Micropayments are popping up in every business model online lately.
From iTunes to the AmazonKindle and now Google – all getting involved in micropayments.
Micropayments are what Wikipedia defines as “financial transactions involving very small sums of money. PayPal defines a micropayment as a transaction of less than 12 USD, and offers less expensive fees for micropayment transactions.”
iTunes charges 99 cents a track, the kindle charges $1.29 per month subscriptions to magazines and now Google says they want to save the “newspapers” by allowing people to purchase subscriptions to newspapers for pennies on the dollar. The first time I saw this was with Yahoo Music about 5 years ago charging only $3 a month to listen to unlimited music. Obviously this model has been around forever, but it’s just starting to get bigger and bigger.
With content and syndication and information being blasted from every corner of the internet, it’s becoming more social. People only want to see and read the information they are interested in. Hint: this is a PERFECT example of why people are going into their “communities” and seeking information from within their “social network”.
Think about it – it’s all digital delivery so the costs of shipping, fulfillment and all that are minimal. Making the cost to deliver any product way lower.
So what does this mean? If you own a product or plan on making a product, you should look into the micropayments model. Consumers will buy or join a site for $3 bucks a month and get what they want and be happy.
Which is why a lot of people shoot themselves in the foot when they measure their “ROI”. Would you rather have 1K customers and only make $10 per customer? Or would you rather have 300 customers and make $20 per customer?
It’s not about the margins, it’s about the volume.
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Micropayments are something that Internet marketers have known about for a long time – every little bit adds up to something big.
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I first heared of this from Mike Hill talking about Micropayments (or like he says, about Value Trojans). Thanks for the headsup and see you in the braintrust section
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That’s exactly the direction I’ve been heading with one of my membership sites and the results have been great. You end up with a huge volume and less pressure to put out a ton of content…of course, I’m all about over delivering so a ton a content for a few bucks a month…
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Got the brainbox thinkin’! Instead of having a broad based product like say internet marketing for 97$ a month, have a newsletter or subscription on blogging, or social media marketing with twitter, or building a continuity site for 7$ a month.
How hard would it be to get affiliates to promote though with such a small initial product? Maybe offering a high oto %.?
Thanks
Brandon
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Amish reply on November 25th, 2009 9:26 am:
You can make your affiliates, affiliates for life. Meaning, no matter what you pitch your members, they make commissions.
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My question is Amish when you going to give us micropayment like Anik from ppc classroom… Because your lost product it was veeeeeeeeeeeeeeeery expensive!
So please give us something with micropayement…
ps! I know you give us some ppc campaing for free 20 niches…
Thanks
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Hey Amish, this is going to be the model I use for my next membership site because my target members seem to be real cheap skates even though the niche they are in takes a lot of cash to get into, Real Estate Investors… I’m thinking a $9.99 membership may pan out.
~ Corey
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Amish you hit it straight on the nose I read a book by a marketer name 5 bucks a day….. which basically talks about this in a bigger scope.
It is so much easier to get 100 people paying 3 vs 30 people pay 10….. it is just how people perceive the information there are getting.
And the reality is digital content is made once and sold over and over and over… which has no real big overhead.
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Hi Amish:
Micropayments … who would have thought … sometimes the OBVIOUS is the answer.
Have a good one today.
Wayne
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Good Stuff as always. The micropayment model is an exact model I use to introduce my clients to the power of online marketing in general. I’m dedicating December to creating my first few ebooks that will actually be sold. Another key component to this is the “Volume of Value.” As I was taught; your product, service or offering should supply at least ten times the cost in value. This opens the door for the “Big Bang.” But First and Foremost, a whole lot of little “booms.”
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Interesting…
I completely agree with you on that. A cheap $5 – $19 monthly deal or even 3, 6, 9, 12 month continuity can drive a ton of extra profit to the bottom line.
I have a friend that has a 6 month $37 continuity and crushes it in the most obscure market you could ever imagine.
