Creating and selling your own offers comes with huge advantages over any affiliate or ad-revenue based online business models.
In this post, you’ll discover exactly why that’s true (and not just based on my own experience) and what kind of offers you can create and sell, as well as pros and cons for each business model.
All that along with practical examples means that if you invest a few minutes into reading this post, you’ll never again have to ask “but what exactly should I sell?”
Moving Up the Food Chain
Selling your own products is “easier” and more profitable than being an affiliate.
I put quotes around “easier” because it’s not a cake walk and I don’t want to give anyone that impression (more on this topic here).
When you sell your own product, you have a longer lever to work with. You’ll still work hard and you’ll still have to work smart, but the same time and effort invested will yield greater results. And there’s a perfectly logical explanation for that:
The image above is an illustration of an online marketing food chain. Items to the left are dependent on or part of items further to the right.
The higher up in this food chain you are, the more power you have.
Money travels from the customer all the way up to the payment processor, more or less directly. In many cases, someone takes a cut per transaction at each step. In every case, the more customers at the bottom of the food chain, the more money travels all the way to the top.
As a vendor or service provider, you can place yourself right in the sweet spot of the food chain:
- You can benefit from multiple affiliates promoting you, you can make use of any and every marketing channel you can think of and you have total control over your own product and brand.
- You can start a business with minimal investment and minimal risk, even as a one-person company, working in your spare time.
- Crucially, as a vendor you are also building a solid asset. A product with a customer base is worth a lot more than a website or blog with subscribers.
- Plus, thanks to the attention hack, it’s easier to get fans, followers and customers if you are selling something.
Move higher up in the food chain and it starts tilting towards more risk and more capital and technical infrastructure needed, to get a business off the ground.
From Information to SaaS: What to Sell
There are five business models that I recommend you pursue. Here they are, along with real world examples that you can learn from:
From a simple ebook to video and multimedia courses, there are many ways in which you can sell information digitally and online.
The greatest advantage with information products is that they can be created quickly and on an almost non-existent budget. Even as a one-person operation, it’s entirely possible to create a high quality information product in a matter of just a few days or weeks and get it to market right away.
This also leads to one of the drawbacks: because the barrier to entry is so low for information products, markets tend to be flooded and there’s price dumping everywhere. Since information is not very tangible and available for free everywhere, you also need to do more work to convince people to buy, especially for higher priced items.
Keeping it Simple: Unofficial Evernote eBook
The Unofficial Evernote Ebook by Daniel Gold is an example of a simple information product that became very successful. It’s also an example of a piggyback-product – a product that piggybacks on the success of a different product (in this case, Evernote).
The product is sold as an eBook, Audio file or Kindle document and is delivered simply via download. The sales page is also very minimal, just listing a few benefits and authority proof of all the places the product has been featured and/or recommended.
The Residual Product: Awesome Screencast Blueprint
Awesome Screencast Blueprint is one of my early products. It consists of a series of videos and was – this is important to note – created based on demand.
People saw my sales videos and videos I posted on the blog and asked me to create a product where I teach how to make such videos. Talk about market research done for me.
I acquired video-making skills as an important asset for my business, so this was almost a “residual product”. All I had to do was teach something I was already doing for other reasons. This is a factor well worth emulating, if possible.
The Info Empire: Primal Blueprint
Primal Blueprint is a company run by Mark Sisson (of marksdailyapple.com) and it’s the brand name under which a whole series of products, courses, services and even live events are sold.
Primal Blueprint products are about healthy diet and lifestyle choices and many of the products are information based. It’s a good example because it shows that:
A) You can make a big splash in a the diet/health niche without being about weight loss.
B) Information products can be scaled up into entire product empires. Take a look at the product line and how there’s something for anyone’s preference and budget. It’s a clever way to scale up an information business.
I use the term “membership sites” very deliberately: the term can describe many things, but in online marketing circles, it’s the commonly used term for an information-based product which is sold via a recurring subscription model.
The main differences between membership sites and information products are:
- You sell ongoing education, teaching and resources instead of a one-time product or course.
- There’s (usually) a community element involved.
