Money

Do You Deserve the Money You Earn?

You’re in a job. You’re a freelancer. You’re a consultant. Maybe you’re stuck right now, maybe you’re not stuck — you’re excited to take the next step, you just don’t know which next step that is.

Well, you’re in luck, because you’re here! This is your next step:

Practice thinking like an entrepreneur.

That means thinking about value. That means reasoning from knowledge about the other guy in any transaction, not wishing about what you want. Believe it or not, this is the hardest thing about being an entrepreneur and it’ll take you lots of practice before you get it.

Ready? Here we go:

Do you pay your bills with a salary or hourly rate? Great. How do you earn it?

Seriously, now. Take a moment and answer that question in your head. Better yet, say it out loud. It’s cool, I’ll wait.

Did you answer, “Well I program abc” or “I design xyz” or “I write jkl”? If so, you’re not alone — and if so, that’s exactly the attitude you have to fix.

So, yeah. You go to work and you do stuff. Maybe you even produce stuff.

That’s great and all, but how does that turn into money?

Even in something as simple & seemingly un-entrepreneurial as full-time employment, there are important, entrepreneurial questions we almost never ask:

Why do you deserve the money you make?
Where does that number come from?
Why do people give it to you?
How on earth did you get that number?
How can you keep it going?
How can you make it go up?

These questions aren’t actually hard, but they’re harder than not questioning at all, which is why you rarely hear them in conversation… and why you haven’t really asked them of yourself.

Despite our incredible powers of higher reasoning, we act like rats in a Skinner box:

Press the lever, get the reward. Go to work, type code, push pixels, turn letters into words into sentences, get paid.

Like rats, we just about never raise our heads and consider the bigger picture. Hey, lever! Hey, food! Where’s that food come from? Sorry, too busy chewing. Hey, lever!

How much should we charge? Well, how much do other people with similar skill sets earn? They earn that much? That’s great, I want that much.

Ratty stimulus-response at work. And rats? Not known for creating business empires.

So, where does your money actually come from? And why?

Don’t be a rat. Think about it.

Biz Book Friday / Money — 13 Comments
8
Jun 12

Henry Ford on Bootstrapping, Funding, & Going Public

Every Friday, I share juicy excerpts and commentary from awesome business books. I read ‘em, so you don’t have to. (Just kidding. READ THE BOOKS. LEARNINGS!) That’s why I call it Biz Book Friday.

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Last week, I squee’d all over how awesome Henry Ford’s autobiography is. And I offered running commentary to the highlights I had chosen.

This week, I thought I’d let a passage stand without commentary. It doesn’t need it.

Henry Ford on Bootstrapping, Funding, & Going Public:

A few pages, excerpted in order, with only one ramble bit skipped, directly from Henry Ford: My Life and Work…

The most surprising feature of business as it was conducted was the large attention given to finance and the small attention to service. That seemed to me to be reversing the natural process which is that the money should come as the result of work and not before the work…

The automobile business was not on what I would call an honest basis, to say nothing of being, from a manufacturing standpoint, on a scientific basis, but it was no worse than business in general. That was the period, it may be remembered, in which many corporations were being floated and financed. The bankers, who before then had confined themselves to the railroads, got into industry. My idea was then and still is that if a man did his work well, the price he would get for that work, the profits and all financial matters, would care for themselves and that a business ought to start small and build itself up and out of its earnings. If there are no earnings then that is a signal to the owner that he is wasting his time and does not belong in that business. I have never found it necessary to change those ideas, but I discovered that this simple formula of doing good work and getting paid for it was supposed to be slow for modern business. The plan at that time most in favor was to start off with the largest possible capitalization and then sell all the stock and all the bonds that could be sold. Whatever money happened to be left over after all the stock and bond-selling expenses and promoters, charges and all that, went grudgingly into the foundation of the business. A good business was not one that did good work and earned a fair profit. A good business was one that would give the opportunity for the floating of a large amount of stocks and bonds at high prices. It was the stocks and bonds, not the work, that mattered. I could not see how a new business or an old business could be expected to be able to charge into its product a great big bond interest and then sell the product at a fair price. I have never been able to see that.

