I fly regularly from Gatwick to Almeria (Spain). Logically there's a set cost of flying a jet plane from A to B, which doesn't vary a great deal from week to week. But sometimes I get charged £40. And sometimes £240. Why?
Yes, I know the standard stuff trotted out by "those who know these things". It's "supply and demand". If loads of people are queuing for a seat (summer holiday time) then they'll pay more. And when no-one wants to go (2 am, Tuesday, mid February) then there's no competition, you have to take what you can get.
It's the same with hotels - peak rates equals peak prices, etc. In my younger days I often used to walk into a hotel at 5pm and ask if they had any rooms free. If they do, then that room will remain empty tonight. So I offer them half the standard rate. I usually get it. Not always. But the hotel next door will accept it, rather than have the room go idle. Try it. It's great fun. (Always have a backup plan, though. You absolutely MUST be able to "walk away", or the bluff falls flat on its face).
This standard "supply and demand" waffle is frequently trotted out with absolutely zero understanding of what's actually going on. Remember, right back at the beginning, my argument was that the price of an item is made up of only 2 elements.
- The cost of the item (£25 of £100)
- The marketing charge (£75 of £100)
Yes, I said I'd come back to this.
Well, the cost of the item (£25) hasn't changed (OK, there might be a slight increase if workers have to be paid night shift or overtime, etc, but that in itself is "supply and demand", and I'm not even going down that route).
What has changed is the marketing charge (£75).
Taking my flight price as an example (assuming that the £40 price is not actually loss making). We have a price of £40, being item cost £25 plus £15 marketing (sometimes, when push comes to shove). Or a price of £240, being item cost £25 plus £215 marketing (sometimes, when they can get away with it).
The car manufacturing industry quite happily sets its model prices to "what the market will bear" (and that's a phrase they actually use, internally). It's utterly unrelated to the cost of building the car. Next time you're passing a car showroom take a look at their cheapest model and their most expensive. See if you can work out what one has that the other has not that - in any way - accounts for the actual physical differences. What you will usually find is £3,000 worth of extra value for £13,000 price increase. The "missing" £10,000 is marketing.
You probably think I've laboured this enough, now. And you're probably right. But I have to put "clear blue water" between "cost of item" and "marketing charge" for one very good reason. The reason is this. The discussion is about "marketing". Whether it's "affiliate marketing" or "network marketing" or "multi-level marketing" or any other kind you come across, it makes no difference. It's "marketing". End of.
Marketing has N O T H I N G whatsoever to do with the C O S T of the item. If that is not perfectly crystal clear by now then you really need to go back and revisit all that's been said up to now. I will mention it again, from time to time, but I really should not have to. Take it as read.
What price should a lottery ticket be? What price should membership of a gym be? What price should you pay to play roulette? How much should you pay for a packet of cigarettes? Or a lesson in Spanish or Russian? Or a haircut? Why should a Vivien Westwood dress cost more than a similar one in Primark?
The rule of marketing is that the price you charge is whatever you can get away with at the time.
Costs of being in business
Every profession has a governing body. Membership of that body is, generally, not optional. I'm a Certified Bookkeeper. I pay £50 membership fees, plus £75 for a "Licence To Practice", plus £130 compulsory Professional Indemnity insurance. A total of £255 every year just to be able to say the words "I'm a Certified Bookkeeper". That's a fraction of what a Chartered Accountant has to pay to say "I'm a Chartered Accountant". And it's typical of every profession. And that's solely to be allowed to make money. It's just the cost of being in business.
I pay £20 a month membership of IAHBE (International Association of Home Business Entrepreneurs). To me it's just the cost of being in business. I know people who spend the same (£5 a week) on scratchcards or lottery tickets or bingo. It amuses me that these same people call IAHBE a scam, a pyramid, a charge for being an affiliate. They buy another scratchcard. I train another team member how to earn their living through marketing. You know by now where you stand on this.
Products To Sell, and Ethics
I frequently come across the statement "you cannot sell what you would not buy".
In affiliate marketing this phrase is often used to pressure new affilates into "buying in order to sell". This practice is so close to pyramid selling that any ethical marketer should be very wary of promoting it, or even being associated with it.