An information based membership can be started with very low investment, much like an information product. Once you gain some traction, you’ll also be in a good position to invite experts to contribute content, in exchange for exposure to your members, payment or both. Of course a big advantage is also that you get recurring income from a membership site.
You’ll have to do more work to convince people to sign up, since you’re asking them to make an ongoing investment and not just a single purchase. If all you offer is information, you also don’t have anything that strongly ties your customers to your product. They can cancel anytime, and not lose much.
Filling a Pressing Demand: TreeHouse
TreeHouse is a membership site providing training resources for all aspects of web development.
There’s a clear need for technical expertise and people who are qualified app developers, web developers and similar. Startups and other employers are looking for people with these qualifications and potential employees can educate themselves to increase their chances of employment.
Treehouse connects the dots and has done so with great success.
Forums and Niches: LearnShootInspire
LearnShootInspire is a forum-based membership site for aspiring photographers.
The fact that it’s forum-based implies that a lot of the work is done by the community. Disclaimer: I’m not a member, so I don’t know for sure how much content is provided by the vendor and how much of it is “just community”.
Very cleverly, LSI also differentiates itself in the (huge) photography market by focusing on newborn, child and wedding photographers.
Community and Love (also a bit of Business): Fizzle
Fizzle is a membership site for aspiring bloggers and online business creators.
I’ve included it here because it’s a good example of two things:
1) It’s a “covert” piggyback product. The offer is being sold off the back of Corbett Barr’s considerable success and reputation from ThinkTraffic. It’s an example of “blog first, sell second” which is an approach that can work, but one I don’t recommend.
2) If you look at the sales page, you’ll see that the main emphasis is on the community aspect. Almost all the content on the page is essentially about how great it will feel to be part of this community. It shows that they know how much they can use the authority of Corbett in selling the product and it also shows that they have an emotion-based or customer-based focus instead of a product-based focus. That’s a good thing and one you can and should emulate for your own business.
When people need things done for them, offering a service is often a viable business opportunity.
A service is a very tangible product and often doesn’t need a lot of explaining. There’s something you need done. You don’t want to do it yourself. We’ll do it for you. It’s pretty straight forward and that can make for an easy sale. Many services also have the potential for creating return customers. If you offer a great service, customers will come back to you again and again, with bigger orders. If you can be the trusted source for a particular service, for a handful of people, you’ve already got a sustainable business.
The drawbacks are quite obvious. You have to deal with clients and their whims (offer very narrowly defined services to make things easier to handle). Services also aren’t as easily scalable as digital products, since there’s more work to be done, the more orders you get. This means that you need to build and manage a team, probably sooner rather than later.
No Fear of Competition: The Content Authority
Website owners need content and writing content takes time (plus, it can be pretty tedious). Article writing is a sprawling online market with many suppliers.
While many writers simply offer their services as individuals, some go on to create large-scale services, employing hundreds of writers and servicing thousands of clients.
Why am I showing the Content Authority as an example, instead of a giant like TextBroker? Because the Content Authority started when most would have said the market was already over-saturated and cornered by other providers, but rose to great success very quickly. It shows that even in a crowded market, you can make a dent with a good service and the right marketing.
Knowing Your Niche: Gourmet Marketing
Anyone offering online marketing services to offline businesses is involved in a big, highly competitive industry.
Gourmet Marketing cleverly side-steps the bulk of competitors by focusing solely on restaurants and bars, with their marketing service. This makes them the go-to experts for a very specific target audience, which makes it much easier for them to get clients.
Also known as “software” as that’s the only way it existed before the Internet came along. Distributed software is anything the customer downloads and installs on a device of their own. The operating system you are using is a piece of distributed software, for example.
An advantage of selling software is that it’s more tangible and more direct than information and that makes it easier to sell.
What would you rather buy: a course that teaches you how to solve a problem or a piece of software that solves that problem for you?
A major disadvantage is the cost of supporting distributed software and keeping it up to date. An information product can easily be sold as a one-off thing. Create it, sell a few hundred or thousand copies with a launch and then forget about it.
