember that the product in question was only offered to a very small, carefully selected set of people at the pre-launch price, it wasn’t available to the general public.

The product has now launched to the public and is priced at $37, the pre-launch price of $17 is now no longer available. I don’t think that anyone who purchased the product at $17 will in any way feel like they have been scammed?

“The product has now launched to the public and is priced at $37, the pre-launch price of $17 is now no longer available. I don’t think that anyone who purchased the product at $17 will in any way feel like they have been scammed?”

Or do the people that are purchasing at $37, and have subsequently found this blog and thread, feel like they have been scammed because they were not able to get it at the $17 price?

That’s kind of like going to your favorite home electronics store and purchasing a product for $50 and finding out after the fact that two weeks ago you could have had it at $40. Is the store scamming you? NO! It’s called advertising. Is there a shortage of that product now that makes the retailer raise the price to $60 instead of $50? Absolutely not!

I don’t think the theory of supply and demand applies in IM. I may be way off base saying that, and if I am, somebody let me know.

Anyways…..my rant……and a blatant plug for my upcoming launch of my ebook site:

http://www.5star-ebooks.com

Thanks,

Ron

If marketing is a scam….
Well I’m sorry to have to inform people this….

But the whole world is scamming you all.

It has been pointed out that ebook’s carry no continuing cost??
(I would suggest that maintaining a website, autoresponder, future product development etc all carry costs)

But leaving that to one side (and the fact that if I wrote a product – then I would like to decide how much I charge regardless of my cost to distribute the information)..

Just focusing on the ‘real world’ whre scarcity is supposedly formed by — well — things being scarce?

I find that a ridiculous statement when in reality nothing is really scarce – but as with all things – the get stockpiled waiting for demand etc.
Or monopolies (that don’t really exsist!!??) control the prices….

Take any software sold by pc world or even music CD’s – Films on DVD …. don’t these all cost less than a pound to manufacture?

So why the big price differences?….. why does The Disney coporation only release limited numbers of it films every 7 years?

Why does DFS have a sale every other fortnight – or so it seems?

It all has to do with 1) Marketing and 2) the product creators deciding on his/her price.

As John has said you don’t have to buy anything you don’t want to!

____
Well apart from mortgage insurance – where there seems to be a ‘Boys Club’ that fixes conditions and prices — why – because they can!
And there is nothing we can do about it – it’s compulsory!!

We still have to buy and pay whatever is quoted!

But no-one has to buy a single solitary thing online.

And without marketing Online or Offline – nothing would be sold – and the world may just come to a standstill

Now that would be an interesting experiment.

Another passing thought….. the cars of the rich and famous — High priced due to low numbers produced???????

OR low numbers produced to maintain high prices ?????????

Marketing.

NO – I agree – the whole world is scamming everyone in it.
And what about those religious organisations?

Only so many seats in the after life? — no money back guarantees there though ??

Or will I now be frowned upon – cos it’s ok to call marketers names – but one mustn’t mention religion?
And yet they market their goods and services all the time!
How come a wedding cost so much ? — A sunday service is free yet takes up more resources?

Oh… cuppa ready – must go ….reality – it will go cold …. scarcity factor at work….LOL

Randy

“Why does DFS have a sale every other fortnight – or so it seems?”

They know your Mrs wants a new sofa

I am going to reply to this as i fell that the use of the word scam is totally unjust, do you when you go to a store to purchase something and see a new product on offer say “sorry i am not buying this at this price it is a scam”? not at all, if it is something you like you buy it, or would you wait till they put the price up and buy at full price? there is no scam here at all, that is silly, introductory offers are done all the time worldwide when a new product comes along, and if John or anyone else has the integrity to offer a valuable product with a discounted offer then good for them.

then people who want it can get it at a good price.

Anne

Anne

After reading all the posts, I just had to get in here. I am a relative newby to Internet Marketing and read all the comments with interest. One thought that kept slapping my mind is, “Why is Internet Marketing and offering a launch discount that will expire at some time such a nasty concept to someone wanting or trying to be an Internet Marketer?”

All sales, online, offline, late-night infomercials, car sales, groceries, whatever, are responsive to supply and demand. If they price it too high, no one buys it. So they drop the price to attract buyers. All marketers of any venue use the same tactics to get customers and promote sales.

They take into account costs for advertising, shipping, shelf space, labor…an endless list of cuts out of the sales price. Where is the difference if an ebook author spends weeks, or longer, researching writing the ebook, designing covers, web pages, setting up a maze of support tools, including affiliate stuff? There isn’t any difference.

