Profiting Big in a Commoditized Digital Marketplace

Profiting Big in a Commoditized Digital Marketplace

February 10th, 2013 // 11:13 am @

The internet has transformed the business landscape creating entirely new industries, reducing the barrier of entry for new entrepreneurs, and shifting what was once a local market to global. However, it’s also destroyed price integrity, open the flood gates to cheap knock-offs, and forced entrepreneurs to get creative on pricing.

Just about any digital product or service you can come up with, someone sells it cheaper online. Furthermore, any topic you can imagine has a vast amount of articles, videos, and forums available for free.

Many of you reading this sell some type of digital product (Audio Course, eBook, Video Lessons, Webinar Instruction) or sell a service digitally (Graphic/Web Design, Consulting, Coaching).

So, how do you compete?
How do you prevent reducing your prices to next to nothing?

How do you take advantage of the latest delivery technologies (like iPads and Smart Phones) without joining the ranks of .99 cent apps?


It all started with music and Napster. Why buy something when you can get it for free (and download it instantaneously instead of driving to the store and picking up the CD).

Napster didn’t wreck the music industry. The music industry failed to fix their own business model flaws and recognize a new opportunity.

A lot of people curse the download-generation; but the fact of the matter is people will pay for digital products. Look at iTunes, Netflix, and Hulu Plus – music, movies, and TV shows CAN all be consumed for free; but the business battle is won by NOT competing on price.

To get to my over-due point: the answer to WIN BIG in the commoditized digital age, is to not compete on price (you will always lose battle) but instead to overwhelmingly justify your higher prices with a better product/service, experience, or technology.

Here are a few rules for the entrepreneur to follow to break out of commoditized digital marketplace.

RULE #1: You have to break the digital comparison. You must include some non-digital components to your offer. Whether that’s a service, personalized attention, or a physical good.

RULE #2: Don’t Sell Where ‘They’ Sell. The easiest way to get sucked into a pricing battle is show up where all of the freebies and cheapies already exist. That’s not to say you shouldn’t in the catalog, but that certainly shouldn’t be THE method by which you sell.

RULE #3: Sell to Acquire the Customer. No matter what you are selling or the price you are selling it at, you should be gaining a customer – not just a one time sell. By having a more sophisticated business model, you can win on the back-end. Focus on the life-time value of the customer and building a relationship. You can upsell, upgrade, and ascend your way to bigger profits.

Two examples of brilliant marketing uses my three rules above…

The iPad is capable of many functions, some not even explored yet, but of course most often its being used as a glorified GameBoy. You are thousands of free and cheap games to download. So how does a traditional game or toy maker compete?

Let’s look at Crayola. Their competition is a .99 cent app that let’s kids finger paint on iPad. Crayola doesn’t want to sell .99 cent apps (less profit, reduces brand value, teaches customers a new terrible behavior).

So they invented “DigiTools” like paintbrushes and stamps that work with the iPad (visit their website) which retail for as much as $40 (this is Rule #1). They ran an aggressive TV and Online ad campaign during the holiday season to spur sales and didn’t wait for kids to stumble on their iPad App in the AppStore (Rule #2). They now offer extensions, add-ons, and upgrades for their kits increasing the value of each “digi-customer” (Rule #3).

The toy brand ‘Nerf’ has also learned the lesson and now creates laser tag guns that incorporate the iPhone. It’s just released some type of basketball hoop that sends scores to your digital device.

Disney is in on the action with “AppMates” that let kids play with physical toys in a digital iPad world (visit their website). Of course Disney can incorporate all of their characters and story lines to offer customers something new.

You probably don’t make toys, but there is a lot to learn from these examples. In a crowded, .99 cent app world they were able to increase prices because of digital technology, not reduce it.

Find ways to enhance the experience and follow the three rules. You’re sure to find big profits.

Share Button

Category : member

Leave a Reply

Featured Content

What Others Are Saying...

"We have improved our business by leaps and bounds. We have, in the past 3 months, doubled our gross income... Thanks to Scott!"

James and AJ Clingerman

Sign Up For Free Tips, Strategies, and Updates