I have never been able to understand on what theory the original investment of money can be charged against a business. Those men in business who call themselves financiers say that money is “worth” 6 per cent, or 5 per cent, or some other per cent, and that if a business has one hundred thousand dollars invested in it, the man who made the investment is entitled to charge an interest payment on the money, because, if instead of putting that money into the business he had put it into a savings bank or into certain securities, he could have a certain fixed return. Therefore they say that a proper charge against the operating expenses of a business is the interest on this money. This idea is at the root of many business failures and most service failures. Money is not worth a particular amount. As money it is not worth anything, for it will do nothing of itself. The only use of money is to buy tools to work with or the product of tools. Therefore money is worth what it will help you to produce or buy and no more.

If a man thinks that his money will earn 5 per cent, or 6 per cent, he ought to place it where he can get that return, but money placed in a business is not a charge on the business—or, rather, should not be. It ceases to be money and becomes, or should become, an engine of production, and it is therefore worth what it produces—and not a fixed sum according to some scale that has no bearing upon the particular business in which the money has been placed. Any return should come after it has produced, not before.

Business men believed that you could do anything by “financing” it. If it did not go through on the first financing then the idea was to “refinance.” The process of “refinancing” was simply the game of sending good money after bad. In the majority of cases the need of refinancing arises from bad management, and the effect of refinancing is simply to pay the poor managers to keep up their bad management a little longer. It is merely a postponement of the day of judgment. This makeshift of refinancing is a device of speculative financiers. Their money is no good to them unless they can connect it up with a place where real work is being done, and that they cannot do unless, somehow, that place is poorly managed. Thus, the speculative financiers delude themselves that they are putting their money out to use. They are not; they are putting it out to waste.

I determined absolutely that never would I join a company in which finance came before the work or in which bankers or financiers had a part. And further that, if there were no way to get started in the kind of business that I thought could be managed in the interest of the public, then I simply would not get started at all. For my own short experience, together with what I saw going on around me, was quite enough proof that business as a mere money-making game was not worth giving much thought to and was distinctly no place for a man who wanted to accomplish anything. Also it did not seem to me to be the way to make money. I have yet to have it demonstrated that it is the way. For the only foundation of real business is service.

Sounds pretty familiar, doesn’t it?

Except for the interest rates being so high… and the fact that VCs expect 10x return and not 5%, Ford puts his finger right on it and he could be writing today, about what we do.

Either Henry Ford is a time-traveling super startup spy… or nothing ever fucking changes, just every generation believes it came up with something new.

You can guess which scenario I’m putting my money on:

There is no “New New New Economy.” Same shit, different century.

Which is why you should download Henry Ford: My Life and Work now — for free! because it’s so old! — and read the crap out of it.

Exercises / Money — 6 Comments
23
Apr 11

How to Make Financial Decisions, a Play in 1 Act

The biggest change in running your own business? Definitely a psychological one. You have to learn to think in terms of what you really want, and the opportunity costs between you and what you desire, which — all feelings of competence aside — almost none of us actually do on a day-to-day basis.

The fact is, we’re all lured by the shiny and impetuous, and it takes a long time to rope that desire and tame it for our own purposes.

To illustrate, consider this typical conversation between my husband and I:

HIM: What’s my hourly rate, for doing awesome visualization stuffs for an agency?
ME: Like what?
HIM: Dunno yet. But I told them it’d have to be really awesome, since I’m doing my own stuff. And it would have to be no more than 20 to 40 hours. Their stuff looked pretty cool.
ME: Who are they?
HIM: X Agency.
ME: researches Their front page is flash.
HIM: Guess that’s why they need me!
ME: skeptical Their work doesn’t look that interesting.
ME: Hmm, you’re right.
ME: So… if you did a 20-hour project for them for $500 an hour, that’d only be $10,000. Or we could just do another Master Class.
HIM: You’re right.
HIM: faux pout Why are you so logical?

Why am I so logical? Cuz I’ve learned the hard way that if I don’t rule my magpie side with an iron fist, I am easily lured away by 5-figure sums. So I’ve learned to conquer my desire for the shiny with logic.

With the exception of one very awesome client, we’ve suffered (and our goals have suffered) every time we’ve let our heads be turned by a phat consulting budget. It just ain’t worth it.

Creating products, and learning to sell them, gives me a totally new type of math to work with:

20 hours of consulting? Hmm, well. Sure, $500/hr sounds like a lot, but we pull in nearly $10k from one JavaScript Master Class. And it’s infinitely more fun. And takes less time. And we get paid faster. And we make new connections with people who might become long-term customers. (And it has a greater impact, too, because we’re sharing our love of JavaScript and helping people make more awesome stuff, not just helping to promote some big brand.)

