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Throwback! To me, my brother, and the chickens. I was the #1 chicken catcher in my family. A true pro.
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If you’re unfamiliar with the term, “scalability” is a business buzzword that simply refers to the ability of a business to grow and meet increased demand, ideally while reducing costs. Whether or not your product or a business is scalable depends on quite a few variables, including things like variable and fixed costs, pricing, consumer demand, and shelf life. Scalability is all about how much you can leverage a fixed cost advantage against variable costs, and then match these against increased market demand.
It’s hard to profit on a product with a very short shelf life unless you have very high demand, because any excess inventory has to be thrown away.
It’s hard to profit on a product with very low margins unless you’re able to produce and sell high quantities quickly.
Books are a very interesting product to think about in terms of scalability, because while they have relatively low price point compared to other products, they have high profit margins, a very low variable cost, and (usually) an infinite shelf life. In addition, they can be converted into a number of formats to be consumed by a wider quantity of people, allowing the author to broaden their consumer base at little to no extra expense to them.
For example, GooglePlay just launched a new option for authors to convert their books into an AI-narrated format. It sounds great, first of all, and guess how much it costs? $0, currently. As compared to hiring a real-life audiobook narrator, which will range from $1k to $20k depending on the narrator, the length of the project, and other factors. In addition, because you can develop this product for free, you can charge a lower price for it, compared to other audiobooks, and it offers the perfect option for readers who want to listen and don’t mind AI voices.
Variable costs: $0. Profit margins: 100%. Shelf life: infinite.
Now consider the difference between paperback manuscripts (or hardcover) and e-books. Paperbacks have a much higher base cost. For every book printed, the author or publisher has to spend a set amount ranging from a few cents to a few dollars. Every book has to be shipped at least once, sometimes two or three times before it reaches the consumer. In many cases, it has to be displayed or delivered, which have associated costs. All of these costs cut into profits.
Because of these added costs, the price point has to be set much higher. A higher price point means fewer customers will be willing or able to buy the book. You also have issues with accessibility—such as small fonts, the weight of the book, and other issues that make the book unreadable for people with various types of physical or learning disabilities. And for each variable, the profit margins get smaller and the scalability shrinks.
E-books, on the other hand, have only the cost of production and the cost of delivery. The costs of production are one-time, upfront costs such as editing or design, and won’t change once the book is published. The delivery fee is usually a percentage, and runs in the price range of $0.02 - $0.10 per e-book. This means that you retain the majority of the profits on the product no matter how many people purchase it, and don’t have to worry about juggling various costs to ensure the availability of your product. E-books are also highly accessible, not just to people with physical and learning disabilities, but also easily delivered digitally all over the world, giving you the highest possible access to your potential audience.
One of the biggest challenges for selling e-books is visibility—getting them in front of the right readers at the right time. But once it happens, there are very few barriers to prevent you from scaling your business as your customer base and demand grows.
Since I’m in a throwback mood, I thought I’d share this delightful photo of Charles (the orange cat) and George (the peacock) having a chat on the roof of the chicken coop at my childhood home.
