Category Archives: Product Development

The Sale You Didn’t Know You Lost

a roll of money rests on a table

Are you leaving money on the table?

It’s bad enough when you know you lost a sale. At least then you can take whatever steps are necessary to ensure it doesn’t happen again.

But what about the sale you didn’t know you lost?

Must your customers jump through hoops before they reach your shopping cart? Do you offer them the payment choices they want instead of just the one that is convenient for you?

Is there a third party vendor standing between you and your customer who is costing you sales?

Consider this story:

I was ready to buy a piece of software for this blog. It is reasonably priced; it works as promised; and I can see lots of uses for it.

I wanted to buy it before the close of 2009, for tax purposes. I went to the developer’s site, credit card in hand, ready to click the buy button.

But PayPal got in the way.

PayPal will only let you pay by credit card if your PayPal account is empty. I was expecting a recurring fee to be charged to my PayPal account the next day, so there was a small balance.

I tried three different times to pay by credit card – but PayPal insisted on using the small amount in my PayPal account and charging the rest to my credit card. For reasons irrelevant to this discussion, I was neither willing to split the charge nor empty the account.

So the sale was lost.

You could say this was through no fault of the product developer – after all, it was PayPal’s policies that got in the way. But all the developer had to do was offer an alternative payment method, such as Google Check Out, to make the sale.

Don’t leave money on the table. Resolve that in 2010, your customers will never leave empty handed when you could have sold them exactly what they wanted.

Info Product Developer’s Wish List

Are you looking for last minute gifts for your favorite Info Product producer (or yourself?) There are some great deals this holiday season, on both hardware and software.

HARDWARE

canon_hv40CAMCORDERS and DIGITAL CAMERAS

These run the gamut from cheap to expensive – but you ought to find something for even the pickiest photographer or videographer.

Canon Camcorders

  1. Canon VIXIA HV40 HD HDV Camcorderhas been named Camcorder of the Year every year since the HV line was introduced. It hasn’t dropped in price this holiday season as much as it has in other years, but a camcorder of this quality is still a great deal at $699.00
  2. Canon VIXIA HF200 HD Flash Memory Camcorder is a great choice if you want to record to flash memory instead of tape. It costs under $600.00 at Amazon.
  3. Step up to the Canon VIXIA HF20 HD Dual Flash Memory with 32 GB Internal Memory for just $100 more right now at Amazon.

Flip Style Camcorders

The hottest pocket camcorder this season isn’t made by Flip.

It’s the Kodak Zi8 HD which not only shoots in 1080p High Definition but has an external microphone jack.  The improved video quality and the external mic jack – combined with the under $200.00 price tag – might make this the perfect web video camcorder. This is also the first pocket camcorder to offer expandable memory via SD/SDHC memory cards. Kodak has definitely raised the bar with this camcorder.

Digital SLRscanon_rebel_t1i_top

There’s only one choice under $1,000.00 for serious photographers – Canon EOS Rebel T1i 15.1 MP CMOS Digital SLR

This spectacular DSLR not only takes amazing still photos – it brings the 1920×1080 High Definition video pioneered on last year’s pro grade EOS to the consumer market. There is no consumer or prosumer camcorder with interchangeable lenses and variable focus. Except for the Canon DSLRs!

The picture quality – bot still and video – is amazing and the reviews have been rapturous. The only drawback is that there is no external microphone jack.

MICROPHONES and AUDIO

If you want good video, you first need good audio. No matter how good your camcorder, the onboard mic is going to produce, at best, mediocre sound.

The solution?

An external microphone (which is why, of course, you should never buy a camcorder that doesn’t have an external microphone jack)

 

rode

 

The Rode VideoMic should be your first (and probably last) choice for a shotgun microphone on a handheld video camera. I use one with my Canon HV20, and the microphone and shock mount dwarf the camcorder. But the Rode is lightweight and high quality, making it perfect for smaller camcorders. The included shockmount keeps the microphone well away from any camera noise. For the price, you won’t find anything better.

The RodeVideoMic also has a line of accessories, including a Mini Boompole and DeadCat Windshield.

For indoor shoots, a lavalier microphone is a must. You can pay hundreds for a pro quality mic with an XLR connection. But if you are shooting web video, the difference in quality will be imperceptible.

