The Economic Advantages of Digital Products

For creators of learning content products deciding to create physical or digital products is a key decision. There is no doubt that sometimes physical products are needed. This is especially true when your audience demands them.

However, there are a number of major economic advantages to creating only digital products.

Of course, there are many levels that you can consider when determining the economic advantages of anything. You may consider its effects on society in general. You might consider its effects on the country. You may consider its effects on the purchaser. Or you may consider its effects on the producer. Or you may consider all of the above.

For this article, I’m going to limit myself to the economic effects for the producer of learning content products. In general there are six areas that a learning content creator is economically concerned with when creating their products. Five are cost items and one is related to revenues. In this article I’m going to examine some of the economic advantages in those areas.

1. Cost to create a learning content product. At first glance there shouldn’t be any difference between the cost of creating a digital and physical version of the same content. After all they both follow the same process. In fact, all media follows roughly the same process. However, depending on the media there can be a difference. For example, a book must be larger than an eBook. A physical audio recording must be less than eighty minutes long (seventy to be safe). But a digital audio recording can be any length. However, ignoring this difference there is no economic difference in the creation of the learning content.

2. Cost to produce a learning content product. Production includes those tasks necessary to turn a completed product into a manufacturable or salable product. Again at first glance, there is little economic advantage since they both require the same process. However, in the case of a physical product it is necessary to create a print quality cover as well as the display cover. This represents a minor increase in cost over a digital product. In fact, most publishers will automatically request this even for digital products since it allows greater flexibility in the future.

3. Cost to manufacture a learning content product. This is where the largest difference lies. The cost to manufacture a digital product is minimal. In fact it is generally no different that the cost to submit the physical product. On the other hand a physical product will cost anywhere from $1 per unit to $4 per unit. In fact, $15 and up per unit is the range for a hard cover book.

4. Cost to inventory a learning content product. In the case of a digital product the cost of inventory is negligible. In fact, it should work out to less than seven cents per day even using a relatively expensive web host. And of course, the number of units being kept in stock is irrelevant. Physical products usually require some form of stock maintenance even in the case of production on demand. While the actual cost will vary depending on a number of factors, it will definitely exceed $1 per unit per day.

5. Cost to market and sell a learning content product. This is where the biggest difference occurs. The cost to ship a digital product is minimal (less than one cent). The cost to ship a physical product runs from $3 to $15 or higher.

6. Selling price. Countering the cost of manufacturing and inventorying a physical product is the selling price of a physical product. It used to be that there was a considerable differential between a digital product’s selling price and that of the equivalent physical product. Typically this would be in the fifty percent range. This began to change and the premium a customer was willing to pay began to reduce. However, with the arrival of the Kindle and other eBook readers, the differential has begun to reassert itself.

The Difference Between Digital Products and Digital Service

I get this question all the time: “Eric, I wanted to start an online business. However I don’t know where to start from. Should I start from digital products, or should I start from digital services?” And my answer for all these while has been this: “always go for digital products.”

You may be shocked to see my answer to be digital products. Countless of people have been telling me that they have certain expertise and it is wiser that they use their expertise in the form of providing service to others so that they can earn money from their expertise. I would like you to think even further, can’t you package your expertise in the form of digital products and sell it online?

Here’s one dirty little secret of these two options, or I should say, the dirty little secret of online business: Digital products can be automated entirely while digital service cannot do so. Simply put, when you have your digital products, you are making your system to be on automatic pilot. You no longer need to be in the equation in order to make money. You make money when you work, make money when you fish, make money when you hike, make money when you hike, make money when you eat, and the coolest part is that, you make money when you sleep.

But if you choose to go for the digital service, unless you are satisfied to work like an office hour in order to make money, then this option may not be suitable for you. When you can create your own digital products, you only do the work once. Once it is up there in the system, or commonly known as the sales funnel, it can be run automatically. You don’t have to monitor the website 24/7 just to make sure money will come in. You don’t have to assist the customers to check out from the sales funnel because everything is arranged and built systematically.

In the digital service world, here is the rule that is inevitable: you have to be in the system or equation in order to make money. Try to think of it. You are providing service to other people. If you stop working, who is going to provide the service to your customers? No one except you! That’s why in digital service, your earning stop when you stop working. You may be arguing with me that to provide digital service will enable a stable income. This to a certain degree is true. But try to think outside the box. If you can sell your service in the form of digital products, can you increase your profit margin? And when you build trust with your customers (which I assume you are adding real values/solutions to their life), you can always promote them with backend products. Can you see how powerful digital product is now?

Here is one final bite between these two. If you ever dream of having the time freedom so that you can do more meaningful things in your life apart from work alone, then you need to take a look at digital products seriously.