With distributed software, unless you know that you’re going into a market where you can get continual sales, it’s probably not worth starting.
Built to Fit: Hybrid Connect
Hybrid Connect is my first “big” distributed app and it comes in the form of a WordPress plugin. In a way, it’s also a piggyback product, since it relies on the WordPress platform (and the immense popularity of WordPress is an advantage for us).
Hybrid Connect was opened to a small group of early customers as a fairly slim product. Ever since, it has been expanded and improved based on customer feedback and suggestions. As a result, it turned into a better product than anything we could have ever come up with on our own.
Evergreen Software: The Action Machine
Productivity is a big deal and many people are interested in anything that helps them get more stuff done. The Action Machine is a clever desktop application for task management and productivity.
The product has been around for years and it serves as a good example that you can create a software product with long term appeal. Plus, the fact that the sales page keeps getting updated indicates the product is still selling (I don’t know any specific numbers), even though it’s relatively small and unknown, compared to big names in the niche like GTD.
Easier Multi-Platform: Klok
Klok is a time tracking application available for individuals as well as teams.
The software is built on the Adobe Air platform, which makes it compatible with many operating systems. I don’t have any experience with using Air myself, but for anyone wanting to sell desktop software without having to deal with multiple versions for different operating systems, it’s worth taking into consideration.
Also, Klok integrates with other products like FreshBooks and Asana. This is a plus for the users and can also be a clever marketing tool – each new integration gives your product potential exposure to a new crowd of people.
Software as a Service (SaaS)
SaaS is all the rage. Out of 100 startups in silicon valley, I’d estimate about 100 are SaaS companies. What exactly is SaaS? Definitions vary, but mostly, it’s software that is accessed online (“in the cloud”, as they say) and that you need to pay a recurring subscription fee for.
The SaaS model comes with significant advantages for both vendors and customers, mostly because the product is in the cloud. It means that customers don’t have to download and install anything, which in turn means there are no compatibility issues, no waiting times and no downloading and installing new bits and pieces when there are software updates. It also means that the product is accessible from anywhere and not tied to just one particular computer.
For the vendor, some of these same advantages apply: no worries (or greatly reduced worries, at least) about supporting multiple operating systems and system configurations, no endless support requests from people who can’t get the software to run on their machine etc. Plus, there’s the advantage of recurring revenue, of course.
The major downside of SaaS is that the necessary infrastructure is quite complex. You can create and sell an ebook with software you already have on your computer, a budget of about $20 for domain and hosting and a free PayPal account. For SaaS, you need a tech person (or a lot of technical knowledge yourself), powerful and scalable servers and much more. There’s a significant cost involved in getting your product set up and ready to market.
SaaS Success Without Funding: SECockpit
Most keyword research tools are sold as distributed apps and the nature of distributed apps leads to many limitations. SECockpit is a keyword research SaaS, which moves away from the desktop and instead processes requests on a large and powerful server setup. For users, this means more data, better data and higher speeds than anything else offers.
SECockpit is quite a unique example of a SaaS because it was entirely bootstrapped. There was no starting budget, no investments, no funding of any kind. It was started by just two people (myself and Sam Haenni) and profitably grew to a user-base of hundreds before any additional staff was added. It’s important to note that one of the two people involved is a genius-level web developer, without whom none of this would have been possible.
It’s also important to note that that person isn’t me. It goes to show that if you have one tech person and one marketing person, you can make a lot happen. This is an extreme example, but I think it’s worth listing.
Why Didn’t I Think of This: Hello Bar
HelloBar is a very simple piece of software. It’s the least complex or complicated SaaS I have ever encountered. In fact, I doubt many people would have the balls to even set this up as a SaaS and charge a monthly fee for it.
Now, that might sound like I’m insulting HelloBar. But I’m not.
Someone created this simple little thing, decided to sell it as SaaS and it worked! I admire that.
I’ve added this as an example so that there’s a counter to the common objection: “SaaS is too complicated for me”. SaaS doesn’t always have to be big, complex and scary.