The Audio-Technica ATR-35S Lavalier Microphone offers great sound at a low price. It has a minjack that plugs directly into your camcorder’s microphone jack. The only downside to this microphone (and the Rode VideoMic) is that it is a mono microphone. If you are shooting voiceovers and narration, this isn’t really much of a drawback, however.

Want to go wireless instead? Try the AUDIO TECHNICA PRO88W-R35 Microphone. It’s an omnidirectional clip on, with 2 channels for interference free recording. This is a VHF wireless microphone, rated for between 100 to 300 feet. Don’t expect to get anywhere near 300 feet unless you are working under perfect conditions. Fortunately, info product videos rarely require that sort of range.

SOFTWARE (for WINDOWS PCs)

camtacia-xDScreencasting

If you want to do screencasts, there is only one choice: Camtasia Studio, from TechSmith.

Yes, there are cheaper (and even a few more expensive) options, but if you want to look like a pro – then use the tool the pros use. Camtasia is far and away the number one choice for screencasting.

Video Editing

Sony Vegas Movie Studio 9 Platinum Pro will give you everything you need in a video editing package. It can handle high definition and standard definition videos, has an excellent collection of effects and transitions built in, and includes DVD Architect for burning DVDs.

If you want to move up to Vegas Pro 9, don’t forget their upgrade deal, good until the end of the year. You can save hundreds of dollars by taking advantage of this offer.

Digital Juice’s 12 Days of Christmas Sale has more great offers than you’ll believe:

  • Compositor’s Toolkit (Vol 1 or 2) is $199.95
  • StackTraxx are 2 for $24.95
  • BackTraxx Vol 1 or 2 for $69.95
  • Any Pro Single from the Editor’s Toolkit for $9.95
  • Any Theme Kit for $9.95
  • Plus deals on DJ Fonts, reflectors, and stock footage.

If you want to give your videos a little something special, now’s the time to become familiar with Digital Juice.

Photo Editing

Adobe Photoshop Elements 8 may not have all the bells and whistles of it’s big brother, but it has plenty for the average product producer.

There are precious few photos that require no editing. Great film photographers performed their magic in the darkroom. Today’s digital photography is tweaked on the computer. Sure, the true artist is still the person behind the camera, but why tie your hands when you can let your imagination fly?elements8

Get Elements and learn to use it. You’ll not only improve your photos but you will find that you can create great graphic elements for your web site or videos.

But what if the image you need isn’t found in nature – but online? Then you need SnagIt from TechSmith. SnagIt does so many things besides simple screen caps, it deserves its own post.

If you make PowerPoint presentations, do software tutoring, teach eBay or other internet related classes, you need SnagIt. In fact, if you’ve ever tried to explain anything to anyone in an email, and given up in despair after five pages of describing where to click next — you’ll immediately recognize the value of screen capture software. And in this category, SnagIt leaves all competitors in the dust.

Sound Editing

Audacity, the free, open source audio editor, may be all you ever need to record and produce your audio. It can output sound files as WAV or MP3. And it has a host of free plugins and filters available.

Packaging Box Shots

Any eBayer will tell you: If there is no picture, you won’t sell it. But what do you do when there is no physical product to take a picture of (like an ebook for instance)? You turn to Box Shot software.

Quick 3D Cover from NervePreserve must have the ugliest web site ever produced for a top notch graphics product. Don’t let the web site fool you – Quick 3D Cover is a top notch product. It has a series of pre-made templates for hardcover, paperbound, and spiral bound books; open and closed DVD cases; CD cases; CD and DVD disks; iPhone and SmartPhone screens; computer monitors; binders and more. If you need a simple to use, high quality, retail ready product shot for your info products, Quick 3D Cover will do the job.

True BoxShot also creates great looking books and DVDs. Like Quick 3D Cover, it has a set of pre-defined templates – but that’s where the similarity ends. True BoxShot lets you rotate the art in 3D. You can change perspective and angle by simply dragging your mouse.

LEARN TO USE IT

This is the gear we use at Ghost Leg and Web Sellers Circle use when creating books, DVDs, CDs and screencasts. If you want to learn more about using these products to create your own products, please join us at The Web Sellers Circle. There is a 21 Day trial membership for only $1.00. Or you can save even more by taking advantage of our Annual Membership Sale. Right now, a full year costs only $125.00 – less than 35¢ a day.

Affiliate Disclaimer: The links to products on Amazon are all affiliate links. I will earn a small commission if you buy the product after clicking on the link. Non-Amazon links are not affiliate links and will not generate commissions.

