Pricing to Sell vs Selling Yourself Short

Dec 8th

A friend of mine suggested I read Dan Kennedy's The Ultimate Success Secret, a great motivational marketing book. One passage from it stuck with me:

When I first started in the "success education business," one of the few people in the country who was consistently effective at selling self-improvement audiocassette programs direct, face-to-face to executives and salespeople, gave me what turned out to be very, very good advice - he said: "Don't waste your time trying to sell these materials to the people who need it the most. They won't buy it. You should focus on selling to successful people who want to get even better."

Over the years, I've demonstrated the validity of this to myself a number of different ways. And I've developed an explanation for it. There is what I now call "the self-esteem Catch-22 loop" at work here: in order for a person to invest directly in himself, which is what buying self-improvement materials is, he has to place value on himself, i.e. have high self-esteem, but if he has such high self-esteem, he is probably already doing well and does not have a critical need for this type of information; he will get marginal improvement out of it; but the person who needs it most does not place much value on himself, i.e. has relatively low self-esteem, which prohibits him from buying, believing in or using self-improvement materials.

To some SEO forum members who spend 10 hours a day on free forums polluted with spam offers, EVERYTHING is overpriced (outside of a listing in THEIR directory). But is their opinion relevant?

Anyone selling "how to" advice, consulting services, or productivity tools is selling self help information. Price yourself too low and enter a market for lemons, enjoying fraud daily, selling to people who fear investing in themselves, while scaring away worthwhile prospects with a negative attitude and/or prices that eat away at your credibility.

Meanwhile, people who know less and sell a lower quality product may price themselves higher on the value chain and attract the right kinds of customers. Is it fair? Nothing is, and so you must increase your prices as your knowledge improves and your market grows. Anytime you can have half as many customers and still make the same income you are heading in the right direction.

If you are going to sell cheap then just give that idea / product / information away free and then look for a way to bolt on a higher value product or service. Price yourself at a fair value to get the right customers, build the profit margins to reinvest into building a higher value product or service, and help the people who are already successful become more successful.

Todd Malicoat Joins Clientside SEM

Nov 30th

In addition to working with Caveman, I am proud to announce the newest member to Clientside SEM is a great friend by the name of Todd Malicoat.

Do You Design Banner Ads?

Nov 25th

A couple years ago a friend of mine who sold ad inventory for premium publishers told me the key to making his banner ads work was to not make them look like banners, unlike the below tongue in cheek effort:

For how many years was the banner the standard format for online advertising? As the web evolves and each of us learn better business practices many standards become irrelevant relics of the past. Every business person is a creature of laziness. Sometimes laziness prevents us from changing, and sometimes it helps us make ourselves more efficient. If a macros can do the job then why not let it?

What ideas have you held on to for far too long? What information and productivity tools convinced you to break those habits?

Too Smart For Your Own Good

Nov 3rd
A few days ago Andy Hagans sent me a link to a 1924 article titled Why I Never Hire Brilliant Men, which has a couple killer quotes in it. The first is how to succeed in business:
That criticism may be justifiable, fo I am mediocre. But the point I have in mind is this: Business and life are built upon successful mediocrity; and victory comes to companies, not through the employment of brilliant men, but through knowing how to get the most out of ordinary folks.
And the second killer quote covers how some people fail to live in reality:
You conceive a big idea, get the whole organization on tiptoes to carry it out, and then you lose interest and go off on a new tangent. You think everybody else's mind ought to function as swiftly as your own, so you are alternately overenthusiastic and over-depressed. One day you carry some poor devil up into a high mountain and make him think he has a chance to become general manager. The next day you blow him up for not doing something which you think you told him, but which you actually forgot. You are always living, in imagination, about six jumps ahead.

That second quote applies to anyone in publishing. Businesses may not need many employees to have reach, but as marketing gets more insidious you need your customers to do your selling for you.

