Once upon a time I wrote a book. It was actually my 2nd book but the first one I published on my own. I wrote it in a weekend on an IBM Selectric® typewriter. Yes, this was before computers so I guess I’m dating myself here. And the diagrams in the book were hand drawn using templates. Archaic, huh? But that’s what we had in those days.
I had discovered that increasing circuit complexity was driving test generation costs through the roof. And I knew the tricks needed to solve that problem. Thus the book. Everyone thought I was nuts trying to sell a 77-page book for $95 (in 1978 dollars!). But I had a hunch. So I spent $1,800 for an ad in Electronics Test magazine (see Media Selection for Your Target Markets for a related topic) and I sold enough books to put me into the teaching and preaching business for over a decade.
I decided, however, that I wanted to broaden the reach of my company by having the book published by a “legitimate” publisher and advertised and sold through that publisher’s distribution channels.
Thus came this version that sold for $39.95 to the “mass market,” such as it was at the time. And Van Nostrand Reinhold did indeed sell more of these books than I did. Three times as many, as a matter of fact, in the first year. So everything was going great, right? Not so fast.
Take a look at the chart below to see what happened financially. While unit sales tripled, income from those sales dropped from an 80% gross margin to a 15% commission rate. That cut from $80 per book to $6 per book reduced revenues by $62,000 per year!
Some deal, huh? Now look at what happened to seminar revenues. They dropped by a factor of four — from more than $200,000 per year to less than $50,000 per year.
Strategies that look sound at first blush really need to be examined and vetted to make sure that they do not have hidden unintended consequences.
Have you ever had a similar experience? If you have it would be great if you’d be willing to share it. Your comments are solicited and thanks for reading.
P.S.: You can view the whole presentation from which these slides were taken here.