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How To Increase Profits Pricing Infoproducts Selling On ebay

Profits are generally viewed as excess revenues when compared to the costs of doing a particular business activity. It isn't just enough to create revenue, but it should also exceed the costs of doing business, otherwise you are actually creating a loss and not a profit. Some entrepreneurs get caught up in the idea of making excess amounts of cash as the final goal of a business, without taking into account the amount of work or intrinsic costs of doing business.
Type Of Product Affects Pricing

For example, when eBayers were allowed to do infoproducts in auctions, the cost of doing business for them was very low. All you had to do was create the product once, establish autoresponders, and then do listings to sell. The costs of doing business were limited to the time spent doing listings, the initial cost of creating the infoproduct, and the costs of fees on eBay for listings or subscriptions to stores. There were no delivery costs and not manufacturing costs because digital goods were being delivered automatically as virtual products.

Now, however, if you want to continue to sell infoproducts on eBay, they will have to be in physical format and shipped the the mail system. This requires not just extra costs in materials for manufacturing and shipping, but also in delivery charges, and in shipping and handling fees. Don't forget to pay yourself too, when estimating how much it actually costs to produce an item. If it takes you 15 minutes to package a product, then that's 15 minutes you don't have to do listings or generate business. If you can pay someone to do the same thing you are doing for $6.00/hr, then you would have to estimate that it would cost another $1.50 to complete the sale, on top of what you are paying for the CDs, DVDs, paper, ink, or whatever format you are using. So, obviously the type of product you sell will determine how to price your product to make a profit. Generally, you can continue to offer digital products on your own website with immediate download for far less money than a physical product. But, there are also other reasons you want to offer both digital and physical products, even if you can't do auction listings on eBay for digital products anymore.
Pricing To Spread Viral Infoproduct

If you looked at some of the offers of infoproducts on eBay auctions the prices would seem ridiculously low. Marketers were selling their infoproducts for pennies and sometimes offering resale rights too. Why would anyone do this for any product if they are attempting to make a profit? The idea was to try to get one or two of their products to “go viral” on the Internet and to increase traffic to their eBay stores, websites, and affiliate partners. The value of having others spread the word about your business and the low cost of virtual infoproducts made this type of marketing ideal and low-cost. So, why not charge a low fee and then entice buyers to buy a higher priced item once they are on your email list?

Even now, you will see marketers attempting to go viral by using other portals like Facebook.com and Youtube.com, even now that they can't use eBay.com to do it for digital products. The restrictions eBay put on marketing only physical products through auctions is going to leave some infoproduct creators left with the Classified Ads section of eBay. It's still too early to tell how well this area will work for creating a viral product, but the classified ads do not get priority in searches down by people visiting eBay and there is little sense of urgency created for the buyer when the ad runs 30 days straight.

One of the biggest strategies to create a viral product is the pricing. Sometimes an infoproduct is priced very low with resale rights or given away for free to entice people to distribute it amongst their friends. With an infoproduct that is not on a CD or DVD or paper book, this is very doable without incurring too high a cost in expenses. Profits aren't meant to come in from the actual sale of the infoproduct but from advertising, affiliate marketing, and sponsored offers.
Brandable Products

Besides resale rights, you should make some of your products brandable. By this, we mean that you should include links in the ebook for your affiliate offers that can be changed by the person who buys the ebook with resale rights so they can change it to their own affiliate links and promote it. These are the products that you can price very low with the intention of making them your banner viral products.

So, why would you practically give away an infoproduct with resale rights and then allow others to change specific affiliate links to their own? Wouldn't it just cost you more money? Not really, if you want someone to promote your products for you, giving them the incentive to make money doing so with your own links is sure to make the product spread faster on the Internet. You still have some of your offers available in the book that can take a reader back to your website, and you will land many more sales through this strategy than if you left the ebook unbrandable. You will need some special software to make your pdf files brandable and you will need to include a small application to all your affiliate marketers. Once such product is located at viralpdf.com.
Take Advantage Of Affiliate Marketing

To ensure that many affiliate markets see your product, you will want to join a portal like cj.com or Clickbank.com. Both of these sites would allow you to put up your affiliate offers and people who are looking for offers that they can make money with will see that they can do so with your products and be more likely to use them in their marketing strategy. These strategies work best with digital products rather than physical products so that you don't incur any manufacturing or delivery costs.

Estimating Expenses Into Profits

You can have several different models for your infoproducts business, if you are going to sell physical products on eBay. You can choose between different ways of doing business, depending on what you are most comfortable with. However, your choices will remain to either reduce the costs of manufacture, the cost of delivery, the cost of doing business, or raise your prices significantly. You can't experience a sound profit in your business until your revenues exceed your profits, and to do that you have to take into account the expenses, especially now that eBay demands infoproducts to be physical items if listed in the auction section.