Without clearly communicating ideas designed to spread, few common people will talk about a business, and that business will stay stuck in a niche. That is unfortunate for those business owners, because in many fields the perceived topical authority (and person getting paid well) is determined outside of the niche. Creating value is not about writing knowledge on a page. Value is determined by the actual transfer of knowledge to others.

The web is speeding up communications. As companies and politicians continue to get caught lying and abusing language, we will be more willing to forgive those who make small errors while clarifying topics and making them more accessible to us.

Even if you are a doctor or scientist you can still communicate clearly using small words. Fields dominated by complex words and prose are full of opportunity for common folks to learn them, simplify them, and share them with other common folk. Most people are common in most ways.

Selling Commodity Services: Controlling Cost vs Adding Value

Nov 1st

One theory of web marketing starts off with controlling cost. Where you try to find what works right now, and do exactly what is needed to get to the level of success you want to reach. The theory sounds valid, but...

  • By the time something is common knowledge, its value and effectiveness has decreased and is heading lower.
  • The markets are shifting. Tomorrow's marketplace is uglier and more competitive than today's marketplace. And it has lower margins for average players too!
  • Those who invest in building real assets are going to eventually beat you. And their success is self reinforcing.

Investing & Adding Value is Better Than Being Cheap

Rather than thinking of how to control costs while growing a web business, it is better to spend that same time, energy, and focus learning how to create value and how to get people talking about how valuable your widget is. When I was new to the web I kept my reported income far lower than it should have been because I kept reinvesting in learning and marketing, even when I was heavily in debt. Some of the spend was a waste, but I know enough to compete in many markets with minimal investment.

How to be Cheap

Two months ago my mom told me she wanted to create a new blog about Diverticulitis, a topic effecting my grandma. With no warning, that afternoon I...

  • learned how to spell the word Diverticulitis (2 minutes)
  • used WordTracker's free keyword research tool (2 minutes)
  • bought my mom a $6 domain at GoDaddy (2 minutes)
  • spent 5 minutes aligning the DNS, hosting her site at Dreamhost, which allows unlimited sites to a $7 a month account. I recently created a 5 year account for a friend and only spent $300 for 5 years of hosting!
  • set my mom up with a default Blogger template (5 minutes)
  • created a cheesy logo (that took me 5 minutes to make using low end $50 logo design software I bought years ago)
  • modified the CSS file to match the logo (5 minutes)

My mom wrote 10 blog posts that took her ~ 5 to 10 minutes each, and a week later I spent 5 minutes and ~ $80 submitting it to a couple directories.

A few months ago I bought a domain name for $2,500. Last month I was offered $17,500 for the domain, and not too long ago the same guy paid over twice that for a similar but worse name. If he offered me that much I might have sold, but unsolicited offers are typically on the low side.

Today I was sent an unsolicited $500 offer for my mom's new site. Why? Because the site already ranks in Yahoo and Microsoft. If I spend a few hundred more the site will likely compete in Google too. My marketing knowledge was expensive to acquire, but everything else was good enough to compete for cheap or free (at least in that market at this moment in time).

The reason this story is remarkable is because people were willing to buy such a small site when it was so new. In two months the site was conceived, created, competing, ranked, and someone already made an offer on it. Two months ago that same domain name was $6.

Everything is Becoming a Commodity

It started with the average travel broker, then it hit classified ads and regional monopolies like newspapers, and it is working its way toward your industry. Just look at all the above web industries listed that are free or nearly free. Due to more efficient markets, automation, outsourcing, and the need to compete on an open marketplace, the margins for almost everything needed to compete on the web are heading toward zero.

My mom's new site competes on about $100 of investment, but in a year or two that domain name might have cost $500, and a couple more competitors entering the field might have pushed the marketing costs to $1,000. A year or two later the domain name might have been $2,000 and the marketing costs might be $10,000.

