Advice for Online Vendors II: Some Selling Truths Exposed

May 9, 2012 at 12:38 am 3 comments

I’ve seen a number of articles in graphic artist magazines encouraging artists to sell their models. One of their main points is that, if you’re already making models for your own artwork, why not sell the models to other people? I’ve seen PDF tutorial e-books try to make the point that creating a best-selling product is almost as easy as just finding a niche and filling it. And I’ve also seen discussions in online forums where top-selling merchants talk about how easy it is to sell models and make hundreds (or thousands) of dollars every month. Well, if they’re doing it, so can you!

I don’t mean to scare anyone away from selling their digital products, but it seems that there’s still a lot missing from these discussions and e-books. I’ve been selling products for about 10 years now, so I thought it was past time to add my thoughts to this idea.

What exactly does it take to make a best-selling product and make thousands of dollars in sales every month?

The first step is developing an idea.

At first, this seems easy: according to the e-books, you just find a niche and fill it. This means all you have to do is look through the digital marketplace sites, such as Renderosity and DAZ, see what’s missing, and make that.

For example, let’s say you find a lack of good airplane models. From there, it’s just a matter of narrowing down your choices to the type of airplane to make.

So far, making a product sounds pretty easy!

As an aside, the problem with the idea of “finding a niche and fill it” is that the “niche” may have already been explored and found to be a wrong road. You may think you’re onto something by finding a lack of airplane models, but there might not be any airplanes because the previous products were removed because they didn’t sell. (And yes, a number of marketplace websites will remove products if they don’t sell any copies within a certain amount of time.)

But, don’t let this stop you. Let’s continue…

The next step is actually making the product.

Let’s go back to the example of selling a model you made for your own artwork. Although this sounds like a good idea in theory, since you already made the model, there are a number of practical issues. For example, if you’re only making a model for your own artwork, you may have overlooked a number of technical specifications such as: the polygon count, the mapping of the model, or if the model has flipped polygons. In other words, your model may not sell-able quality.

Let’s use the example of making an airplane model. You’ve determined that you’re going to make a military aircraft since you couldn’t find any in the marketplace. But, do you know how to make digital models? Do you know what kind of modelling program to use? Next, you’ll need to know how to map your model and make textures for it. Do you have any experience doing this? Remember that you’re making a product for sale to the rest of the community and people expect good-quality textures.

If you’re making a product for use in Poser, do you know how to rig the wheels, flaps, rudder, and other parts of the airplane? You could sell the product as “unrigged”, but this lowers the quality and price.

In a PDF tutorial written by the Dreamlight Club (and available for free at DAZ), the author uses an example of creating a software plug-in which automatically conforms an outfit for a human figure. While that’s definitely a niche market (and one that might need filling), where in the world do you start? Do you need programming skills? What programming language? What kind of Software Development Kit (SDK) do you need to make this kind of plug-in? And are you the type of person who likes to write code?

Pricing your product for the market

Okay, so now you have an idea and you’ve actually created a product. How much do you want to charge? It probably goes without saying that you’ll want as much as possible for your artistic creation. You’re spending time and effort to make the best product possible, so you’ll want at least $50 or $60 or more, right?

You may have even seen models at “higher-end” sites like TurboSquid and The3DStudio that go for $200 or $400 or more! You only need to sell a few models at these prices and you’ll be all set!

Unfortunately, there’s a huge difference between the asking price and the market-value price.

If you want to sell your product to the Poser market, you’re going to have to drastically reduce your price. At the time of this writing, airplane models were going for an average of $10-$15, with some higher priced and some lower priced. Like I said, you could try pricing your product for $50, but no one will buy it, especially if they’re expecting to pay $10.

On the other hand, if you price your product too low (in an attempt to undercut other merchants), people may wonder if something’s wrong with it.

On top of that, some websites (such as DAZ3D) tend to sell their products for $1.99 sales. This tends to condition customers to want every product for $1.99, which in turn, means you may get customers asking when you’ll lower the price of your $10 product to $1.99 to match the other sites. This also means the product you valued at $50 is now thought to be worth only $1.99 by your customers.

Next, where do you sell?

The obvious answer is to sell at your own website. This way, you can control everything, from the look of the page to the prices of your products. However, this means you have to do everything yourself: you’ll need to create the website yourself, you’ll need a merchant account to process payments (though it’s easy enough to get a PayPal merchant account), and most importantly, you’ll need to market yourself. You’ll face the issues that every business faces: how to you get customers to your site, where do you get customers, how do you keep customers, how do you advertise, etc.

A better answer may be to sell at other sites since they’ve already done most of this work for you: they have the merchant accounts to process credit cards, they already have the traffic and customers, and so on. However, there are downsides to this also: the website will take a cut for selling your product, usually 50% of your product’s price.

This means you’re immediately losing half of your income just by selling on their site. Sure, your product will be exposed to all of their customers, but can you make twice as many sales on this site than on your own? Maybe or maybe not.

You’ll also have to follow that site’s rules about discounts and coupons: if they run a sale, you’re forced to discount your products, sometimes whether you like it or not. You’ll also have to accept that site’s vouchers, which means you’ll receive even less income. As an example, when I sold some of my products on a site that offered vouchers to its customers, the discounted price was passed along to me. When customers used the site’s vouchers on my $12 products, I received a payment of $4.00, or a cut of 33%, far below their advertised cut of 50%.

Needless to say, I “agreed” to this when I signed their seller’s terms of service.

Next, some sites place payment restrictions on new merchants. This means you may not get paid until you’ve been selling products for X number of months or until you’ve made $300 (as an example) in sales. If you’re only selling one airplane model (and at $10.00), you would need to sell 30 copies to get paid.