So, Paula and most of the others here offer a discount to their loyal customers when they launch a new product. So What? The ethical Marketers state when and why the price is going to change and then they do it. The grocery stores have sales every week and state how many days the sale price is good for. Where’s the difference?

John, I think, said, “If you don’t like it, don’t buy it,” or something to that effect. I believe Dan and Randy echoed that attitude in their own way. I agree with them. Why would anyone buy something they didn’t need, want, or couldn’t afford?

Why would any Internet Marketer here even wonder about proven sales and marketing techniques if they plan on making a living doing the exact same thing?

Pat Graham
ghost-writer@charter.net

Hi Everyone,

That was a long thread to read!

I’ve bought the launch price editions from several people in this thread and special offers are not any way scams.

One reason to have a reduced launch price eg $17 is because we buy directly from the author.

If the item is later released on Clickbank eg at $37 affiliates get a big chunk of the money and Clickbank charge fees. Two more expenses. I end up with about 40% from my clickbank ebook.
(I make more than that on my physical products – sometimes 80% I hope I’m not scamming anyone!)

This method makes sense to me and I expect to use it myself in the future.

Thanks

Keith

Paula asks: “Aren’t all things `priced to what the market can sustain’?”

No. The monopoly pricing model tends to apply to organisations that have a monopoly or quasi monopoly. Monopoly pricing largely disregards what the true value of the product is, and prices products as high a value as they think they can get away with.

When the situation of a competitive market gets converted into a monopoly what you see happen is the price of the exact same commodity rise – largely because of the lack of competition, and the lack of alternatives or substitutes.

The XBox and Xbox 360 weren’t priced at at a price the market could sustain. The XBox undercut the current market price in a loss leader strategy, taking millions of dollars worth of losses in the gamble that the games sold would make up for the loss on each console. The Xbox 360 most certainly wasn’t priced at the price the market could sustain, because demand outstripped supply – and that is the key indicator that the product was priced below the level the market could sustain. Demand and supply.

quips Paula: “You’d have a point if that’s what I said. Here’s my comment again:“I felt my product was worth $37 at full price and, of course, this was fully researched, I didn’t just pluck the number out of the air.””

This is the sentence that appears on your sales pitch page/site:
“This is valuable stuff, and at $67 this eBook would be a steal.”

That indicates a belief that your book is worth at least that price. The wording suggests that you are offering the book below its true value, and reading the page, the minimum value seems to be $67. You then go on to justify why you are accepting a below-par value of $37.

So again, I ask you (and others that follow this practice) as a typical representative and adherent to the internet marketing pricing model, what makes you think your content is worth at least $67?

Paula, I commend you for not falling into the worthless bonus rubbish that pollutes the vast majority of internet marketing dross. There’s one positive sign of integrity in this particular conversation.

Paula notes: “I’d rather go for the `Buy one Get One Free’ in Tescos. But I bet the author and publishers make more money on that than the initial hardback”

No. Two for one offers are a mechanism for reducing stocks in a most expedient fashion, and in line with demand/supply logic. Paper books aren’t printed incrementally, publishers have print runs, which vary in size from a couple of thousand copies to a couple of hundred thousand copies. They do this to minimise printing costs by taking advantage of economies of scale. This print run forms a chunk of the pricing of the book, which determines (once profit margins are adjusted) into the cover price of the book.

Wholesalers, like Tesco, buy in bulk, and negotiate discounts which cut into the profit margin of the book. Tesco then have to store these books somewhere, and that storage entails extra costs on Tesco. So over time, faced with a stock that’s not moving quickly, the costs of storage incrementally eat away at their current profit margins since they accumulate over time, its in Tescos economic interests to move this stock off their warehouse floor and out. Hence the specials are a way of moving their excess stock out of their warehouse before the accumulated storage costs completely eat away their profit margins.

People seem surprised at the low prices the last Harry Potter book got at supermarket chains like Asda. They didn’t make a loss on the book, they just forced the publisher or middleman to give up a large chunk of their profit margin. And with that pricing, Asda were able to move their stock off the warehouse floor before storage costs became an issue. Demand and supply.

John: “If I learn ONE THING from an eBook that helps my business make an extra $100 per week how much is that information worth?”

You’re supposed to be the expert in pricing here – why don’t you answer this question?

Here’s a more direct question: How much did you, John Thornhill, pay for Paula Brett’s ebook – the copy of Operation Ebook that you read that prompted you to write the testimonial that appears on her sales page?

Interesting discussion going on here and it’s great to see that people are trying to view this from both sides.

I don’t claim to be VERY informed, but being a student of economics, I’m inclined to try and find a demand and supply relationship in IM.