Don't Become a Commodity

The three solutions to the commodity issue are

  • use new technologies to create and publish the DIY tools and information that will commoditize other businesses competing in your space
  • build your knowledge in related fields that interest you, such that you can add value to multiple points on the value chain. Google is search + ads + documents + hosting + syndication + etc etc etc. I know a bit about SEO + SEM + marketing + branding + conversion + domaining + etc etc etc.
  • Invest to build your awareness and brand (build mindshare and distribution) to where you are not considered a commodity. Create enough of an abundance of demand that you chose who you work with.

Unless somebody is talking about you or consuming your stuff right now you are becoming a commodity, although you may not realize it yet.

Socionomics & The Wave Principal

Aug 19th

One of my favorite parts about blogging is that thousands of people way smarter than me read my blog and give me feedback. Recently I was sent a couple links about socionomics and the wave principal.

Information markets influenced by a wide array of marketing techniques and publishing formats are likely also bound by the same sort of wave principals that guide economic markets.

The general trend (online or off) goes something like this...Politicians, corporations, and other powerful institutions abuse language, cook the books, and game rating and ranking systems until eventually the fraud can be held no longer. The bottom falls out of a near perfect market. Then the market gets new guidelines and regulations, which start getting gamed before they are even drafted.

The online world largely reflects the offline world, with a bias toward the edges (as smaller markets can be served online, we are more inclined to follow things that reinforce our worldview, and most modern measures of relevancy are aligned with things that easily associated with signs of bias). Here are some examples of how wave theory applies to search, publishing, and monetization.

  • Companies and individuals aggressively optimize conversion rates until one day that form of optimization goes so far that some consider it fraud, as reported by a guy who was flamed in the last Internet bubble.

  • Every effective marketing method spreads, gets abused, dies down, then is reformatted and reused again under another name, but touches the same emotional triggers.
  • Each new social network is easy to game. After early adopters are ingrained in the hierarchy, the story spreads about how easy it is to game, then the ROI is marginal at best for the latecomers.
  • All the new social networks spread out consumer interest, so now Google is investing into trying to pull it back together.
  • Google trusts links so people buy them. Google starts filtering some obvious bought links and tries to manipulate public perception when they find that they can't do it well enough to put a dent in the link buying market.
  • Most new sites are spammy. Google trusts old sites so people buy them. etc.
  • You publish news of how successful a site is. Either Google tries to kill it or dozens of people clone it.
  • Auto-generated content is getting more sophisticated and trusted sites are pumping out garbage content to monetize their authority, so Google requires more link equity to keep your content indexed.

Measuring relevancy and manipulating it are both forward looking and reactive processes. As is creating a self-funding brand in a fast changing market dominated by misinformation and information pollution.

[Update: Great follow up post at Squareoak.]

The Importance of Hiding Success on a Competitive Network

Aug 7th

Brendon Sinclair, one of my leading affiliates, mentioned Ugg Boots in his review of SEO Book. Today I got a blog comment spam for Ugg Boots. Last week a guy stole a friend's site. This week another person stole the same site, then was stupid enough to comment spam the sister blog supporting the site. One of the reasons it is hard to give specific examples of successful SEO is that the landscape is ever-changing, but another equally important reason is that some ideas only remains successful because few people know about them. There are far more entrepreneurs than there are successful entrepreneurs. As a well known SEO (or insert your field here), if you mention your sites publicly you run the following risks

  • search engineer thinking that it must be spam because you own it, without even considering site quality (if you doubt that, read Matt Cutts comment about shoot-on-sight)

  • asshats cloning your sites, then spamming you to promote their copy of your site
  • larger players with older domains, more authority, and more money hiring staff or paying consultants to clone the best portions of your site and outrank you

I have probably been a bit naive with my worldview, but business is exceptionally dirty, so it is best to keep your sites out of the limelight unless they are nearly impossible to knock down. Competitive research tools are making it faster and easier for competitors to find you, but there is no reason to go out of your way to let Google AdSense pay people to steal your content.

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