I like seeing numbers.
Today, I want to show you how generosity pays – not just in theory, but in practice (with numbers to prove it).
But first, a little background to help you understand the numbers a little bit better.
In the Beginning…
I started my blog less than a year ago.
To be honest with you, I didn’t really have a direction I wanted to take it – I just wanted to get certain ideas out of my head and onto paper (or screen). I was hoping that once I’d started writing, I’d figure out my ‘niche’ and the direction I was supposed to take would become clear. It didn’t.
So I kept writing.
Over the course of a few months I wrote a book, started a podcast and created a couple guides – and I gave it all away for free. People enjoyed my work, so I kept producing.
I was excited to see my audience grow, but there was a slight problem: I hadn’t made a cent off my website.
I wanted to change that, but not at the expense of my art or authenticity. I’ve always disliked pushy salespeople, so I wanted to find a way to sell to my audience without being a salesman.
A Project That Might Not Work
In April of 2013 I finished up with another product for my readers.
It was a book, but not by any conventional standards.
It wasn’t 200 pages, there was no story arc, it was purposely concise (almost to the point of being abrupt), and the truth is a lot of people probably weren’t going to like it.
It was a collection of my notes, sketches, and ruminations from 2 days I spent with Seth Godin in the fall of 2012.
Initially, I wasn’t going to publish this content, but as I began organizing my notes, I realized how much business-transforming material I had at my fingertips. It seemed selfish to keep it to myself, so I brainstormed ways to package and spread the information as generously as possible.
So I transcribed over 50 pages of notes into a word document. I figured I’d spend a couple hours putting the notes into a blog post and simply hit publish.
But, as with most things I create, one thing lead to another and pretty soon this simple blog post turned into a massive eBook project.
Instead of a few hours of work, it took months.
After several months of writing, drawing, and editing I finally had something worth sharing.
I sent the PDF to Seth directly to see what he thought and to ask permission to share and spread the content. He graciously and generously said yes.
The next day, I threw up a quick splash page, an intro to the book and its purpose, and I hosted the file on Gumroad.com (the Paypal killer).
I planned on giving this product away for free, but Gumroad allowed me to do something even cooler: offer the eBook as “Pay What You Want.”
Now readers could not only grab the product for free, but they could treat me to coffee (or a steak dinner) if they wanted.
I figured this was a fun, no pressure way to let my happy readers contribute to my creative work.
I didn’t expect many contributions. After all, who would pay for something when they can get for free?
As it turns out, more than you’d expect.
Generosity by the Numbers
First, my audience.
At the time of publishing this eBook in April of 2013, I had 166 subscribers (yes, that’s slightly embarrassing to admit – but we all start somewhere, right?!).
This is a miniscule number – a number most people would write off as not being worth the time of day to engage with or monetize.
166 subscribers. That’s it.
So when I finally published my eBook, I sent an email out to 166 people. 86 opened the email (52% open rate). 56 clicked through to the product page on my website (34% click through rate).
I also posted on a couple Facebook groups I’m semi-active in. I posted the cover art, gave a brief description of the book and told people to grab it for free. I didn’t do a good job tracking the conversion for this segment, but I estimated about a dozen people came to the product page on my site.
All in all, I was able to convince about 100 people directly through email and social media to come to my product page and check out the book.
Not very much at all.
But by the end of the first week I was blown away.
A Breakdown by Week and Month:
Here’s what the data looks like, as tracked by Gumroad:
|Total number of views of my product on Gumroad||
|Total who took the product for free||
|Total who contributed $1.00 or more||
|Percentage who contributed $1.00 or more||
|Total Dollar Amount Contributed||
|Range of Dollar Contributions||
$5 – $50
|Average Dollar Contribution (all sales)||
|Average Dollar Contribution (of $1.00 or more)||
While there’s a decent amount of data here, the most important metrics (in bold) are:
- The percentage of people who chose to contribute
- The average dollar contribution of those who contributed $1 or more
Of the people who saw my product and decided to grab it, almost 50% contributed!
This is a number I never expected – I figured it would be much, much lower. But, as it turns out, 50% of people wanted to give something in return.
The next most important figure is the average dollar contribution of those who contributed: people, when they contributed, paid on average $15 for my eBook.
For me, this was an eye-opening figure.
The truth is, I didn’t expect many people to contribute and I never expected them to contribute, on average, $15 per eBook.