Another Bootstrapping Example: Freckle
I mentioned above that SECockpit, as a bootstrapped SaaS, is a bit of an exception. To show that it being an exception doesn’t mean that it’s a complete freak occurrence that can never be replicated, I present Freckle.
Freckle is a time management SaaS made for freelancers and service providers. It was also completely bootstrapped and is, to my knowledge, run by a team of only three people. The product managed to carve a niche for itself in a market with many competing services to choose from and has become quite successful in the span of only a few years.
What About Mobile Apps?
I haven’t mentioned iPhone apps, Android apps etc. even though those are clearly also products you sell yourself.
I won’t deny that there’s a big market there and if you manage to create the next Angry Birds, please invite me to your private island parties.
I see app marketplaces as a great marketing channel for your business, rather than the foundation of it. If you have a product of your own, creating an app that makes it accessible on mobile devices for your customers can be a great idea. Having the app itself as your sole product is less appealing to me, because then you are tied down to the marketplace with all its rules and conditions.
To me, that looks too much like combining the drawbacks of being an affiliate with the drawbacks of being a vendor…
What About Kindle Publishing?
In the IM space, there’s a bit of a craze about Kindle publishing. Amazon has opened up great opportunities for self-publishing and for ebooks specifically, it might be a good way to make sales. Having a self published Kindle book is a lot less of an asset than, say, having an ebook you sell independently, which builds your customer list and for which you can recruit affiliates (that go on your affiliate list).
In short: there’s nothing wrong with it, but I’d rather focus my efforts on businesses that I have more of an ownership over.
What About E-Commerce?
With an e-commerce store that sells physical products, you have many of the same vendor advantages as with the examples above. You have your own brand, you build a real asset, you can gather fans and followers.
However, you also need to deal with some disadvantages of selling physical goods such as shipping, item stock etc.
Personally, I moved from e-commerce to selling digital products to avoid these issues and I haven’t ever looked back.
What Not to Sell
All the examples listed above are of businesses that can be started small and that focus on a very specific need of a very specific group of people. This is essential, in setting up your own offer for success.
The most common (and deadly) mistakes you need to avoid are:
The “Me-Too” Product
Seeing a competitor get a lot of business and thinking “I could do that too” is not a good basis for a business. Your product can’t be a clone of a different product. You need an edge. You need something that separates your product from the competition. In other words: you need a unique selling proposition.
The Product that Does Everything
Combining several products into one is, strangely, often an appealing idea for new entrepreneurs. A combination product (e.g. social media plus video hosting plus analytics plus…) might sound appealing in theory, but in practice it’s a nightmare to create and more difficult to sell than a highly focused product.
The Next Facebook
Don’t try to create the next big thing. There are two issues with this:
- A “next big thing” product relies on mass appeal. Facebook is pointless if only very few people use it and the same goes for many of the Internet’s behemoth companies. Needing this mass exposure as a condition for success is simply too much of a gamble.
- Most “next big thing” ideas come with the following business plan: “we’ll get to millions of users and then we’ll figure out how to monetize this thing.” This is not a good business plan.
Over to you: what are your questions about this topic? What are you selling? What do you plan to sell? How can I help you sell more?
Let me know by leaving a comment!
I clipped this article to my Evernote. :) What a great guide!
My sister and I are selling a service. Design and publishing pack. My sister is a graphic designer so she will be doing all the design stuffs. I’m in charge of all the marketing stuffs.
How I see ourselves is more than freelance designer/ publisher. My goal is to make this a real business THAN offering our services at freelancing platforms such as Warrior for Hire or oDesk.
That’s how I realised we need to differentiate from the rest of the service providers/ designers. Our primary service is a done-for-you publishing pack that target Kindle publishing authors (more details on our new website if you’re interested) to handle their technical stuffs such as formatting, cover design etc. We’ll have more custom services coming up (author website, book trailer etc).
Basically that’s for now. In term of scaling we might hire other talented people if our business goes well.
