Founder of Growth Models
Launching an online course or a simple digital download is the best way to make money online, right?
I mean, it’s passive income.
You create once and sell multiple times.
Who doesn’t want to spend a month or two creating something then watch the Stripe notifications ping as they’re sitting on a beach sipping on a cocktail?
It’s every entrepreneur’s dream.
But let’s be honest, there’s no such thing as passive income.
Even easily scalable, evergreen products need a continuous marketing effort to avoid fatigue.
It’s actually a lot of work to properly maintain a “passive income” stream.
But there’s one thing that makes it one hell of a lot easier.
Having a product people actually want to pay for.
Sound obvious, but it’s something 90% of creators get incredibly wrong. Here’s how...
It’s easy to get wrapped up in your own idea.
To think you’ve stumbled across the next unicorn business or concept.
I’ve honestly lost count of the founders I’ve spoken to who thought they had the next Uber/Facebook/Tesla and then disappeared without a trace.
When someone stumbles on an idea they think could be huge, this is the general approach they take.
This is an extremely poor way to launch a new product.
Because this entrepreneur has waited far too long to get feedback.
They’ve basically created the product and marketing before seeing what anyone in the real world thinks.
What happens if, after 3 months of building and launching, the feedback they get is “eh, it’s kinda OK I guess…”.
3 months wasted, right?
If you do that 3 or 4 times then you’ll have run through a whole year creating products and ideas that no one in the real world would pay for.
And that’s what it comes down to.
You need to put your own emotions on the sidelines and let the market tell you what it is they will pay for.
There is no truer metric than someone opening their wallet and paying you.
So, how can you figure out what people will pay for?
Over the years I’ve launched multiple products.
The majority of which failed to make any money. Mainly because I created what I *thought* people wanted without asking them if they’d actually pay for it.
All of those failures followed a product launch model similar to the above.
The handful of products that made (and in some cases continue to make) money for me follow a very different path.
Here’s the overall model for guaranteeing the success of your new product launch.
What you basically do in this method is create 2 feedback loops.
The first is a generic feedback loop.
You have an idea and ask your audience if it’s something they’d pay for.
If there are enough people who say yes, you move on.If there are too few people who say they’d pay for this, go back and revisit your idea.
Bear in mind, you’ve got to ask people if they’d pay for this.
Liking something and paying for it are two different things. Unprofitable products are not the goal here - even if people “like” them.
Once enough people say they’d pay for that solution, do a small amount of research on the best way to create it.
Don’t go overboard here. You just want to understand how you can solve the problem. Once you’re confident you can, get to creating a pre-sales page.
With a pre-sales page made, go back and promote it to the people who gave you feedback.
These people are already warmed up and will have some feeling of involvement. They helped refine the idea after all.
Promote it to them and see what the response is like (it’s usually good which makes for easy sales).
This is the second feedback loop and it’s more crucial than the first.
A lot of folk will say they’d pay for something but won’t actually open their wallets. You need this stage to ensure you’re going to get paid for this.
If you receive enough sales to justify spending the time to create, then do it.
If you don’t get enough sales, refund the people who pre-paid and go back to your idea generation stage.
It sounds simple enough, right?
In particular, we’re gonna be looking at her content training offer - Doing Content Right.
You can find great business ideas anywhere.
Just look for where people are experiencing a problem and think about potential solutions. If you want a shortcut, I’d recommend listening to the My First Million podcast.
In Steph’s case, the idea was simple.
She has an incredible track record of growing online publications. It doesn’t take long to do a quick search around and see huge amounts of people…
Struggling with this problemPaying other people to solve it for themAsking on forums, communities, and through comments for advice
A lot of the best business ideas are like Steph’s. Born from your own experience.
If you have experience doing something other people wish they could, charge them for it.
Or, to quote an overused maxim, “if you’re good at something, never do it for free”.
You only want to get feedback from those within your target market.