The Masterminds of Web Presentation


masterminds

The League of Extraordinary Women


Do You Want to Learn How To Be A Better Educator  or Learn to Create Information Products?


If so, please come to the Web Sellers’ Circle’s FREE Master Mind Round Table Teleseminar on Tuesday – 5:00 PM Pacific – 8:00 Eastern

Here’s the scoop:

The Web Sellers’ Circle is proud to host the new “Presenter Series.” Online education is a growing field. It is a new way to reach students, clients and promote your business. New technology makes it easy and inexpensive to reach more people. Webinars and Podcasts are becoming a common way to communicate and build a community.

However, most educators don’t know where to start, what tools work the best or a host of other details.

This new course will cover a host of topics to help get online presenters off to a good start.

Covered In The Series:

  • How to choose topics and guests
  • How to define your audience – your purpose and theirs
  • How to determine your budget
  • How to find the technology works best for your presentations
  • How to podcast, including distribution and syndication
  • How to do a teleconference, what software works for your needs
  • How to present a webinar, what service to use and how to record it
  • How to record the broadcast
  • How to turn your presentation into a product

To kick the series off The Web Sellers Circle is having an exciting Master Mind Round table conference call with industry experts: Janelle Elms, Marlene Gavens, Phaedra Stockstill, Sheryl Schuff , Cindy Shebley. I’ll be introducing the guests and asking questions.

This is a FREE call and I invite you to join us on the line.

When: November 3, 2009
Time: 5:00 PM Pacific /8:00 PM Eastern
How To Register: http://www.websellerscircle.com/public/331.cfm

This is going to be really exciting! Don’t miss it.

Are You Losing Money By Calculating Margins Wrong?

Are You Leaving Money On The Table?

Are You Leaving Money On The Table?

I spent time on Friday helping a client update spreadsheets and Excel reports that used an incorrect formula to calculate the margin on bids for construction jobs. While this particular client was looking for a margin of 25%, he was actually getting one closer to 20%. On a $100,000.00 bid, that can be the difference between profit and disaster.

I see sellers new to retailing make this same mistake over and over again.

The seller wants a “mark up” of 30%  

So they take their cost (the wholesale price), multiply that by 30% and add the result to the wholesale cost to find the retail, or selling price.

Wrong!

You can certainly find a retail price that way, but it won’t give you a 30% margin. The confusion stems from

  1. Confusion about calculating percentages
  2. The difference between margins and mark ups

YOUR MARK UP IS NOT YOUR MARGIN

Although it is less important, let’s talk about mark up vs margin first.  Many people use these terms interchangeably to mean the difference between what you pay for goods and what you sell them for – that is, gross profit. However, they are not the same thing. Misunderstanding the nature of mark ups and margins can make it easier to calculate them incorrectly – which cuts deeply into your bottom line.

A margin is, most simply put, the percentage of the selling price that is the profit.

  • If you pay $6.00 for an item and you sell it for $10.00, you made a gross profit of $4.00. 
  • $4.00 is 40% of $10.00 – so you have a margin of 40%
  • Notice this important distinction- the 40% margin is 40% of the final selling price, not of the wholesale cost.

A mark up is the percent of the cost you add to the wholesale price to get to the selling price.

  • If you pay the same $6.00 and sell the item with a 40% mark up, you make a gross profit of only $2.40
  • 40% of $6.00 is just $2.40
  • A mark up of x% will yield a smaller profit than a margin of x% because the mark up is a percentage of the lower wholesale cost.

IT DOESN’T MATTER IF YOU MIX UP THE TERMS AS LONG AS YOU DO THE MATH RIGHT

Many people say “mark up” when they mean “margin.” If you are fussy about language, this is annoying but it will not lead to financial disaster. It’s just words.

However, if you’ve confused the two concepts and are calculating your margins by mutliplying the wholesale cost by the margin percentage, you could be headed for trouble.

Just remember – you want to calculate your profit as a percentage of the final value, not as a percentage of the original cost. When a customer hands you $10.00, you need to know how much goes into your pocket and how much goes to your vendor.

Do you need a 40% profit margin to survive? Then you want to keep $4 out of every $10.

Also keep in mind that this is a gross profit margin. It does not take into account overhead, fees, etc. You may put $4 into your pocket, then have to turn around and give $1.00 to the landlord, 75¢ to the tax man, 15¢ to the bank for processing fees, etc.