On top of this, some sites may be late paying you because “the person in accounting is sick this week and no one else can do her job” or because you didn’t click the “Pay Me Now” button because the site can’t be bothered to pay its merchants automatically each month.

(As an aside, I’ve been selling at Renderosity for 10 years and they have always paid me on time.)

The next step is marketing and promotion.

As you finish your product, you’ll need to start marketing and promoting it. Obviously you don’t want to buy ads in magazines and start spending money before your product is even finished. Instead, look for free places to advertise. Internet consultants will say to use social media, such as Facebook, Twitter, and so on, but the better place to start is the community forums. This way, you’ll be advertising directly to the people who will buy your product.

As soon as you post any kind of messages about your product, you’ll get immediate feedback. Although most customers are generally nice, I’ve found that the most vocal people in the forums tend to be the most negative.

You’ll need to be prepared to deal with questions like:

  • That’s a nice airplane, but are you going to make a Boeing 747 Jumbo Jet? My father flew in one when he worked with United and I’ve attached a picture in case you’re interested in making a 747 for me.
  • Sorry, but $10 is too much for me. When are you going to sell it for $1.99, like DAZ does?
  • Why does the product only have 5 textures?
  • I can see from the promotional images that the front wheel is 2 centimeters too small. I expect better accuracy when I buy models. This isn’t for me.
  • Did you know that Boeing could come after you because you made a model of their airplane? My neighbor’s cousin’s brother’s uncle’s nephew read a book about copyright law and he says Boeing could confiscate your model and take all your income. People shouldn’t buy this to be safe.

The problem with most of these comments is that create unnecessary doubt in the mind of potential customers. If the posters claimed there was something wrong with the product, you could fix it and make them happy, but these kinds of comments are from people who haven’t even purchased or used your product!

I’ve talked to a few merchants who claim their sales plummeted after comments like these were posted in response to a product-announcement message thread. There’s no way to know how, exactly, these kinds of comments could hurt your sales.

Why are you selling digital products?

If you’re doing it as a hobby or to make some extra money to buy yourself lunch, you’ll probably make a few dollars a month. If you’re selling your own products to get in-store credit at your favorite marketplace site, then you’ll probably also make enough to pick up other products.

Although making digital models doesn’t involve the same production costs as a physical item, there is still the cost of your time. Again, I don’t mean to sound cynical, but how much time do you want to spend making a highly-accurate airplane model when people may complain about the $10 price? And even when you sell it for $10 on the marketplace site, you’ll only be getting $5 per sale. And is a $5 product worth worrying about the causally disparaging remarks that people post in the forums?

Here are some economics that people don’t usually talk about:

Let’s say you need to make $25,000 a year selling digital products so you can quit your office job. Sure, you may be making a lot more than that at your office job, but let’s use this as a starting point. How many products and at what price do you need to sell to make this much money?

Let’s assume you sell your product at a big site such as Renderosity or DAZ and they take a 50% cut. So, already, you’ll need to make $50,000 in sales to keep $25,000 a year. If the average price of your product is $10, you’ll need to sell 2,500 items in a year, or just over 200 copies a month. Can you really sell 200 copies of a product by “filling a niche”?

Although Renderosity and DAZ don’t release their sales figures, it would be interesting to see how many individual products actually sell more than 200 copies a month. Some people have estimated that the top sellers sell between 50-60 copies a month. The exception is when a product is put on sale; however, when you do this, you’re raising the number of copies sold but possibly lowering your income.

My own company, Vanishing Point, tried this trick a few times. Sure, we sold 200 copies of one product in one month, but we had to sell a $13 product for $1.99. Instead of bringing in $2,600 in income (200 copies at $13), this sale brought in around $600 (200 copies at $1.99).

As you make products, don’t forget about customer support.

As you strive to sell 200 copies in one month, you’ll gain more and more customers. While this is definitely a good thing, it can also be a double-edged sword since there will always be a small percentage of “problem” customers who complain or who want to take up your time with nit-picky questions.

Granted, this percentage is small, but when you’re selling hundreds of products a month, a small percentage could be 20 or 50 or 100 of these kinds of customers.

How long will you be spending answering e-mails, posting replies in community forums, and generally providing customer support? At what point are you spending more time supporting your existing products instead of making new ones? At what point are you pulling your hair out, answering the same basic questions from people who should read the software manual instead of asking you?

Selling your product at other sites will help alleviate this issue since those sites will handle basic customer support (such as how to purchase, how to download, etc), but the sites will still ask you to support customers who are having problems.

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Entry filed under: Digital Goods, Vendor Advice. Tags: , , , , , , , , , .

My Views on File-Sharing Some Common Digital-Model Myths Debunked

3 Comments Add your own

  • 1. ExVendor  |  May 9, 2012 at 3:13 pm

    Why not tell the WHOLE truth here? You left out the part about other vendors in this industry who do everything in their power to cut your throat and leave you lying on the floor bleeding to death. HA! One less potential vendor!

    Don’t leave out the part about the vendors who hate those who “only do this for fun while I have to depend on it to eat” and the ones who would rather slit their OWN throats before sharing knowledge with a potential vendor!

    Tell these folks just exactly what they are walking into. It’s an ugly, nasty industry. You’ll not get out with all your limbs intact.

    Reply
  • 2. Black  |  April 15, 2013 at 1:55 pm

    What you said here is true,in every time you think you can handle this you find a new problem to pin with,but what to do?it’s your living….

    Reply
  • 3. ILOVEUALL  |  April 5, 2016 at 5:05 am

    Exvendor sounds salty. Possibly just didnt find success doing this? Its alright we still love you 😉

    Reply

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