If you have an audience established already, great. If not, it’s easy to get in front of people who might be interested thanks to places like…
Facebook communitiesSlack channelsSubredditsForums
Simply find the most relevant community, get involved there, and ask for feedback on your idea.
When you’re asking for feedback, make sure there’s a focus on the financial. You want to know if people will pay for this.
If they won’t, it’s not a business, it’s a hobby.
To get feedback on her idea Steph shared to Twitter (where she has a lot of relevant followers) and made sure to ask if people would pay $10 for it.
Bonus points here for being specific with the price. Means people are less likely to run away when hit with a $ figure.
This is something a lot of creators blow way out of proportion.
You don’t need to be a world-renowned industry expert and featured in Forbes 30 under 30 before you create anything.
I’m a believer in Tim Ferriss’s opinion that 3 books on a topic will make you an expert.
Of course, that’s not the same level of expert as someone who’s been in the field for 20 years. Nowhere close.
But compared to the 99% of the population who haven’t read a single book on that topic, you’ll be an expert.
Do ONLY as much research as is required for you to solve the problem your product focuses on.
No more at this stage.
Your goal is to become an “expert” to the common person on the street. Not to the 20 year veteran.
Better yet, take a leaf out of Steph’s book and roll with something you already have experience in.
Check that tweet above and you’ll notice how she uses her experience of growing a blog to 400k visits in one year.
That’s expertise most of us don’t have, and people will evidently pay for.
When I’ve talked people through this stage in the past, they get jittery.
They feel uncomfortable selling something that doesn’t yet exist.
They think you have to create the product before you sell it. And that couldn’t be further from the truth.
A pre-sale is needed to judge interest.
The customers know the product isn’t ready for their use yet.
You offset their worry by giving them an “early-adopter” discount.
They get a great deal, you get validation for your product. Everybody wins.
If you use Web Archive you can see Steph did exactly this.
She also increased the price every 30 sales by $5 until launch. Great way to add a little urgency into the purchase.
And, as you’ll see below, Steph managed to validate the product idea insanely quickly.
What I look for when financially validating a product is to first cover the cost it’s gonna take to create.
First, figure out how long it will take you to create. Let’s imagine a month.
Then figure out how much cash you need to survive for a month. Costs to consider include…
Let’s create those numbers on the assumption this will take you a month, and a month’s “survival costs” for you are $2000.
In the above, you’d need to clear a minimum of $2500 in pre-sales to justify putting the time in.
As I mentioned, that will differ if you’re not doing this full-time or have other products already making money and covering your costs.
Even if you don’t have any costs to cover, give yourself a small financial target.
A product no one will pay for is not a product. It’s a hobby.
You need to know if this can be sold.
Once you’ve exceeded your minimum, it’s on to…
Step 5 - Creation
Nothing surprising here
Just put the time in to create a great product people will be happy they paid for.
Focus on getting the product’s value ABOVE the fee people paid.
It’ll pay off in the long run if you do.
So you’ve successfully scaled your product beyond the minimum fee needed.
Move on and create the next product?Scale this up with advertising and referral marketing?Sit back and order the beach-side cocktail you’ve been dreaming of?
You could do all or any of the above. But I’d recommend improving what you have.
You now have a bunch of customers who are paying for your product. Make the most use of them.
Ask them what you could add to make it better and increase the value.
Keep a record of what people say and, when you see something coming up time and time again, look into adding it.
A few bits on analysing feedback though…
Again, to bring it back to Steph, you’ll see she did exactly this.
If you check her sales page now the deliverables have increased.
This increases the value.
Which means Steph can increase the price.
What started as a $10 pre-sale, is now being sold for $100.
10X the results from every single sale.
Not bad hey.
Use this simple model if you’re thinking of launching a new product. This is going to ensure you don’t spend months working on something no one is going to buy.
Oh, and be sure to check out Steph's Doing Content Right here.
Previously published at https://growthmodels.co/validate-digital-product/
Create your free account to unlock your custom reading experience.