Episode 107 - 22 Nov 2017
Last time, I tried to convince you that 1+1 really can equal 3.
I tried to convince you with reasoned argument.
Today, I'll try to convince you with cold, hard maths.
Imagine you go into business. Building digital products.
(Perhaps a course of some kind?)
You set to work and build it. In a week.
And launch it, priced at $100.
By the end of the week, 10 people bought it.
You made $1,000.
THE END
Oh. You think that’s not the end?
I think you’re right: If you made 10 sales in the first week, it stands to reason that you can make 10 sales in the second week.
In a perfect world, you can make 10 sales EVERY week.
(We’ll talk about imperfect worlds in a moment.)
Feeling inspired by your sales, you develop and launch a second product.
And you do it in record time: just one week.
And wouldn’t you know it, in its first week you make 10 sales!
10 at $100, that’s $1,000 dollars for you.
Time for some bookkeeping:
In Week One, you have an income of zero
In Week Two, you have an income of $1,000
In Week Three, you have an income of $1,000 + $1,000 = $2,000
A total of $3,000.
Two weeks work, three thousand income. 1 + 1 = 3
What if you’d done things differently?
What if you’d launched both products at the same time?
Week One: zero income.
Week Two: zero income,
Week Three $1,000 + $1,000 = $2,000 income.
Same time period. Same work in. Different income: $3,000 became $2,000
Depending on how you calculate it, that’s a 50% increase or a 30% reduction.
Those are big numbers.
Let’s mix in some real-world-ness.
There’s more work in launching-one-product-and-then-launching-a-second-product.
Let’s factor that in.
Let’s say that it takes 50% longer.
(That’s a large increase - but let’s see where it takes us.)
This changes the maths. A lot.
In this three week period, the second course doesn’t even make it out the door.
And the first course had just a week and a half of sales: 15 sales = $1,500.
That’s “1 + 1 = 1.5“ territory.
Hmmm.
Perhaps if we look at a longer time-scale.
You get excited about the economies of scale and decide to build and launch 10 courses.
10 week of work. 10 sales each in their first week.
10 x 10 x $100 = $10,000
Very nice.
What if you’ve gone the other way and launched them one at a time
Same effort. But because it takes longer to build and launch products this way, you only manage to launch 7 courses.
But the value of each STACKS.
With a result that the total income in this 11 week period is a cool $35,000!
Of course, the 10 courses now start generating $10,000 every week. At at week 24, the lines cross.
One more spoonful of reality:
Which of these 10 courses is best?
How do you know?
Perhaps a better question would be: WHEN do you know?
You know when you get feedback from your customers.
Is it reasonable to assume that the feedback you receive makes you better at making courses?
Could this translate into more sales?
Make that happen… and the lines never cross.
Watch "Agile Value - Forget VALUE. Let’s talk MONEY!" on YouTube.