Developing a $300,000 a year product - a checklist and examples
Here's your guide to creating the kinds of products that can net $300,000 a year or more in sales This is the fifth article in our series of articles on Your $300,000 a year business plan. Developing Profitable Products To have any chance of reaching the $300,000 a year revenue goals with your product development business, you absolutely have to be able to develop the kinds of products that have the potential to generate significant revenue streams. That means pursuing a product development and marketing strategy that maximizes the chances of success, while minimizing the chances of failure. And also minimizes the cost of development in terms of times and money. Here is the checklist I use to do that, followed by examples of four different products that meet the requirements of the checklist.
| The $300,000 a year product checklist |
| Item | Comment | Yes | No |
| Price | The product price should be at least $50, with a price of $97 or more being preferred. Higher priced products mean fewer sales are needed to reach revenue goals. | | |
| Profit margin | The product should have close to a 100% profit margin. That means the cost needs to be a small fraction of the price. The cost should never be more than 5% of the price. | | |
| Easy delivery | The product must be easy to deliver to the customer. Digital delivery over the internet is preferred, but due to concerns of unauthorized duplication and resale, physical delivery is often the only solution.
In either case, the product must be easy to package, easy to ship, easy for the customer to receive - in good and usable condition. | | |
| Minimal support | The product must be such that little or no support is required for the customer to use the product. Products requiring much support will lead to customer dissatisfaction, high support costs, and product returns. | | |
| High perceived value | The product must have a high perceived (and actual) value to the customer. The customer must understand that the benefits of having the product vastly exceed the price to acquire the product. | | |
| Exclusivity | You must be the exclusive (only) source for the product. Being the exclusive source for a product means you'll have no competitors willing to sell the same exact product for less money.
Exclusivity means you control the means of distribution, the price, the availability, the delivery, the support - all the important elements. | | |
| Compelling reason to buy | The product must offer a clearly defined, easy to understand, compelling reason for the customer to want to buy the product immediately upon finding out about it.
Creating this compelling reason should be the central focus on the design and development of the product. Define the compelling reason to buy first, then develop the product. | | |
| Qualified customers | The product must appeal to people with the ability to buy (they have credit cards), the desire to buy, the time to find your product, and the skill to buy (internet savvy). | | |
| Legal, ethical & moral | All aspects of the product should be clearly legal, ethical and moral. Life's too short to get involved with products that have questionable legal status. You don't want to end up in court or in jail because greed clouded your decision making process. Do it above board, or don't do it at all. | | |
| Scalable sales volume | The order and shipping system for the product should be able to automatically scale to whatever volume of sales come in. If the sales jump from 1 a week to 100 a day, the order taking and product delivery system should be able to automatically handle it without your involvement.
Failure to have a scalable order and shipping system places an upper limit on the amount of sales (and profits), you can handle. | | |
Preferred business models with product examples
Here are four different business models, with examples of products, that fit the above checklist:
- Special purpose tools and software - Software tools developed to achieve one specific purpose, delivered over the internet, generally via the web vending business model.
A good example is Easy Download Protector. It sells for $149, is delivered over the internet, has a compelling reason to buy, high perceived value, requires only minimal support, has a scalable order and delivery system, and is legal, ethical and moral.
You'd need a programmer to develop something like this for you, but it could be done - probably for less than $500. (Use www.scriptlance.com or www.elance.com to find programmers to bid on these kinds of projects).
- Information product - DVDs, videos, audios, books. In theory, ebooks should fit the above checklist, except ebooks generally have a low perceived value, and a high theft rate. Better to go with physically delivered info products - specifically DVDs and videos.
A good example is my own DVD, or better yet higher end training DVDs like Photoshop CS3 for Photographers .
High perceived value, compelling reason to buy, little support required, easy to deliver, scalable, exclusive, and legal.
- Subscription web site - A good business model if you are able to pinpoint a specific topic area. Extremely high profit margin, very scalable, high perceived value (depending on topic), exclusivity, and legal.
See examples at Restaurant Owner, strengthcoach.com,www.bmyers.com
- App on tap or delivery of service over the web - A combination of the special tools/software and subscription web site business models. All the advantages of delivering digital products, without the risk of theft. The scalability and profit margin of subscription web site without the requirement to add content.
Highly scalable, high perceived value, compelling reason, high profit margin, minimal support, exclusive, and legal.
See example at Bidnapper.com.
Which model to pursue?
In reviewing the above business models, the big question might be, "Which of these preferred business models should I choose?"
My advice . . . work toward developing different products for each business model, and as mentioned in the previous articles in this series, gear those products so they appeal to a specific market of customers who might be interested in many or all of the overlapping products.
This way, you plant seeds for several different potentially high revenue streams, which all work for you.
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