I think the simple model to do this would be a easy members only site, in WP, Joomla, and 1-2 emails per month. Nothing too much to get them to cancel, but nough info they dig it and stick with it.
What’s your thoughts on the information delivery system?
Chris
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Amish reply on November 25th, 2009 9:25 am:
Depends – what kind of delivery? Drip feed? Or just a big members area with content? I would use Joomla or WP
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Micropayments is the furture for niche content. One of my mentors “Adam Short” was saying that having a membership website niche with video is were it is.Because video it self like youtube is growing big. Im working on one also. cant wait.
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Amish reply on November 25th, 2009 9:24 am:
Nice!
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Absolutely ! Thats going to be getting largely more popular within the next 5 years.
Even affiliate and CPA networks are going to allow their publishers, etc to pay their affiliates fractional cents on the dollar for each lead they generate.
Especially mobile applications and services.
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My thoughts on MICRO payments are in the $3.99 to $4.95 per month range.
UNDER $5 per month. Even $5 to $10 per month is enough to cause
dramatic increases in cancels…
Under $5… well, that’s just peanuts… It’s really nothing…
It is just perception, but Micro-Payments are ALL ABOUT LONG TERM
memberships/subscriptions.
At 10,000 members, even $3 is $30,000 per month.
I would call $5 to $29 per month MINI payments.
MICRO is under $5…
Dr. Michael Quadlander
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Amish reply on November 25th, 2009 9:23 am:
You are absolutely right. I do consider micropayments under #5 as well
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Micropayments: The future of online marketing? Come on man – micropayments have been in play for years now. Where have you been?
Welcome to Yesterday!
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Amish reply on November 25th, 2009 9:23 am:
Apparently you didn’t read the post closely.
I wrote :
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I think the micropayment model should be something you test with your site. It sounds good for the consumer to pay a small fee to access content but what if you are in a niche that is not bothered and willing to pay more than the average micropayment amount. Also what if this content is not available elsewhere for this type of niche. That demand should make the content worth more right? Would the micropayment model be more suited to things on the web that are ubiquitous like music, news, movies etc vs content that is not available to specific niche markets? Just wondering.
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Great to point this out…as an information publisher I am experimenting with one mass market membership site where I drip content for under $5.00/month – I do have other membership sites that go for $97/month, but deliver higher-touch, more specialized information. Depends on the market, desire and specialization of information in the end.
Jeff
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Paypal has micropayments that change the transaction fees in favour of smaller prices, but it applies to your entire account ie all your products for one email address. I use wordpress with wishlist member plugin to deliver video content via memberships. You can have short term memberships or one time payments.
Another benefit of micropayments that I am going to try is that you break your product/offer into smaller products and so you can see which ones are selling better, in addition to having one large membership site with a higher price point.
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This is really interesting and something I’ve considered in the past, but I suppose greed and fear held me back.
I did recently lower one of my sites to offer a $9.95 a month deal…
Here’s my question… if you have a big site that offers crazy good stuff… what are your thoughts on having a micro continuity offer but blocking access to some of the site?
Would that still work… or would choices of different member plans change perceptions… now I just got all these questions. I guess it’s time for some testing.
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This is a really interesting post and really got me thinking about the emerging successful business models online today.
One question though. If we are selling in niches, and we choose to use the micro-payment membership model, then, isn’t there a chance that nobody buys, or you actually see a FALL in sales, as now what you are offering has a reduced or lesser perceived value?
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Amish reply on December 29th, 2009 11:09 am:
I think it’s market dependent. Obviously the micro-payments model does not work for every market. Or it CAN work in every market but you have to see “how” it would fit. I think the best for micrpayments are community sites that keep on giving.
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Thanks for the reply.
I see what you are saying. I guess it comes down to the pitch and the positioning of your offer. I guess it is important to test-run these things for yourself.
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The micropayments thing is definitely something worth considering. I notice it with my own consumer behaviour, mainly. I’m not a quick spender. I usually spend lots of time researching any product before I decide whether to buy or not. With super-cheap stuff like iPhone apps, however, I make impulse-purchases much more often.
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