This is the no-brainer math of opportunity cost vs upside. This is the no-brainer math of freedom.

Events / Money — 11 Comments
5
Mar 11

From Freelance to Product Empire

You wanna watch this interview with me on Mixergy. Especially if you’re a frustrated consultant (or freelancer). I talk turkey about how I went from being an overworked consultant (aka “wage slave” – ha!) to starting and running my own mini-product empire.

Prefer to read? Check out the transcript below the video.

Fun facts: I don’t think I did a good job with this interview. Every time I opened my mouth, a long, involved story came out. I misunderstood a couple of Andrew’s questions. I didn’t propound on the points I should have, like the idea of Unicorn Free (aka charging real money for real products). But other people seem to really enjoy it! Just goes to show that “you are not your customer.”

Money — 21 Comments
1
Mar 11

Let’s Draw Back the Curtain

You wanna know why I write all this stuff? Why I’m so happy to disclose my income and strategies? It’s pretty simple:

It’s a fucking vacuum out there. Those of us trying to make real money, we’re stumbling around in the dark, alone.

There are thousands and thousands of blog posts about venture capital, viral social media, and decks, and elevator pitches, and on and on. But when it comes to cold, hard facts about web-based subscription software? About making money? About conversion rates, refund rates, churn rates, growth rates, customer service, business expenses? We got nothin!

Why? Because we’re too busy making money? Because we’re afraid? Are either of those a good enough excuse?

SaaS Facts of Life: Case Study 1

Scene: Three weeks ago. Players: me & a new friend who also runs an SaaS catering to small business.

Me: So Freckle just passed $180,000/year projected.
Him: Wow! That’s fast! It took us two years to get to that point.
Me: … Freckle just turned 2 years old last week.

Yep. Privately, we were both impressed by the others’ success, not realizing the paths of our businesses were exactly the same.

What would have been different, if we’d known that sooner?

Would I ever have found out at all, if I hadn’t been the one to name a number first?

SaaS Facts of Life: Case Study 2

Two weeks ago, Thomas & I had dinner with a pair of new friends, a married couple who’s in the same biz. They created & run 3 subscription web apps, including two quite popular ones you know about.

I told them the above story. They laughed and commiserated. While their 2nd and 3rd apps grew much faster, their experience with their 1st app was much the same.

And as the woman said to me, “That’s the thing. There’s NOTHING out there about this.”

They’d had to learn it all the hard way, too. They weren’t forging a new path, but one that had been set by a handful of smaller, non-Salesforce.com-type SaaS companies before. Companies who had often started as single freelancers or tiny consulting shops, but which nevertheless had refused to share.

SaaS Facts of Life: Case Study 3

Yesterday I did an interview with the excellent Andrew Warner from Mixergy. (Here’s my interview – it’s up already!)

Since we’re in Philly, I did the interview at IndyHall, my favorite coworking joint anywhere. Let’s just say I’m not a quiet girl — one of our “podmates” overheard me. We’d never really talked before but she introduced herself after my interview. She said to me, “I was eavesdropping on your interview. Thank you so much.”

You know what she does for a living? She runs a content/community subscription site and she’s been doing it for a couple years. It’s not software, but the parallels are huge.

You know why she thanked me? Because there’s no fucking information out there.

Maybe it just takes 2 years to reach $200k

Maybe that’s just the way it goes for the vast majority of first SaaS apps. Maybe it just takes 2 years to get to $200,000 a year. Subscription income takes time. Maybe that’s normal.

Why don’t we even know if those statements are true or not?

How many people have given up on viable products because they didn’t achieve hockey stick “traction” in 6 months? How many people went back to jobs they hated, or gigs that sucked up all their time, because they didn’t know that overnight success is incredibly rare? How many have ignored the potential of SaaS entirely because they don’t know how very profitable it can be?

Too many, if you ask me.

But it’s uncouth to talk about money…

Then let’s be uncouth and proud of it!

It used to be uncouth to talk about menstruation, about sex, about AIDS, about racism and poverty and crime. History doesn’t say a lot of good things about polite people.

If the choice is between “respectable and ignorant” and “uncouth and well-informed,” I know which side I’ll choose.

I won’t sit idly by

Moving from a consulting business to a product is one of the most rewarding things I’ve ever done. Yep, there’s stress, and anxiety, and lots of work… but there’s also the freedom to choose what we work on, and when, and how, and where, and with whom.

