Income Generation Series: Informational Products

Overview

money-treeSelling informational products is a very common business model on the internet.  Nowadays it is hard to surf the internet without running into an e-book or course being sold on even conceivable topic imaginable.  Informational products includes e-books, course, informational websites, and guides.  The basic concept is to produce a body of specialized knowledge and sell it to others for a profit.

There are many different channels to sell informational products; eBay, Craigslist, websites, affiliate marketing, and email lists, among others.  The channel effectiveness will depend upon the niche of the product and the competition.  Many informational product merchants sell their products across several different channels to maximize their exposure.

The production of materials can become time consuming and capital intensive if outsourced.  Depending upon how specialized the knowledge is, the writing and content development may be outsourced.  If outsourcing is used, the merchant generally pays for the cost of production upfront, with the intention of generating sales higher than the cost of production.  As with just about anything in life, you get what you pay for, so using cheap outsourced labor runs the risk of developing a poor product that may be difficult to sell.

The major benefit to this business model is that once the content is developed, sales can be setup to be automated.  There are minimal variable costs associated with each consecutive sale, so it can be relatively easy to recoup development costs.  Additionally depending upon the scarcity of your knowledge and the demand in your niche, the price point for a product can be very high.

Analysis

  • Time:  The time requirement is generally very high in the content development phase, but drops off sharply once the product begins to be sold.  If setup correctly the sales process can be mostly automated.  Utilizing outsourced labor can also decrease the time requirements.
  • Capital: If developed 100% in-house, then the capital requirements are very low, although this is personally not recommended.  Utilizing outsourced labor will increase costs, but will ensure you are not burdened with the development of the project.  Development costs can range from $500 – $5000.
  • Scaling: This business model has excellent scalability.  Once products are developed, they will continue to develop income as long as they are actively promoted.  Products can be repackaged or sold through different channels to increase sales volume.  Most of the sales process can be outsourced or automated.
  • Outsourcing:  Most of the activities associated with this model can be outsourced.  Although it may be very difficult to outsource complex content development.  This will primarily depend upon the skill of the labor pool.
  • ROI: This is highly variable on the niche, demand, intrinsic value of the content, price point, development costs, and marketing overhead.

Recommendation

Informational products is a solid business model on the internet if developed correctly.  Given the development time and associated overhead of outsourcing, this business model will not be utilized until later in the growth plan of my business model.  It will provide an opportunity to diversify income, although the revenue it generates will take some time to capture.  Another potential for this business model is to generate content and give it away for free, in the hopes of adding value to existing websites.  The intention would be to utilize free content to increase traffic or add value to members only sections.

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