If you're selling anything online, pay attention to these two variables: 1. Unit economics: how profitable is one "unit" of your product or service? (one digital download, 1 month of MRR) 2. Sales volume: how many units can you sell every month?
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This is exactly what happened to
@pomplamoose: they had good unit economics on iTunes, but bad margins + volume on Spotify. As@jackconte recounted to@guyraz on@HowIBuiltThis: https://www.npr.org/2021/01/08/954876726/patreon-jack-conte-and-sam-yam …pic.twitter.com/Mlv58Ap0gkPokaż ten wątek -
“In the recent past it might have been possible to make a middle-class living on your music. In the current streaming economy, the only way to survive is to be huge.” https://www.theringer.com/tech/2019/1/16/18184314/spotify-music-streaming-service-royalty-payout-model …pic.twitter.com/KCHbsfPppJ
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So what does this mean for SaaS founders, or creators selling digital products and subscriptions?
Volume
Profit.
Those are your two levers.
How badly do people want it? That's volume.
What's your price and costs? That's profit.Pokaż ten wątek -
Low-volume example:

If you want to make $10k / month...
And your margins are 80%,
but you can only attract 5 sales,
your price is going to need to be $2,500Pokaż ten wątek -
High-volume example:

If you want to make $10k / month...
And your margins are 80%,
and your price is $25,
you'll need 400 sales/month
most SaaS is high-volume (~400 customers to earn $10k / month)Pokaż ten wątek -
Generally, you're either in a low-volume business (with a high price), or a high-volume business (with low prices). And (again, generally):
Most consulting/services businesses are low-volume/high-price
Most SaaS/digital products businesses are high-volume/low-pricePokaż ten wątek -
Just wrote this up for my upcoming Saturday newsletter. Anyone here want to give me some feedback? (Ways to improve, make it better/more clear)https://justinjackson.ca/units
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Another funny example: Tony Hawk owns his own skateboard company (Birdhouse). My guess, based on market share, is he's sold 1-2 million decks in the past 10 years. But over the past decade, his video games have sold over 31 million copies. He's rich from
not
.Pokaż ten wątek
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Spotify adds value for their listeners, but would you say there's also a component of rent seeking going on there?
Dziękujemy. Twitter skorzysta z tych informacji, aby Twoja oś czasu bardziej Ci odpowiadała. CofnijCofnij
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I see what you mean, but I think the "true fans" model does not really apply that much. As a popular artist (even as moderately popular artist) you get a lot of listens from not true fans. Even lisrens from not fans at all. That's mostly because a listen in particular costs
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No money. So you listen through lots of tracks, you have many playlists that get updated by different curators. While for the artist to earn money on iTunes, someone really needs to know your song already and be so amazed to throw money at you.
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Wydaje się, że ładowanie zajmuje dużo czasu.
Twitter jest przeciążony lub wystąpił chwilowy problem. Spróbuj ponownie lub sprawdź status Twittera, aby uzyskać więcej informacji.
building

## She used to make:
On iTunes:
Retail price: $0.99 / track
Artist profit: $0.69 / track
## But now she makes:
On Spotify:
Artist profit: $0.007 / stream
Her profit per unit has gone WAY down.
Sales volume