At 2 years old, Freckle is the longest “job” I’ve ever stuck with. I still love it. And I love our next product, Charm, even more.

Not only do I get to design great software without the interference of committees, not only do I get to decide what exactly to tackle, not only do I get to teach what I love, I get to help people run better businesses and lead happier business lives.

I’ve never been happier in my work, ever.

So whenever I’m thinking about how we did finally get started, I can’t help but wonder:

It took me 2 years to get here. What if I’d started 5 years ago?

Maybe I would have, if the information was out there. If there had been somebody like me I could have really learned from. So I’m standing up to be counted.

If you’re currently making & selling products, I hope you’ll join me.

*There’s more no-nonsense business advice where that came from. Don’t miss out: subscribe with RSS or subscribe by email and follow me on Twitter.

Money — 18 Comments
20
Oct 10

I’ve Made $216,688 From Products This Year

Hey, would you look at the time? It’s getting late. Just two months until the deeply introspective blog posts start comin’ hot & heavy.

It’s still only mid-October, I know. Halloween decorations: in. Pensive rumination: out.

But hey, I caught myself thinking last night, I’ve finally caught up with the bookkeeping (thanks, Jess!), and I’m, you know, in the middle of a product launch… so why can’t New Year’s deep thoughts come early this year?

I’ve got a lot of deep to thought, but mostly I’m interested in the numbers. Yes, the money. Money money money!

First, a Teensy Bit of Not-too-boring Background

In 2008, my income from products was $0.

My product empire was born in late 2008, with the introduction of the crappy first versions of both Freckle time tracking and JavaScript Performance Rocks!.

Then 2009 was… well, let’s not go there.

But this year! The income from products (sorta) made it possible for me to quit consulting in January 2010.

I say “sorta,” because my products weren’t making enough to support me by January 2010. On the other hand, consulting was driving me batshit insane. So I took a look at my extra savings (a megapayment from a contract from hell), looked at my flagging products, and decided that dammit, I’ll make it work.

I decided that, come hell, high water, or income tax audit, I would figure out how to earn enough from products alone… enough that I’d never have to pour my creative heart out for a client ever again.

The Results are In

So… did it work?

I thought it’d be fun to share the numbers behind the products I’ve made with my husband, Thomas; with one of my very best friends, Alex Hillman, and by myself.

From Jan 1, 2010 to Today (Oct 20, 2010)

I know you’re skimming past all those annoying words and going straight for the digits. Hi. Hello. They’re right here.

Here’s all the product-based income I can claim from 2010 so far:

Freckle	$70,952
JS Performance Rocks!	$14,225
JS Workshops – Public	$57,483
JS Workshops – Corporate	$29,028
Year of Hustle Launch Class	$13,850
30×500 Launch Class (to date)	$31,150
Total	$216,688

Hot diggity, that’s not too bad: $216,688. Actually, that’s a bigger number than I even thought.

It’s not all mine

That money’s not all mine — happily. I’m not a lone wolf. I’m a very sociable wolf who loves to hang out and hunt with a pack. (Okay… backing away from wildlife metaphors now.) That is, I don’t like working all by myself, even when I could do everything on my own. I like to work with other people because it’s fun, because it results in a better product, and because, honestly, I like sharing the wealth.

The top 3 products — Freckle, JavaScript Performance Rocks!, and the JavaScript workshops — are all joint Amy-and-Thomas productions. Thomas is my husband, and we make a killer team, and no, I don’t do all the spending. The money for the products goes straight to our LLC; some of the training goes thru Thomas’ Austrian company instead.

The first Year of Hustle Launch Class was a joint Amy-and-Alex production. (What I report as YoH income, though, is all mine — he paid me my share.)

The new, improved reincarnation of that class, the 30×500 Launch Class does have material in it that Alex created, but is being run almost entirely by me.

Other number-y details

Also, as an FYI, these numbers…

Do not include costs. All numbers are gross — that means I haven’t deducted operating costs, including transaction fees, server upkeep, freelance help, advertising, affiliate/partner shares, etc., etc.
Do not count discounts as costs. I’ve only included money we received, so all discounts we’ve offered were deducted before payment aren’t being counted as revenue. (And for the Year of Hustle class, that was only my share — Alex received the money, and paid me my part.)
May be a bit odd because of conversion rates. Some, but not all, of our training courses were paid for in Euros. I converted them to USD with a rate of $1.30, a reasonable average.