Apart from anything else, it's baloney. I know a family that owns a very successful shop. It's a newsagent. They sell cigarettes, yet none of them smoke. It's never caused them a problem. They also sell "top shelf" magazines (it's part of the franchise with the publishers), but they're not into porn (as far as I know).
And do you really think that owners of casinos are compulsive gamblers? I suspect it's quite the opposite. And I don't know any men who use tampons, even though they carry them in their shops.
If you want to buy, do it. If you don't, don't. But don't accept pressure to do so.
Today versus tomorrow
There's also the issue of marketing something that you have personal qualms about (eg gambling, porn, smoking, alcohol, etc) or whatever else makes you uneasy. One of the companies I deal with is a "try before you buy" promoter. This arena is heavily used by the bingo, lottery, sports betting companies. It's not something I'm completely happy with but I totally understand that there are thousands of people "out there" who thoroughly enjoy playing bingo and happily pay (lose?) £5, £10, £20 in an evening "for relaxation". Who am I to judge? At the end of the day, they can cancel any time they want to.
Also, affiliate marketing is an arena that is gathering pace and every day sees new companies being added to the ranks. So what you're marketing today could be very different from what you'll have on your plate tomorrow. You may not always have the final say on what is included in the "portfolio" of products in your arsenal. And you may not want to give up doing what you've just spent the last 6 months building up.
Where to begin
You will be aware by now of the banner images at the end of each article. These are all businesses with whom I am comfortable dealing. They have marketable products that have profit margins of which I get a share every time something is sold. If you want to sell them, you too will get exactly the same share as I would (I don't get any part of your earnings). The rest of the profit goes into a pool that gets shared among all the affiliates in proportion to their marketing efforts, eg team building.
There is no cost to becoming an affiliate with these companies. There is no requirement to purchase anything. Anything you purchase will earn you the same profit you'd get if someone else bought it through you. There's a clearly structured program of activity that will lead you via the shortest route to profit, and a "day-to-day" training program that will educate you in every aspect of the business.
A word of caution
One of the big (really big) problems with the internet is the abundance of information. Part of that is my fault. Most of my work as an engineer (prior to, and part of the reason for, my becoming a bookkeeper) was spent in the submarine cables industry. No, nothing to do with submarines. Submarine cables are the tens of thousands of miles of fibre-optic cables criss-crossing the oceans and linking every country in the world to every other country. I went into this industry predominantly because I hated not knowing stuff, and being conned by people claiming to know but who actually didn't. I threw my heart and soul into making the internet and the web (two entirely different things, but that's being seriously petty) a place where knowledge was freely available to everyone and anyone. I am totally besotted with Wikipedia, for that reason. And Google (the search engine) can't put a foot wrong, in my book.
Looking back I can see some serious flaws in my logic - but they will get fixed, over time. The problems relate to the free and unobstructed flow of "bad" stuff (bomb making, for example), and the enormous, and burgeoning, pile of "old" stuff.
It's the "old" stuff I want to address here (I'll let politicians and lawyers deal with the "bad" stuff).
The "old" stuff, as far as internet marketing is concerned, is stuff that used to be true but is now false. A lot of that revolves around how and where to advertise. Marketing is a fast moving, and ever changing, industry. Things that worked last year do not work any more. When you find a "how to ..." page, often there's no indication of its age and relevance. If you find a "free" training course that" used to sell for £1,997" there's a solid reason. The reason is - it's obsolete and no-one wants it (a bit like my cheap 2am flight to Spain),
Don't spend your life learinng to do things that don't work. Google promotes pages that deliver valuable content, and penalises those that use "tricks" to achieve high ranking. If a course teaches you "tricks" that work today, you can be sure that Google is learning to recognise those tricks and it won't be long before your marketing efforts get you "de-ranked" or even "blacklisted". This has happened time and time again over the last 10 years, and is permanently ongoing.
The companies that I work with are those that work in harmony with Google's "desired intent" and whose training is regularly updated to reflect "best practice". IAHBE is a key part of that.
Next time - Where To Find The Market
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