How to Price Your eBook, Software, Script or Digital Product

You have just completed one killer of an eBook, Software, Script or Digital Product, Script or piece of Software and as the old adage goes it is “Better than Sliced Bread”.

Now what?

You need to find the right price to sell your eBook, Software, Script or Digital Product at. This could make the difference between selling a few eBook, Software, Script or Digital Products or thousands. What price point will you put it in well depend on the perceived value of the eBook, Software, Script or Digital Product and the pricing of comparable eBook, Software, Script or Digital Products out their. If the price is very low the prospective purchaser may think this isn’t a very good eBook, Software, Script or Digital Product but if you price the eBook, Software, Script or Digital Product too high this could cause problems in the future. For example if you start your eBook, Software, Script or Digital Product out at a price of $49.95 and then drop it to $29.95 then people who purchased the eBook, Software, Script or Digital Product at $49.95 would be upset that they purchased the eBook, Software, Script or Digital Product for the higher price.

One of the most important parts in the marketing process is finding the right price for your eBook, Software, Script or Digital Product. Never under price your eBook, Software, Script or Digital Product. When doing your research try to find the highest amount your audience can afford if you find the price is too high and not selling you could reduce the price but … before you reduce the price have you are promoting the life out of the net before you do. Price is a factor customers judge the value of an eBook, Software, Script or Digital Product before they purchase it.

What makes an eBook, Software, Script or Digital Product valuable?

Your ideas that will change the readers life. If your ideas are of extreme value and will change a readers live for the better then a higher price would be a good place to start. Also ask what your ideas are worth and what you should charge for your ideas.

Try to decide what your goal for selling your eBook, Software, Script or Digital Product is. Do you want to bring customers to your business, establish credibility & collect email lists? Then your price probably would be lower. Some will sell their eBook, Software, Script or Digital Products at a profit loss to draw people as a new customer then sell them on something else once they have purchased the eBook, Software, Script or Digital Product.

The above strategy is great if you want long term customers who purchase over and over again. Remember if you use this technique you will need to have written an exceptional eBook, Software, Script or Digital Product that benefits the customer.

If though your eBook, Software, Script or Digital Product has information that is WOW, NEW, and of high value then try to price the eBook, Software, Script or Digital Product on the higher end of the scale of what a customer will pay.

Once your eBook, Software, Script or Digital Product is released remember that once the information in your eBook, Software, Script or Digital Product has become widely known and your ideas have become old plus your competition is cutting the price then you may need to reconsider your pricing and marketing strategy.

Try to aim at an audience that wants a solution to their problem at a reasonable price. To keep a higher price for an eBook, Software, Script or Digital Product then try not to give general information but a solution to solving a specific problem.

Finally an eBook, Software, Script or Digital Product written to solve a problem, give a unique or new technique or one that will help draw traffic and create profits should be a good go and on your landing page write sales copy to entice the reader into purchasing your eBook, Software, Script or Digital Product along with your pricing for your eBook, Software, Script or Digital Product and then watch the customers come to you…. And profit from your hard work.

Digital Products Are Changing Our World

Let’s face it, digital products are changing the world. Market demands are continually pushing semiconductor developers to design smaller, faster chips that consume less power. Cell phones have gone from niche items that were only available to a small segment of affluent, well-connected people to affordable devices that are loaded with all the bells and whistles. The way we read books has evolved digitally with Kindle titles (e-books) out doing the hard cover book sales.

Digital audio is becoming ever more popular, and soon will be the standard audio production method. Music and audio technology continues to advance from the new products like I pods, USB flash drives, MP4 players and audio workstations. Television digital has overtaken the analog type. The new companies who sell digital products are growing ten fold.

Cameras digital has improved the quality of photographs beyond belief. Clear crisp video and camcorders with digital converters are out performing most analog devices. Information products available covering every subject couldn’t be easier to obtain. Today, products are created and stored electronically then shipped digitally to the customer. In the old days you waited for the mail to be delivered in a couple days.

Games, online gambling, pc software, system security, PC hardware all use this new technology of the future. Satellite radio, GPSes, cell phones with all the apps would never have been invented and made small enough to enjoy if we didn’t explore digital science.

Signs on the road with digital mechanics provide photo realistic pictures for our journey. This method of billboard advertising truly has it all. The virtual fireplace is one of the most innovative products of the decade it gives the appearance of a cozy fireplace without all the hassle and requires no wood, gas, or other.

Companies who stay in tune with the latest available technologies will be best positioned to meet the increasingly demanding market requirements. We need to stay ahead of the curve by staying in touch with these new digital products. This will enhance our quality of life and enjoyment from these inventions forever. Embrace the change.