Thursday, 5 March 2009

Free Stuff and Selling

Everyone screams "free" while we are advised to sell for "premium prices". So, how does that work? Go back to Economics 101 and they called it "supply and demand". Talk to a ticket tout after a concert they know about supply and demand!



High Demand and Low Supply = High Prices


Low Demand and High Supply = Low Prices

But....

infinite supply means that prices head towards zero...!


If there's unlimited supply then the prices crashes (ultimately to zero).

If the product/service is in limited supply (ie it is scarce) then the price rises (if it is in demand).

Moral of the story (in a world of sweeping generalisations)...?

Don't try to sell stuff that is in unlimited supply and/or where the price of manufacture is nearly zero
eg lots of stuff on the net
eg most of what is on most people's Ipods (What would most young people pay to download the MP3 of Led Zepp 2??? I think most people swap their portable hard drives and pay zilch...)

Try to sell stuff that is in limited supply... eg tickets to see Led Zeppelin. (Name your price!)

AND while I am on the subject... you also need to ...

1) find people who have a problem that you/your product/service can sort... and...

2) who you have a way of identifying and communicating with... and...

3) have the ability/pockets/willingness to pay you to sort out their problem.

You need all three! two is not enough..

Too many people are selling stuff that is not in limited supply... or rather they commoditise what they do... try to make it look like everyone else so we end up going for the cheap option.
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