In fact, I’m trying to roll most of the Freckle income back into making Freckle awesome-r, but that’s another post entirely.

Earnings Are Sooo Not Static

Just the year-to-date numbers don’t tell anything like the whole story.

A business is like a living thing: over time some things grow, others shrink. Following that slightly squicky metaphor, if my business were a body, Freckle would be the nose and ears (growing with age) and JSPR! would be, uh, something that shrinks over time. Height? Dignity? Neuroplasticity?

Err, anyway. Tossing that one in the discarded metaphor pile, along with my wolf pack…

Decline

JSPR! earned about $30,000 in 2009 (when it was new). It’s only earned half of that this year. We haven’t done many updates to it, and we haven’t pushed it much, either. This decline is natural, expected, and nothing to mourn.

Growth

Freckle, on the other hand, was earning about $3,300 a month in January. If constant, that would have added up to, let’s see… $29,700 in earnings to date, instead of the $70,952 that actually happened.

But when I quit consulting, I started spending a whole lot more time on it, and it’s grown quite nicely since. This month I expect we’ll just barely miss squeaking into the $12,000′s.

I’m still experimenting with what will help get Freckle keep growing at this pace, or even faster. (And, like I said, rolling much of the Freckle money into that!)

Windfall

Since you’re clever, you probably noticed that there are three types of income at work here:

subscriptions (Freckle)
ongoing trickle of one-off sales (JSPR!), and
windfalls (workshops & classes)

This is a beautiful mix, and one I’ll talk about in much more detail in another essay, but in short:

Windfalls kick ass. Each time Thomas & I do a workshop, we pocket a few grand — whether it’s the JavaScript Master Class or the HTML5 Mobile Pro. Or a corporate workshop (more work, more money).

For all the training income above, there were 3 corporate workshops and 11 open-to-the-public ones. The windfall income from these is fairly small but the reusability is very high!

The Year of Hustle class was a slightly bigger windfall – in total, Alex and I took in about $22,000, which we split. (I only reported my part of it, since Alex paid me.)

The new 30×500 Launch Class — starting Nov 1 — should be about $50,000 all told. (Again, that doesn’t include costs, or revenue sharing for someone who will probably be helping me out.)

As you can tell, windfall income actually has made up the lion’s share of that large, tantalizing number.

I wouldn’t want to live off windfall income alone. But it’s really kickass for helping fund our lives while we work on growing Freckle (and building our next SaaS subscription product, Charm).

What’s Next?

I’d like to grow the subscription income. A lot.

Almost all of my work on Freckle lately is either promotion (by myself and working with freelancers), or expanding features (designing features/improvements; finding, onboarding, coordinating with freelancers). Delegating is hard.

In Nov or Dec-ish, we’ll be shipping the private beta for our next SaaS, Charm. Charm is a bigger piece of software than Freckle, with more that could go wrong, but it will also be able to command a higher price.

I’m going to create more self-guided learning products, and do less live training.

I really enjoy live, 4-to-7-hours-a-day teaching. A lot. But it takes a lot outta me, and at some point, it’s not possible to charge enough for the tickets to make it worthwhile. (I gotta say, we haven’t reached that point yet! But we will.)

The on-going trickle of product sales (like ebooks) is sooo much less work… and Freckle & Charm are going to require a lot more attention soon.

So, Act I is to finish pimping & run my Launch Class. It’s almost 70% sold out so that’s good.

Once I can stop fretting about those last few seats, I’m going to spend a few days brainstorming on what kind of self-guided learning products I could create. I’m going to take a long hard look at what tech/biz things I know, am learning, or have been teaching, & figure out which ones would distill well and sell well. Then I’m going to make one or two of ‘em for the new year.

Am I never satisfied? Why earn more?

Money is a tool for me — I want more money to hire people full-time, to pay for some boutique development work I want done, to do a few personal things I want to do. I want to be able to work with my dream team (and they don’t come cheap). That sorta thing.

Other than that, it’s all about the joy of the chase. I want to make a difference in the way that software is designed, and the way people work. Money is a fun way of keeping score, and a way to fund the things that can make those goals happen.

(And the money doesn’t go as far as you’d think, considering I spend in Euros and live in Vienna, which is not the cheapest place. And, um, there’s the little issue of (cringe) taxes. Paperwork is my kryptonite.)

The Story in 3 Bullets

So, yeah. In short:

2008: $0 from products (building)
2009: $85,102 from products
2010 YTD: $216,688 from products (projected $261,000)

(What happened in 2009 is another story — a story I’m working on telling.)