You might end up keeping only $1.50 (net profit) of the original $4.00 (gross profit). Which is why calculating your margin by incorrectly using the wholesale price can be such a disaster. You can actually lose money with every sale!

WHAT’S THE FORMULA?

Now that you know you want your margin to be a percentage of the final cost, how do you actually figure it out?

Relax – as long as you have a calculator handy, it is easy.

Say you want a 40% margin. We know that 100% less 40% leaves 60%. So your wholesale cost represents 60% of the final value. To find the remaining 40%, divide the wholesale cost by .6

  • If  you want a 90% margin – divide the wholesale cost by .1
  • If  you want a 80% margin – divide the wholesale cost by .2
  • If  you want a 70% margin – divide the wholesale cost by .3
  • If  you want a 60% margin – divide the wholesale cost by .4
  • If  you want a 50% margin – divide the wholesale cost by .5
  • If  you want a 40% margin – divide the wholesale cost by .6
  • If you want a 30% margin – divide the wholesale cost by .7
  • If you want a 20% margin – divide the wholesale cost by .8
  • If  you want a 10% margin – divide the wholesale cost by .9

As long as you follow this formula for calculating retail price, you will get the margin you want.

Photo by MrVJTod Released under Creative Commons License

Amazon Drops Affiliates Over Tax Issues

Who Will Break The Bank?

Who Will Break The Bank?

If you were an Amazon affiliate in California, North Carolina, Hawaii and Rhode Island – you already know that Amazon has canceled affiliate programs in those states to avoid dealing with sales tax. Other affiliate programs are following Amazon’s lead. And this follows last year’s cancellation of most New York state affiliate programs.

Back in the Clinton years, the Congress passed a moratorium on internet taxes, to give new online ventures a chance to grow. It worked.

But states watched their sales tax revenues shrink as online sales took a bigger and bigger bite out of traditional retail sales. They are now searching for ways to recapture that revenue, especially as the sour economy shrinks revenue in general.

The problem is complex – more than just an “I hate taxes!” kneejerk reaction is required.

The sales tax issue can get very complicated depending on which state legislature’s latest salvo you are talking about.

Last year, Commission Junction and a number of other affiliate progams dropped all their New York State affiliates (Amazon is suing NY right now), because NY passed a law saying that having an affiliate in NY was the same as having a physical presence in NY.

To collect sales tax, a business must have a physical location in that state. Any business with an affiliate in NY was suddenly a NY based business (with some dollar amount restrictions).

Amazon’s problem isn’t whether affiliate sales were taxed – Amazon doesn’t collect taxes for third party sellers, even in Washington state. The real problem was that all of Amazon’s own sales in New York became taxable sales.

States like New York have hundreds of tax jurisdictions.  Big, populous states have state sales tax, city sales tax, county sales tax and added excise taxes for football stadiums and rapid transit and who knows what all. And the taxes change all the time.

So it isn’t just a matter of collecting one more tax – it is a huge, complex undertaking to tax each purchase based on the buyer’s address anywhere in the USA. You have to know when the voters of Back End Of Nowhere, Anystate, USA pass a .001% sales tax increase to build a new library – whether you’ve yet sold anything there or not.

As anyone who had to deal with the switch to buyer-based sales tax change in Washington state this year will tell you, location based tax collection is a bookkeeping nightmare for internet sellers, even in a small state. Multiply the problem by every single, tiny tax jurisdiction in the US – and the scope of the looming problem becomes clearer.

WHY THIS MATTERS EVEN IF YOU AREN’T AN AFFILIATE

Each state legislature is trying to deal with this piecemeal right now, and it is a horror show. Whatever your preferred solution (and we have to admit, internet sales are a tax drain on local economies – whether we support sales tax or not, someone has to pay for schools and roads and sewer systems), the solution needs to be national rather than local if it isn’t going to strangle business entirely.

If you are an internet seller – even if you are only a small affiliate of Amazon, this is your problem as well as a problem for big retailers.

Here’s a peak at what independent sellers may soon encounter. In Western Washington, the population is concentrated in King County (Seattle) with smaller cities and towns going south into Pierce County (Tacoma) and north into Snohomish County (Everett). All three counties have different tax rates. And different cities and towns within those counties also have different tax rates.

