Think less like a technically savvy HN reader who does not pay for content online, and more like an info marketing huckster who has an email list of 50,000 people who have bought a similar product in the last six months.
For example, I sell information products as well as a New York Times best-selling book. My students do very well, whether it's learning how to automate their finances or earn more via freelancing. If they don't, they request a refund and I eat any costs of my online products.
Virtually every info-marketer offers generous guarantees and has to live up to their product's hype...or they go out of business. This is an extremely competitive area.
Vaksel, let me also offer some feedback on your numbers. You're analyzing them without knowing how the field works, and frankly every Web2.0 company could learn a LOT from studying the direct-response field. Want to know how to increase your AOV by 200% or 300%? How about finding undiscovered 6-figure revenue sources in your business (like I did 2 months ago)? Why not look to the people who have been doing this for decades?
You assume that most of the money is made from the sale of the ebook itself. That's not correct. Most of the revenue is actually made from the "back end," or other products that are either cross-sold, upsold, or repeatedly sold. Every direct marketer knows that you profit more from having a dedicated group of customers who buys from you time after time...which is why the very best ones take INSANE care of their customers. I'll speak for myself, but I continue to send lots of free material to both my free users and my customers. I email them free stuff. I call them. I write them hand-written cards (seriously).
As a result, on the rare occasion when I sell something, I can sell it for premium prices (often 100x more than my competitors charge for their products) and people happily pay it because they trust me and they know it's the best.
Here's another example. I know an info marketer who pays a 200% commission for any affiliate who sells his book. So if you sell his $27 ebook, you get $54. How does he afford that? Because he's systematically built a funnel that offers his customers more products that they want and are willing to pay for, making it a simple no-brainer customer-acquisition cost -- even at 200%.
A skilled direct-response marketer could take a $27 ebook and turn it into $500 of LTV...and the customer would be DELIGHTED to pay it if the material is of outstanding quality.
IMHO, a lot of Web2.0 companies should stop poo-poohing marketing and learn how it really works. Virtually every Web2.0 company should be doing upsells, cross-sells, and partnerships...and as a guy who co-founded a venture-backed startup and know a lot of other startup CEOs/marketers, I know that very, very few do.
I've put together several bookmarks that might be interesting:
* http://delicious.com/ramitsethi/emarketing (direct-response stuff)
* http://delicious.com/ramitsethi/marketing (general marketing)
* http://delicious.com/ramitsethi/monetization
Hope this helps.
Without any concrete examples, I'm inclined to assume that it's some variation on the "get rich quick" scheme. This makes the numbers even less believable, as the ebook author has even more incentive to claim extraordinary sales numbers. No one wants to buy a get-rich-quick book from someone who claims to sell 10 copies per month. If an author claims to rake in $5,000,000 per month, then people are going to want to hop on the bandwagon and buy his ebook.
Ramit has a way of marketing like a scammer, but delivering solid content every time. Seriously "I will teach you to be rich"? I was really reluctant to buy a copy, but after a few solid recommendations picked it up. I trust Ramit's opinion on finances highly, enough to bring my people to see him at sxsw and keep reading his blog. My copy of his book has been passed through probably 10 people by now (haven't seen it in a year) and I link to his articles from my University niche sites, because they have tremendous value.
When is "I will teach your business to be rich" book coming out?
I'm focusing on helping people earn more via my Earn1k freelancing course right now, so it's basically an IWTYTBR business course. We teach a lot of techniques that can apply to freelancing or even product-based companies.
Btw, thanks for the kind words!
Lists like that get a 15-17% open rate(# of people who view emails)...and out of those 3-5% click rate(# of people who click on the link)
So that 50,000 list = ~400 clicks.
Even if every one of these converts(not going to happen), that's only 400 sales.
Even the biggest names who sell these info products, the guys who have their own lists with 2-3 million emails, and who have tens of thousands of affiliates...only manage to make 5-10 million a year in revenue. Before you take into account the 75% commissions they pay to affiliates(pretty much a must have now).
Reason: build a LIST ... the, build a relationship with this list (free monthly newsletter) THEN sell high-end product (eg membership system @ $19pm 7m7y.com for an example).
AJC