Someone mentioned that the incremental cost of producing an ebook (every additional unit) is ZERO. This is NOT correct if you take into consideration the hosting, domain, advertising and other costs. What part of the price goes to paying for these things PER EBOOK is a different matter and the profit PER ebook is certainly increasing with each sale.

One important point to note is that when you are paying for an ebook, you are not only paying for the information contained there in, but also the convenience of having it delivered right at your desktop AS SOON AS you buy it (instant gratification). Many people are ready to pay more for this kind of “delivery”, rather than going to the local bookstore and buying physical books.

Is there a demand for ebooks – YES. Is there a supply function acting in IM for ebooks? YES. There is a demand and there is a supply as well but the price is not decided by them alone but also by a lot of other factors. Remember, the demand and supply function assume this: All other things being equal. This is certainly IMPOSSIBLE in any market – especially a market as dynamic as IM.

And charging a low price to the fast action takers is NOT cheating. It is simply offering them a BENEFIT for being fast.

Warmest Regards,
Sagar Mehta

“Isofarro says: So again, I ask you (and others that follow this practice) as a typical representative and adherent to the internet marketing pricing model, what makes you think your content is worth at least $67?”

It is worth any price that a buyer will put on it if the information contained inside is valuable to them, surely?

Of course, I sweated over the book, so to me it’s my baby and it’s worth loads. But, I’m not daft enough, nor even up my own backside enough to think that I’ll make loads of sales selling it at that price – I would make more sales selling it at a lower price, therefore making it more accessbile to the majority of people.

e.g. I love reading physical books, I spend a lot of money on them. My husband thinks I am mad, as far as he can see, it’s a total waste of money. Because I love books so much I think the money I spend on them is worth it.

It’s all relative. If you don’t want or need information on how to write your own eBook, then the book obviously isn’t worth $17 or even $1, and you wouldn’t bother to buy it because you don’t NEED that information. But if you do want that information, then the book is worth every penny.

My husband spends a fortune on fishing equipment and bait. I get cross as I think it’s a waste of money, I am not interested in fishing but he is – to him the money he spends is worth it.

Thank you for your commendation. I like to think that I have integrity.

You sound much more educated in the subject of economics than I. And your point about Tescos and warehouses and floor space etc. seem to make sense. But answer me this, if Asda negotiated a deal with the publishers for, say, 10,000 Harry Potter books and sold, say, 1,000 at 20 quid, making 20,000, wouldn’t it make more profit lowering the price, to, say 10 quid (which is what they actually did) and have more people grabbing them cos they were more affordable, so they sold 8,000 copies making 80,000 at a tenner?

Yes, they don’t want to lose money on the extra costs for storage, but surely they also take into account that selling a greater number at a lesser cost makes more profit than selling fewer at a larger cost?

I note your interpretation of two for one offers but what is your interpretation of the reasoning behind new products being offered at an introductory price?

Paula Brett
http://www.OperationEbook.com

Isofarro,

There is one flaw in your highly articulate argument.
But it is a global flaw, and thus fractures the foundation upon which the subsequent pragmatism of your opinions rest:

VALUE of Information.

It does NOT cost any more for Seth Godin to travel to Google to deliver a motivational speech than it would me,
(logistics being equal).
However, Google will happily pay him $25,000 for the afternoon and do him technical favors I couldn’t buy.
On the other hand, I’d be fortunate to get a tiny honorarium, dinner and a room in exchange for my presentation.

Why? It cost Godin NOTHING more than traveling downtown.

Because the information contained/delivered is valuable.

Paula’s ebook holds real value.

I understand the appearance of dubious value of bits streaming to my computer, where I use my own paper to print (or not), any “e-book”.

But this document is actionable, with specific data, indeed even a read on the culture and reality of online commerce, which I would not have possessed without it.

What do you think the average consumer spends in lifetime equivalent for the constant river of television ads in their home?
And they gain what? The opportunity to Spend.

I have benefited immensely from both electronic publications and bound matter.

Health to all,
Ed

(sorry John, I’m splitting my response into two separate comments. One to address the series of questions raised, and one to answer your specific question)

Paula asks: “But answer me this, if Asda negotiated a deal with the publishers for, say, 10,000 Harry Potter books and sold, say, 1,000 at 20 quid, making 20,000, wouldn’t it make more profit lowering the price, to, say 10 quid (which is what they actually did) and have more people grabbing them cos they were more affordable, so they sold 8,000 copies making 80,000 at a tenner?”

Depends on the cost to Asda for acquiring the 10,000 copies. It normally can be profitable, since Asda are seeking to move their stock before the cost of storage starts to significantly affect their profitability.