Considering I originally thought of making my own products almost 8 years ago, I’m glad I finally got off my ass 2 years ago and did something about it. (I’m glad, particularly, that I learned the life lessons that made it possible for me to begin, and the ways of working that made it possible to finish.)

How About You?

Are you on your way to product-based income replacement? Do you want to be? Why or why not?

Intrigued? Want to create your own products but not sure quite how to start? I can help. You, yes you, might just like my 30×500 Launch Class.

Money / Selling / Slaying Unicorns / Thinking like a Slayer — 4 Comments
18
Oct 10

When Selling Turns You Evil

Does selling make you evil?

Am I evil? Wicked? Slightly naughty?

Well, am I? Some certainly would have you think so.

There’s a lot of people out there who think commerce is evil. The exchange of money for goods and services? Yep, evil. And inherently manipulative. That’s what they believe. It doesn’t matter whether there’s “undue profit-seeking,” or the rude exploitation of information asymmetry. It doesn’t matter whether the seller has some kind of power or edge over the buyer. It doesn’t matter if the seller is the tricksiest, slickest snake in the grass, or the world’s most honest downhome folky grandpa.

Commerce = EVIL. That’s what they believe.

Yep. Lots of people are doing the believing. And an awful lot of them are “in tech.”

Then you have me. I’m not only selling things (gasp!), but I’m selling things that teach other people how to sell things (double gasp!). I’m the meat puppet of mass consumerization! Me = double plus ungood evil. Right?

Anti-Cinderella Syndrome

Now, maybe you don’t think that Commerce = EVIL. Or at least, not so strongly that you’d admit it. You probably don’t think I’m evil, since here you are, reading my blog. (Unless, of course, you’re keeping your enemies closer. In which case, let’s snuggle!)

But I do have a question for you, because there’s something I like to think of as Anti-Cinderella Syndrome, and I see it all the time in otherwise smart, clever, intelligent, thoughtful, and creative people.

If you would be so kind, finish this sentence for me:

I think I could create some awesome products, or have created awesome product-like things already, but I’m afraid of setting a price and selling because…

A. I’m scared people will laugh at me, and/or hate me

B. I’m scared I’ll do it wrong, and screw up my business

C. I’m afraid that, as soon as money enters the equation, I will become obsessed with profit, damn the consequences! I will do all sorts of immoral things. I won’t be able to stop myself. I will lose my soul, doomed to become an evil marketer. The primrose path, you know! The primrose path!

If you felt more than a passing familiarity with Option C, then fret not: you sure as hell aren’t alone. And no, you wouldn’t become evil overnight. In fact, you are very moral. That’s the source of the whole quandry, isn’t it?

Because, in reality…

You Have Anti-Cinderella Syndrome

At some level, you believe that putting on a set of shiny glass slippers would transform you into a different, slicker, eviller person.

Or rather, you believe that that evil manipulation-ness is already hidden inside you, just waiting for the right set of glitzy huaraches to set it free.

There’s something about money — or specifically, profit — that makes you worry you’d turn all green and slimy.

Luckily, that fear? Not based on reality. And there’s an easy way to ensure that particular grim fairy tale never comes true.

Curing ACS

The cure for Anti-Cinderella Syndrome really is simple:

Do good. If you have Anti-Cinderella Syndrome, you’ve got strongly held ethics. Maybe you hold your ethics strongly because you’re concerned about them. But the point is, you have them. So stick to them. Create a product that reflects those morals — create immense value. Help people. Create something that leaves the world better than it was. It’s not that hard.
Make your mission bigger than selling your product. Take your good product, that leaves the world better than it was, and ask, “What’s the Bigger Thing? How does it help people?” That good result and make that your mission. If your fervent mission is to ensure that good result for everyone, including your potential customers, you will never have to worry that you’ll steer them wrong.

I Do Good, My Mission

I didn’t pull this out of my ass — it’s the philosophy I’ve developed while trying to run my own businesses in the most ethical way possible.

Here’s how I figured it out:

Do Good: My products do a lot of good — I help freelancers earn more, and make better decisions; I help people make their web apps faster, and learn new skills; and, last but not least, I help people like you create, launch and sell their own products.

The Bigger Thing: Foster (and encourage) healthier, happier, smarter indie biz.

Ergo, My Mission: Help people kick ass with their small businesses.