We’re just started out. Getting ready to launch our website. Some of the questions I have involve driving traffic and conversion (of course!). They’re the fundamental to all business. To be more specific, I need helps in:
1. Recruiting JV – how to approach, follow up and partner with them. I do not need a lot of JV or “scratching my back and I’ll scratch yours” kind of promoting method. I know I just need a few quality JV. Anyway my current business model is also limited to our time and resources. (We’re both having full time job by the way)
2. Reach out to pre-sold audience. There is huge audience in Kindle publishing. Be it on WF, facebook or buyers that already bought Kindle course. I need a way to reach out to them, and let them know our existence.
3. Build list. I’ve written a free report to educate prospect for the benefits of getting our done-for-you package. I thought of buying solo ad but not sure is it a worth trying method. Any other way to drive traffic to my opt-in page? I’ve zero list and limited friends on facebook.
To be honest I’ll be afraid sometimes. What if our service doesn’t sell? What if someone takes our idea and replicate quickly? Etc. But I’m always grateful for being able to read your insights. Thanks Shane for always providing quality content.
P.S. I remember you mentioned about how you differentiate from other online marketers in IM niches is – simply being honest, provide quality content and honest reviews.
That’s really inspired me a lot. We kind of having a similar feeling. I mean I could be selling another Kindle publishing training and jump into WSO but it just doesn’t give much values (not to say we are not experienced Kindle authors). In fact, we hope to give quality technical supports to help those people to kickstart their Kindle publishing journey at an affordable price that’s correlate to our talents.
Wow, this is the longest comment I’ever left on your blog! Looking forward more of your content. Thanks!
Thank you for your comment, Hazel!
I’ll do my best to address these topics in upcoming posts.
Bullseye again. I am doing eCommerce and always “looking forward” to doing something in the digital delivery market. My wishlist would be something that once rolling, can keep rolling – unlike membership sites that require constant updates & added material as to assure continuation. I like the piggyback concept and need to think about how this would apply to me.
Shane, a ton of negative thinking comes up with “but I’m not an expert in much of anything”, and yet probably 100% of us readers are in the top 1% of internet anything. Your weekly inspiration keeps me positive on the positive.
Yes, I would like to be part of your next launch GNBN group (good news, bad news). It would be fascinating to experience exactly what is involved, and I would look forward to adding my 2 cents as value added!
I think with your experience in ecommerce, many things in digital marketing will be much easier for you to get a hang of, as well.
This would have to be the best summary of online business models that I’ve seen anywhere!
Well done, Shane.
What I like most is the comparative pros and cons for each model.
The fact that you’ve gone on to provide real-life examples of each model, really makes this an incredibly useful summary. It really puts everything in context for those of us with much less online experience or success.
I currently provide a service, but have been battling for (12+) months to clearly define some products that I want to create and sell online. I’ve bookmarked this page for reference as it has helped me consolidate my thinking some more.
Keep up the great work! :-)
Thank you very much, Stephen! That means a lot, after investing lots of time into writing a post like this. :)
This is an awesome summary Shane.
I have been in most of those business types (except software) and many offline businesses. The absolute best business was my online model train membership site…
It was so incredibly simple to set up and over 4,000 members went through the doors before I sold it for 6 figures.
Most people think membership sites are hard to set up and maintain, but the opposite is true. Affiliate marketing is so much harder.
Model train membership site? How’s that for a great example of a niche most people wouldn’t even think of! :)
I just read your post about it. Really good write-up!
As someone who has been considering niche membership sites i would be very interested in your opinion on what you consider to be the sweet spot monthly subscription $ amount to charge. Also, what are your thoughts on fixed term Vs open ended membership sites.
WOW – you could have “easily” packaged this detailed information and sold it as a stand-alone “How-To” guide – but I’m so glad you’ve made it available to your list instead!
I’ve been going back and forth with the idea of creating a “Video PLR” business and serving the needs of those who just don’t have the time to develope the skills to make quality videos to give their various niche blogs a “boost”. I think your article has given me some direction on this!
Thanks for the outstanding information – Cliff
Thanks for your feedback, Cliff! Glad it gave you a helpful nudge. :)
Very useful blog – took a ton of notes, but am annoyed by your pop-up “6 Figure business…” which I subscribed to a while ago, and could not stop from blocking important real estate of my screen. I hope you find a way to NOT offer it to people who subscribed already, or allow us to close it!