Paula, your point is well made – and I offer an unreserved apology to you for the incorrect accusation that what you were doing was a scam. Thank you for your time, your patience and contributions. I think you’ve added a great deal of value to this blog – and that’s one of the great pluses of blogging, the value is defined not by the original author, but by the conversations it creates, and the relationships it forms.

My argument – initially badly outlined – isn’t about a change in price. Its about the implied reasons behind the change of price (the implication that an ebook is a scarce resource, and that there are finite copies of it). You’ve been the only one in this conversation that’s picked up on that, with your earlier comment ‘Nor did I say anything like `only 50 copies left’ as many marketers do. ‘ – there you’ve hit on the purest example of what I strongly object to.

I note with curiosity that, apart from yourself, no other internet marketer has expressed a position on this. That in itself says nothing about Internet Marketers themselves, except that only one had the integrity to stand up firmly and clearly against this practice. I note that the argument about raising a price of a product has been vehemently defended multiple times by different people in at least two separate threads, so the disparity in volume is unusual.

Ed, your response is very interesting. What Seth Godin represents is a well known speaker on a speaker circuit. None of the people in this conversation are as well known on the speaker circuit as Godin, so I contest the value of ebooks being based on the fame of the author. Maybe Internet Marketing is so niche that its an isolated community?

Sagar, what you list are up-front costs that are independent of the number of ebooks sold. I’m interested that hosting costs have been brought up a few times – particularly because decent hosting is fairly cheap these days. You guys are buying cpanel accounts that allow multiple domains right?

(Seriously, if you are buying separate hosting accounts for every ebook minisite, you throwing money to the wind. A simple cpanel account should allow you to host your main site, plus enough domains to cover all your ebook projects to the extend that the outlay for a mini-site is very close to zero. Well, it costs me zero to host a new website right now, and has been that way for at least 5 years or so. Its not like your buying brand new hosting for an ebook – what’s an internet marketer without a presence on the web?)

Sagar, you make a great point on the instant gratification.

A quick UPDATE! The post on the Warior Forum has now been deleted. I wonder why?

I thought on multiple occasions John says to use an ebook and split it up for your auto responder as help to New Marketers. I mean I could be wrong but why wouldn’t you practice what you teach?

This is not a personal attack on anyone but as someone who has followed John and purchased a few products from him it does appear he is trying to help. I believe even in this blog his main goal was to show people to, DO something… DO anything… JUST build your business.

Oct 25th ***I am doing nothing special, there is no real secret to what I do, it’s all about action. If I can give you any advice that means you can stop buying these $1000 courses and $97 eBooks it would be this. Do something each day that builds your business.***

Oct 31rst ****Are you starting to understand the concept of ‘Do a Little Every Day to Build Your Business’? You have watched me build my business in real time this month and there is absolutely no reason why you can’t do the same. Remember, if you do nothing you will achieve nothing.****

So when the comment is made “ blogging – it paints a more accurate picture of a person” just my opinion but the whole point was to show people that are scared to take the first step, that it’s really not that hard

You just need to take action, and do something each day that builds your business and if you don’t get to everything on your list, it’s ok but keep going.

Now maybe that is not the point to this conversation but that is what I got from the blog maybe I’m ignorant?

Jonathan
http://www.jonathanmcguire.com

Isofarro,

You’re VERY correct about the web space thing. I can now see your point MORE clearly. Certainly, if hosting cost (say) only $200 a year and you were already making that much with just ONE ebook, all other ebooks you host on the same account would have only UPFRONT costs.

Product pricing is always in the hands of the person who creates it. Irrespective of whether people buy at that price has nothing to do with what price he sets. You can set a price for your product (whether physical or digital) at $197. This is your NORMAL price. If people know that it is your normal price but don’t buy it at that and you REDUCE your price to $97 “for a very limited time”, it isn’t scamming. Just something to help the buyer make a quicker decision.

And thanks, I’m glad you liked the point about instant gratification.

Isofarro,
You missed my point. I’m not saying that Paula’s ebook,
the works of indeed any marketers present, (no offense all, but Seth is a giant), are of equal value.

I was using a simple analogy to respond to your earliest posts.

My point was simply that Paula’s time, and the content she authored, has REAL value to real people.

It is not a hardcover bound tome, true. But it has real value.
In fact if I can download it now, tonite, it has much more value to me than driving 26 miles to Borders to buy a hardcover on writing my first book. In fact, with gas, wear and tear and time, her ebook is almost free. 😉

My analogy with Seth was simply addressing your point that ebooks cost little or nothing to produce. Yet I believe the value is in the content.

Hey, you know what? If he got caught in a traffic jam, and the crowd was getting restless, perhaps my presentation value to tide them over for awhile would skyrocket.
Talk about scarcity!

Good Health to All!
Ed S