My mission is to help every indie biz I come in contact with. That makes it easy for me to navigate any dilemma: When a person has a problem, or wants to know if my products are really for them, I don’t have to worry about whether I want their money or not. I give them the answer that will help their small biz the most. Even if that’s a “No, this doesn’t make sense, please take your $700 elsewhere.” Or even if it’s “You know, your needs are really more suited for our competitor.”

It’s crystal fucking clear.

There, dilemma solved.

The Bottom Cinderell-y Line

If you create a product that’s good news, people will be glad to hear about it. Your audience will love to find out about it, buy it, use it. (Except for a tiny portion of haters, who don’t buy anyway.)

And if your mission is larger than “move product,” then you’ll have a nice and easy ethical guideline to follow. You won’t have to wonder, you’ll sleep like a baby, and again, your customers will be happy.

Also, little woodland creatures will be your friend.

The end.

Want to learn how to create and sell products in a happy, woodland-creature-loving, ethical way? Dream about quitting freelancing for the green fields of product-hood? My 30×500 Launch Class is filling up, so be sure to check it out!

Digital Goods / Getting Started / Money — 9 Comments
11
Oct 10

Running the Numbers: Your First Infoproduct

If you’re a freelancer, doing creative-y things, then it won’t take but a small push to get you from No Products zomg! to Hey I Gots a Product.

Let’s look at the numbers for Your First Infoproduct.

First up: Your Freelance Income

Say you typically charge $75/hr. Your rate may be higher or lower; adjust as necessary.

I bet you could make and begin to market an infoproduct in 75 hours or fewer. Dave Navarro says you can do one in a weekend. I agree.

That means your infoproduct would have a freelance opportunity cost of $5,625 (75 hours • $75 hourly billing).

Second: Launch Your Product

Price your short, sweet, punchy infoproduct at $19. Sell 75 copies at launch, that nets you $1,425.

Don’t freak. It’s not hard to sell 75 copies. If you have an audience of 200 to 400 people, and you create a product offer that speaks to them, that solves a problem for them, you’ll have no problem at all.

So, $5,625 (Hourly Potential Earnings, an opportunity cost of creating a product) minus $1,425 (Product Launch Earnings) is $4,200. Let’s call that the Wage Slave vs Freedom Gestalt. That’s still a big number, in favor of freelancing.

Or is it?

Ongoing Sales: Not Spectacular

You’ve done a little bit of other marketing: put a banner in your sidebar, blogged about your launch, posted on forums with it in your signature, basically made sure you didn’t commit the criminal mistake of Not Tellin’ Nobody.

So you keep selling copies. Slowly, of course, since you’re no marketing genius. Let’s say you sell another 15 copies per month for the first 2 months. That’s $285 x 2 = $570.

Your total product earnings are now up to $1,995 (hurry, act now!). Gestalt is still big.

Ehhhn: The Sound of a Mild Additional Effort

Now, you’re a smart cookie. You know a product won’t coast forever just on one push. (That’d defy physics, for one thing.)

So you gird your loins and do you a little bit of extra marketing. Take two hours of your time ($150 opportunity cost) and write 3 more blog posts that appeal to the audience for your book, create an infographic, release a bit of open source code, post more on forums, and so on. Update your sales page with some customer quotes. Send a couple review copies out. Your Gestalt increases slightly.

The Magic Formula: Earnings = Reward x Effort

Hey, what’s this you find? That tiny bit of effort was almost like another launch!

Sell 30 copies. $1995 + $570 (30 copies) = $2,565.

You now rest on your well-padded laurels. Your monthly sales are up to 20 copies a month on average, though, because of your extra bit of marketing. For the rest of the year (10 months), you earn an average of $380 a month in sales — $3,800 in total.

$3,800 (10 months’ coasting) plus $2,565 (launch, relaunch, first 2 months’ sales) = $6,365.

Your original Hourly Potential Earnings was $5,625 plus two extra hours of marketing at $150 = $5,775.

Congratulations. You did better than break-even on on the opportunity cost, by 10.2%.

Your Wage Slave vs Freedom Gestalt is a negative number: doing a single freelance job, for the same amount of time, would have been 10.2% less profitable.

The Numbers Again: In Short

You charge $75/hr. You spent 75 hours (+ 2 later) creating and marketing your product.

