One of the really nice things about writing books is that readers get in touch, and somewhat surprisingly, almost  all of them are really complimentary and nice. I like this for two reasons.

1. It’s good for inflating my already bloated ego.

2. It saves me a lot of time.

I hadn’t really considered that second point until yesterday, when I read a really good quote from Winston Churchill. Now I’m sure Churchill was probably drunk when he said most of the things that are attributed to him, but they are often funny and  usually profound. Here’s what I came across yesterday…

“You will never reach your destination if you stop to
throw stones at every dog that barks.”

I’ve tempered it a bit over the years, but I have a tendency to want to throw stones at barking dogs, and if they were coming along (in the form of readers saying things like  “That book is crap Harrison, my five year old could have done better with crayons.”) I fear that my stone-throwing propensity would get in the way of getting much done.

Anyway, I received an email yesterday from a reader of How To Stop Working And Make A Million Pounds Instead. It certainly wasn’t from a ‘barking dog’ and was complimentary, but it did ask a question which caused me to wonder whether other people were harbouring similar doubts and concerns, but not voicing them. It was from a guy called Tom, and here’s what he said:

“I’ve just read your first book and would like to start making some money writing a home study course. You stated in your book that some of these courses can be worth several hundred pounds but when I look at ebay most of the courses are around £17. Am I missing something here. Thanks and really liked your book.”

So the gist of Tom’s question here is this…how the heck can I sell something for a lot of money when there’s  stuff on eBay that’s a lot cheaper?

Well the simple answer is that product prices don’t exist in isolation. Far from it. Price is just one factor in the marketing mix which is  made up of the four ‘P’s – product, price, promotion and place.

I’ve bored you at length about my interest in wristwatches in the past, but don’t think for one minute  that will stop me from doing it again. The watch I’m wearing  today cost over £5,000. I could go to eBay (or similar) and buy a watch which performs essentially the same function for less than five pounds. So aside from insanity or having more money than sense ( both of which are perfectly valid points) why would I choose to spend over a thousand times the price?   The difference can largely be explained via the other three P’s.

1. Product

It’s a better product. It’s better made using better materials and  with more features and user benefits. This is pretty fundamental but often forgotten by people who panic when they see there’s something cheaper on eBay. There’s always something cheaper and there’s always something worse! That doesn’t mean there isn’t a legitimate market for it, but it’s not one I’m personally interested in.

2. Promotion

The expensive watch was sold to me with the help of very persuasive and sophisticated marketing that created a perception of value in my mind. This perception created a tangible value in that, if I chose to sell the watch  (which I have a tendency to do) much of that value will be retained and be willingly paid for by the next owner.

3. Place

I bought the watch  in a place where I would expect to buy valuable items. It was surrounded by comparable products. Had it been in a discount store or on eBay, some of the perceived value would have melted away..

So to go back to Tom’s question,  yes you can buy a ‘home study course’ on eBay for very little money in the same way that you can buy cheap watches, clothing and everything else. But this isn’t the only market, or indeed the one we should be interested in if we want to make some money while providing customers with a worthwhile experience

What Tom should be aiming to do is create great products (with more valuable content, features, benefits and back up), market them in a professional way which supports and enhances the perception of value, and them sell directly to customers (via email, online, direct mail or newspaper advertisements) rather than waiting for them to come to him via eBay or some other passive medium.

Attempting to compete at the arse end of the market (if you’ll excuse the expression) is rarely a sensible strategy for the small business or lone entrepreneur in any market. Profit margins are tiny and you will invariably get ‘beaten up’ by deperado’s working for pocket money and larger professional competition with bigger buying power and deeper pockets. A far better option is to concentrate on the other 3 P’s…and create enhanced products, promote them in professional and innovative ways, and then offer them in places and ways that are in keeping with their premium price.

In closing, I want to tell you a story about a friend who was in the watch department in Harrods recently looking at stuff he couldn’t afford. Another customer was trying on a Jaeger LeCoultre watch.  The price tag was £35,000. “I really like it…”, he said  “…really like it. But it’s too cheap. Have you got something more expensive?”

Not everyone buys on price, but even those that do, can be motivated in ways you can’t possibly comprehend. Assume everyone is solely interested in the cheapest and you’ll make a mistake that  will seriously damage your wealth.