Making money with a product: a myth?
Written on 13th June, 2012 • Comments
I’ve realised there was a time I didn’t believe people would pay for a product. In my mind, it was a myth. As an entrepreneur, it’s so vital to overcome that.
First, a coffee shop conversation
I was chatting with my friend Joss in a coffee shop recently, and he told me about his new project, Open Exchange Rates, which is gaining a surprising amount of traction. He’s a great hacker and he’s done countless side projects and many open source collaborations, and he’s had great success with many of them. He’s also done work for many different people and has no problem finding great, well paid work.
From traction to a mini brainwave
The traction with the recent project got him thinking, though. This was a turning point for him. He had a hunch that this could be the project he could turn into a startup venture. He knew he could enjoy spending his time building this and scaling it up. The key realisation was that if he could make it work - and the signs were good that he could - then he could stop working for others and spend his days working on something he enjoyed and something he was accumulating value with, which belonged to him.
Thinking more about paying for products
What he shared with me next in our coffee shop conversation was very interesting. He said that after this realisation he hit a problem. He started to think about how he would achieve this, and realised that to make it the only thing he worked on, he’d need to make money from the product. He then thought about other products people pay for. He thought about products he pay’s for, and realised he doesn’t pay for products, or at least it was very rare for him to. He thought long and hard and tried to understand why anyone would pay for anything. In his mind, products generating revenue was a myth and he couldn’t reach the mindset where it existed in reality.
A familiar feeling
The most interesting part for me about the whole conversation, however, was that I suddenly realised that I had this exact same feeling just before I had the idea for Buffer almost two years ago. I’ve now realised by discussing it with others that this is a very natural mindset and feeling. For some like my friend who is a fantastic developer, it seems crazy to pay for something which would only save you a bit of time. Also, as a developer, to pay for something which you could just spend half a day or a day coding and have something almost as good, seemed unimaginable.
Why does it feel like a myth? 5 thoughts.
Since having this coffee shop conversation and talking with a few others about this topic, I’ve spent a lot of time thinking about it and looking back to when I had the very same feeling.
Clearly, getting past this feeling that it is a myth to make money is an essential thing for any aspiring entrepreneur. Here are 5 thoughts on why it feels like a myth:
Saving time seems like a crazy thing for people to pay for
When we get started, we often don’t value our time too highly. We spend a little longer, do it ourselves or find a free solution, and save the money. It’s easy to forget that time is a commodity that many will pay for quite freely.
For a small task, we think people can just do it themselves
Many of us who think about creating products are able to build products, which is why we think about charging for something we build. When we can fairly easily build it ourselves, we forget that this is not the case for many others, especially the target customer.
$10 seems like a lot of money. It can feel unimaginable people will hand over $10
A lot of the time, we start from a situation where we don’t have too much money ourselves. This is great because it puts fire in your belly and you have a determination to succeed and get out of that situation. However, in this scenario we cut costs everywhere we can and do everything ourselves. It’s very understandable to feel that most people will not pay for something. We easily forget how small an amount $10 is.
It requires hustle and practice, things which are rarely taught
It takes a certain amount of courage to ask for money, whether you do it in person or you close your eyes and hit the button to put your site live with a payment process in place. It also takes a lot of practice to know how to ask for money, both offline and online, and it takes persistence to keep going until you make that first buck.
Feeling like it’s wrong to make money
People often feel like it’s somehow wrong to make money. It can be hard to realise that by making money you can genuinely have a positive impact on many other people. This is probably one of the most important reasons we don’t “take the leap”. When chatting with my good friend Isaac about the topic, he shared this article which was the tipping point for him:
“Probably the biggest thing that holds people back from getting money are hangups about it. How do you get over that?
Practice? Philosophy? Desperation?
Probably all of them. But I’d bet on the guy with no hangups about getting money and a little drive getting more money faster than someone with tons of skills but hangups about it. There’s silly amounts of opportunity all over the place. The menus at the place I eat breakfast in Saigon are worn out and cheap-looking. I know the top printshop in the city and they’ve done work for me.
I could offer the owner to give him a full set of new menus for a few bucks when I’m on my way to the printshop anyways, and then drop them off the next morning at breakfast. In fact, I’m going to do that tomorrow.”
Making money with a product: no myth
Of course, we all know that there are many products which are very profitable, and making money with a product is not a myth at all.
How I overcame the myth
It personally took me a long time to take that plunge and try to make money. I had many previous projects and a previous startup and none went too far. None gave me the freedom I now have as a result of the success we’ve had with Buffer. The mistake? I never charged for anything. I only ever charged directly for my time. I was so into startups that I even created an event for like-minded people to meet monthly and talk startups.
I gained a reputation as someone who knew what he was doing, but I’d still never made a “scalable” penny. I actually felt like a fraud in some ways because people were coming to me for advice, but I’d never made money with a product. That was the turning point for me, I had to fix it. That’s why I charged from day 1 with Buffer, and luckily I had the first paying customer after 3 days and everything changed.
Do you have any feeling that making money with a product is a myth? Have you overcome this mindset? I’d love to hear from you in the comments.
Photo credit: Portable Antiquities Scheme