Yet, by giving the book away for free, I ended up making way more money than I would have had I sold the book on Amazon.
For reference, if I had sold the book on Amazon, there is no way I could have had the same success pricing the book at $15. Why? First, because many of the people who took the book for free or contributed under $15 promoted the book to their audiences. It’s easy to promote something that you can’t lose on (i.e. a free product). This brought more people to my page and resulted in more contributions across the board.
Second, $15 for the Amazon Kindle store is steep. The majority of self-published books sell from $2.99 to $9.99. Any higher (or lower) and Amazon cuts royalties from 70% to 35%. This means readers aren’t used to higher priced ($10+) Kindle books. A $15 self-published eBook from an unknown author would be largely ignored.
In the end, whether you sell through Amazon or Gumroad (or through a different marketplace or platform altogether), if you have an audience that wants to hear from you, allow them the opportunity to buy from you. Believe it or not, they WANT to buy from you.
Creating Sustainable Income
So what do these numbers mean?
Well, first and foremost, you can’t make a living on $493.50 a month.
Even if I doubled the amount of contributions and could make that amount consistently, I’d still be living at the poverty level in most major cities in the United States.
To make matters worse, the second month’s numbers were even less (much, much less), as I had already exhausted my core readers.
It’s possible some of you are in a similar situation, starting out with a small audience and wondering how in the world to make a living doing something online…
Well, I’ve come to realize it’s NOT by selling books…
Or, at least, not by selling books to a very small audience.
If, hypothetically, I had a list of 5,000 – 10,000 (or more) active readers, and could convert at a similar rate, I might be able to double, triple or quadruple this number…but again, these numbers probably wouldn’t stay very consistent.
So while you can make money with eBooks even with a limited audience, it helps to have a large readership (listen to Think Traffic – they can help you with that).
Success or Failure
So was it a success?
How could this be, though? I invested over $2,000 attending the conference, not to mention the months of work that went into writing, designing, and formatting the book. I’ve barely made back a fraction of my costs.
Monetarily, this was a bigger disaster than Disney’s John Carter.
But, for me, it’s a huge success, and here’s why:
- I didn’t do it for the money. I priced this item at “pay what you want” for a reason. Making a few bucks from contributions means people support my creative work – money I can put back into creating more content and products – and that’s the greatest gift of all.
- The larger point is building products people want and find useful. The positive feedback I’ve received has been incredible. I had people write reviews on their sites for my book, I’ve had several people email me directly thanking me for the work I’d done, and I’ve even received a few offers for podcast interviews because of the book. At the end of the day, the positive response I’ve gotten for my book means I’m creating stuff in line with the audience I want to write for. For a person just starting out, that’s about the best thing you can ask for.
- I’ve grown my subscriber list because of the newsletter opt-in I put at the end of my book. At the back of the book is a small resource page and a link to join the Resistance (my weekly newsletter). I’ve had dozens of people find me through the book and now they’re supportive and passionate members of the Resistance – people who want to read what I write and spread the word to others. Having the ability to speak directly to a group of people who want to hear from you is more powerful than any dollar amount ever could be.
Applying This to Your Product
I hope this short analysis helps you understand the power of generosity – and how it’s possible to make money from the kind contributions of friends and strangers without having to resort to paid advertisements, forced sales funnels, or any other conventional sales techniques.
It’s like Amanda Palmer says in her status quo challenging TED talk: “I think people have been obsessed with the wrong question – how do we make people pay for music. What if we started asking, how do we let people pay for music?”
Amanda Palmer rightly believes that if you generously put your heart and soul into something, people will respond just as generously.
This has certainly been true in my experience.
My goal for the future: to continue to find new ways to let my happy readers pay for my art.
So how about you?
How can you apply this idea of generosity to your project, business, or writing?
Leave a comment below and let’s start a discussion on the merits of “pay what you want” and generosity as a sales strategy.
The Top 10 Mistakes in Online Business
Every week we talk with entrepreneurs. We talk about what’s working and what isn’t. We talk about successes and failures. We spend time with complete newbies, seasoned veterans, and everything in between.
One topic that comes up over and over again with both groups is mistakes made in starting businesses. Newbies love to learn about mistakes so they can avoid them. Veterans love to talk about what they wish they had known when starting out.
These conversations have been fascinating, so we compiled a list of the 10 mistakes we hear most often into a nifty lil' guide. Get the 10 Most Common Mistakes in Starting an Online Business here »