$75 x 75 hours = $5,625
$75 x 2 hours = $150
Total Hourly Potential Earnings (freelancing): $5,775

You priced your infoproduct at $19, and sold 75 copies at launch. You then sold 15 copies a month for two months (average). You did another mini-launch and sold 30 copies. Your extra marketing paid off with an increase to 20 copies per month for the next 10 months (average).

$19 x 75 copies = $1,425
$19 x 15 copies x 2 months = $570
$19 x 30 copies = $570
$19 x 20 copies x 10 months = $3,800
Total Income from Sales: $6,365

That math is a no-brainer, if you ask me.

Whaddaya say?

Have you been running the numbers?

Oh yeah. Kelly and I are doing a free 90-minute online class on infoproducts on Oct 29th. In preparation for making a full-day workshop on making and selling your very first infoproduct. Interested? Subscribe to my Advanced Discount List for the heads’ up & discounts. Or follow me on Twitter for the heads’ up, but no discounts. Your choice!

Ideology / Money / Slaying Unicorns — 24 Comments
18
May 10

Don’t bite the shit sandwich

CC thecheals (ps - it's Nutella)

The “startup” world is bursting with bullshit (or, if you prefer, ‘unicorn dust’).

There are bullshit peddlers on every blog-corner. They don’t want merely to get you to read. They don’t want merely to sell you their products now and again. They want to sell you on their religion.

There are two reasons to sell religion:

To feel validated
To sell something else under the cover of righteousness

Many startup writers want to sell your their ideology because they feel validated as human beings by your agreement. That’s not incredibly skeezy, it’s just human. (Though perhaps a tad bit unself-aware.)

And then you have the other group.

There’s a handful of people, prominent people, who drive their propaganda machines with a purpose: they want you… as grist for their industrial mill. They want to sell you on BIG things (high-dollar consulting, high-dollar seminars, systems), or they want a piece of you directly. An investor can’t exist without products to invest in.

They have skin in the game. Their outcomes hinge on whether you buy in.

So they lure you in by dressing up a shit sandwich.

Mmmmm! they simper through browned teeth. Tastes delicious! Just like chocolate!

Go big! Worry about scaling! Hire a CEO! Take investment — here’s how! Don’t charge! Sell your company to a big company! Never mind that it’ll gobble you up, chew you up, and spit you out as so much gristle!

I’m not one of them

I won’t lie: I’m trying to sell you on an ideology, too. That’s what I’m doing right now, in fact. And I will try to sell you products. I make some pretty fucking awesome products.

But I will never try to sell you a shit sandwich. My whole raison d’etre is to eliminate the selling and eating of shit sandwiches.

I am tired of seeing smart, capable, motivated people derailed by the idea that they need a plan for liquidation. That they need VC. That they have to grow big, and that the only way to do that involves a poisonous four-letter word spelled F-R-E-E.

Wanna drop that shit sandwich? Here’s what you do

This is the backbone of the new religion you can install to replace that shit sandwich in mid-chomp:

The best business model in the world is the exchange of goods and services for money.

If you have to dream up monetization strategies, you’re doing it wrong. Wal-Mart’s board of directors does not sit around their big, shiny mahogany boardroom table and propose monetization strategies. We all hate on Wal-Mart, but you’ve got to admire their ability to turn a profit. Which they do by charging money for things.

Because you don’t monetize a business. A business has the exchange of goods & services for money baked in from the start. And it it’s baked in, the idea of monetization is moot.

Money is better than monetization.

It’s shorter.   It’s sweeter.

It’s easier to say.

 And you can spend it.

Selling direct to your customers — providing value, solving problems — is one of the best highs there is. And it is a helluva lot more rewarding than trying to figure out how to fuel your car with your click-through rate.

That’s the ideology I hope you’ll adopt

Because, frankly, I want more people to see the light.

I want the world to be full of small, savvy, spunky businesses, like mine. Not for my ego’s sake, because I’m an arrogant SOB and I don’t need you to validate my choices. The one thing I don’t need in this world is to feel safe.

The icky, gooey bottom line is this:

It kicks total ass to work directly with your customers.

It kicks ass when you — designers, developers, writers, teachers — realize that you’ve had the power all along. That you can make your own products, that you don’t need a book contract, an angel investor, a gilded invitation, or even permission.

The fancy word for that is “disintermediation.” The not-so-fancy word for that is fucking awesome.

Now kwitcherbitchin, drop that shit sandwich, muster up your arrogance, and go forge yourself a business.

Create value. Charge money for it.

Disintermediate.

Change the world.

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