So, your choices might be, thus:

•    Lower production costs
You might want to lower the expense of production by leaning more on private label rights and establish a membership at a website that can offer you quality products that you can modify and resell. Or, you can find a source of paper, CDs, DVDs, and printing equipment that lowers your cost of materials that you plan to use to create your product.

•    Lower delivery charges
There is very little wiggle room here as it will depend on what the USPS is charging as a rate. However, you can look into bulk mailing programs and at-home stamp printing programs to help reduce your time going back and forth to the post office.

•    Lower cost of doing business
This can be any tool or sales tactic that increases the time you have to generate revenues while reducing the time spent doing business. Autoresponders would fall into this category.

•    Raise your prices
In order to stay competitive in the marketplace, your price will have to reflect either a superior product, a value-added product, or an inexpensive alternative to higher priced items on eBay. If your production costs, delivery, and cost of doing business are too high and you must include them in your price making you less competitive, then you need to find some other way to make the product stand out as being a good value for the money.

Now, let's go back to the three ways you might be doing a business using physical infoproducts on eBay.
Estimating Production Costs

The DIY model is the one that will take the most amount of time away from you personally, but can also provide superior customer service because it gives you the greatest degree of control over your business. Hiring some third party will obviously free your time the most, but also keep you a little out of the loop of delivery and quality control. You can use some private label companies to help reduce the time requirements, but they will increase some of your production expenses when you pay for content and quality may not be that great.

Production Costs In DIY Model

CDs or DVDs
Paper for printer
Quality Printer
B&W Ink for printer
Color Ink for printer
Software for CD/DVD creation
Jewel cases
Special paper templates for jewel case inserts
Private label infoproducts
Camera for photographs
Membership to graphics download sites
Binding equipment
Covers for paper infoproducts
Inventory control system

As you can see, the number of items needed to do a physical product far exceed what is required for digital creation and delivery. You will have to break it down to find out what it actually costs you to create your own infoproduct at home, by totaling your expenses, and seeing how that translates to each individual infoproduct you put out. You may find you can get it as low as about $3 per CD or DVD, but we aren't counting how much it cost you in terms of time doing business. That will come later.

Estimating Production Costs In An Outsourced Model

You are now also probably thinking about having tons of infoproducts lying around your house and how you will manage inventory to make sure you don't run out. This may get a little much for you and maybe you're willing to give up some control to have less production costs, by hiring a third party dropshipper to do the work for you. You also don't really want to get into how much in materials it will cost you to create your own infoproducts at home. So, you decide to go with a dropshipper and now you can easily estimate what your production costs will be create a CD/DVD as they usually give you a per disk cost, ranging from $5 to $8 per CD or DVD.

Estimating Production Costs Using Private Label Companies

You might add a little bit to production costs when paying for the content that you will be using, but that will eventually be offset by the savings in the time doing business. However, if you just look at the production costs, it will look like you are spending more to get the same thing done that you could do yourself for free. So, it all depends on what stage you are in your business as to which of these three choices might appeal to you. If you are just starting and have plenty of time, you might want to create some of your own infoproducts and trade time for the expense of paying someone to create partial or all of your physical items.

Estimating Delivery Costs

For both the DIY model and the private labels model, you will be in charge of figuring out and managing the delivery costs. This includes the necessary materials to deliver out of your home. You may even want to include gas costs as these are high these days:

Bubble wrap
Mailing Envelopes
Mailing labels
Stamps.com Software for at-home stamps
Scale for weighing products for shipping

For the third party dropshipper, they may or may not include the price of delivery in their original estimate for you. However, you won't be buying any materials to ship if you use a dropshipper other than potentially sales pages and postcards to maintain communication with your customer. So, your costs here are very low using a dropshipper.

Cost Of Doing Business

The cost of doing business includes intangibles like time spent doing a business activity or membership fees to help you conduct business. This would include eBay listing fees and the hourly wage it would cost to have someone do the same activity you are doing to conduct business. Of course, in the DIY model many entrepreneurs don't pay themselves a wage for conducting business until they start to make a profit. So, it's up to you to decide how you want to estimate this activity. You do know that if you pay someone else do something for you, that those wages would count as in the “cost of doing business” column.

In the next section, we'll go over a hypothetical model to discuss how to determine if your business is profitable, and if so, how big can your profits be in an infoproduct business.

Visit my Selling Info on ebay Blog for step by step information

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