Sorry about that. The slide-in can be closed. We’ve had a couple of people report that they can’t close it, but we haven’t been able to replicate the problem ourselves. As soon as we do, we’ll be able to fix the problem.
You continue to prove you are one of the sharpest minds in this space. Thanks for another great post.
Thank you very much, Eric!
Great job. But after 3 years, I finally have found something to disagree with you on.
“Having a self published Kindle book is a lot less of an asset than, say, having an ebook you sell independently.” Having done both, I have to say that I would rather have 1 big gorilla on my side (Amazon) than constantly fighting the other one (Google).
Furthermore, I think you are overlooking the huge leverage of taking that Kindle manuscript, turning it into a paperback book and an audiobook, and then turning all 3 (with tiny formatting changes) to a dozen other major publishers to do all sales, accounting, and delivery.
Affiliates? No thank you.
But the above notwithstanding, you’re still the man.
Thank you for your comment!
You make a very compelling argument about the gorillas. I don’t speak from experience, when it comes to Kindle publishing. Perhaps I’ll change my mind once I get something published myself.
You’ve given me some new ideas to work with for several of my niche markets. I never really considered all these alternatives.
Awesome! I’m glad the post is useful to you.
I’d have to rate this as one of the most useful posts you’ve written in a long time (and that’s not to devalue your previous posts).
Thank you very much, Peter, that means a lot to me.
Hi Shane, I actually have a question about your latest distributed software foray “WPSharely”. Are there any concrete differences between it and the free service offered by Cloudflood besides G+ integration and albeit a much nicer design?
Excuse me if this is misplaced :s but there’s no comment section under the landing page.
Yeah, there are many differences. Too many to list in a reply here, without it dragging on.
In short: design, flexibility in the way you can use the plugin, some future updates we’re still working on and much more.
I’ll be sending an email with answers to some of the questions I’ve gotten about WP Sharely and I’ll try to address this as well.
Figuring out what to sell isn’t nearly as hard as picking ONE thing, sticking with it, AND …seeing it through until it’s profitable!
You start building niche sites. You get a few up and running and start making some chump change. The sun is on the horizon.
THEN you buy a sexy new WSO about how to create your very own information product. Hot damn! You put the niche sites on the backburner and now you’re off to the races with a whole ‘nother thing.
While you’re creating your info product, your niche sites wither from a lack of love, just like flowers in a garden. And on and on it goes…
Yes, speaking from painful personal experience – If I had to point to just ONE thing that prevents folks from “succeeding” online *earlier* (like…a LOT earlier) it’s the endless fracturing of attention that comes from chasing too many opportunities simultaneously.
Thanks for your comment, Vic!
I think this is an issue many people who come to this from the “make money online” angle suffer from.
When your only goal is to get paid, it’s easy to be torn between many attractive looking offers. The sooner someone in this situation can find their footing, the better.
People who come from a more entrepreneurial angle usually have a better run of it. If your goal is to build something awesome (and you have an idea of what that is), you’re less of a leaf in the wind.
On the other hand, you’re confronted with a new set of problems (e.g. being too in love with your own idea to be able to admit it’s not working…).
Excellent timing..I’m in the process of creating my own information product..and this is just the best comprehensive guide i have seen to date.
Again Shane i’m bookmarking it..
Thank you very much, Greg! Glad you like the post. :)
Wow, this is a useful post. So packed with information. Learned so much about some new things I’m going to implement into my website. The Hello Bar is exactly what I was looking for, for my business.
You didn’t mention WordPress themes and WordPress plugins, but it is a huge market.
Those are examples of distributed software. :)
Would love to know how you created the first graphic food-chain.png ?
Photoshop? Outsource? other software?
That was made in photoshop, yes.
thanks for valuable contents. I am going to start my own consulting business.i dont have any product to sell and i don’t know how to start to pack a product. I found a niche as getting client for professions and solo entrepreneurs in the market. but i dont know what should mention in my homepage. should i start from blog only and get some followers and subscribers first or i can start to add one on one consulting from day one? thanks for help