If you have a physical business, you know the tax rate for your location and that one rate is all you need to know. But if you have an internet business, you need to know the tax rate where your customer lives, not where you ship from.

The town of Bothell straddles the King/Snohomish county lines. Some Bothell addresses are taxed at a higher King County rate. Others are taxed at a lower Snohomish County rate. Zip codes won’t tell you which county tax to apply – because the county line actually goes right down the middle of some streets. You need to know which side of the street your customer lives on!

This drives Washington state businesses wild. But at least we know the problem exists. Now imagine you are an internet seller in a small town in Indiana who has never heard of Snohomish County, let alone the city of Bothell.

How are you going to find the correct tax rate? Will your sales tax database have to be accurate down to the level of individual street addresses?

Internet sellers need to get on top of this issue, somehow, soon.

Photo by danielbroche Released under Creative Commons

Fair Use and Online Video

Of all the videos I have uploaded to You Tube, none has been as controversial as an innocuous demonstration of how to use You Tube’s Audio Swap. It has more views and comments than all my other videos combined. What’s so fascinating about that video?

Well, nothing, really. It’s the topic that has blood boiling.

You Tube sometimes yanks videos that violate copyright law.

Kids (mostly) want to use their favorite song as a soundtrack for their latest video, and record companies want You Tube to pay royalties or remove copyrighted material.

As a compromise, You Tube introduced audio swap – a limited (and admittedly feeble) collection of royalty free music that can replace your illegal audio track.

This is not popular with people who are heavily invested in their music.

However, if you are invested in your business rather than in your background music, you probably want to avoid Take Down notices and other copyright problems.

American University’s Center for Social Media has plenty of material that will help guide you through these stormy waters. They’ve just released an excellent new video called Remix Culture: Fair Use Is Your Friend and a Code of  Best Practices in Fair Use for Online Video.

Watch the video then download the Best Practices Guide.

h/t to WebUniversity Blog

The Advantage To Being Small

Be Ready To Switch Strategies

Adapt While You Still Can

Change happens rapidly.

Sometimes you go along, very successfully, doing what you’ve always done – doing what has always worked – and suddenly – BAM! – the tipping point is reached.

Overnight, it doesn’t work at all any more.

You are too late and too big and too invested in what you’ve already done to change.

Instead, you keep doing what you’ve always done… and you slowly become irrelevant.

Change creeps up on you and you never notice until it’s too late.

You’re successful. Your competition is nothing but a pack of annoying, yappy dogs, sqarming around your ankles. No one can challenge your pre-eminence.

Until that day that the new market you thought was a fad becomes the only game in town. And you are so far behind, you’ll never catch up… because all your energy went into securing your spot as #1 in the game no one plays anymore.

You’re Small – Be Nimble

You’ve seen big businesses and mighty institutions fail. Not just banks, but more to the point – auto companies, newspapers, broadcast TV, downtown department stores, computer big box chains…. the list is long and frightening.

The one thing they have in common is an inability to adapt.

They captured their market and then they protected it from the armies they’d already vanquished. They were blindsided by the real challenge, which came from nowhere.

They were too slow to change, too big to adapt.

Never Get Comfortable

Although the hype and triumphalism around all things Web 2.0 can be hard to take, something different is clearly happening.

  • The mass media is doing a wretched job of covering Iran – but Twitterers are sending reports from every street corner in Tehran.
  • Major metropolitan newspapers are disappearing, while blogs proliferate.
  • Retail chains disappear, online shopping grows, but established online giants like eBay continue to lose market share.

You, as an independent small business owner or information product producer, are in the perfect position to benefit from the shake ups and the chaos, if only you are ready and can change directions in an instant.

No one really knows what will happen next year (or next month).

  • Will Google still rule the universe?
  • Will the changes they are making to their ranking algorithms lock out the little guy – or will they rocket you to the top?
  • Will blogging become so mainstream it’s boring and people stop reading?
  • Will Amazon turn into the online Wal-Mart or will some new business model take them down?

I certainly can’t predict – but I do know that trends are easy to spot if you are watching for them. And easy to exploit if you are not afraid.

Don’t be tomorrow’s CNN, forced to turn to some kid with a cell phone and a Twitter account to do your job.

When you see a trend, divert resources to it. Be ready to catch the wave as it builds. Learn, investigate, invest. Don’t just be the leader in your niche – be a leader.

Photo by Lin Pernille ? Photography Released under Creative Commons License.

Get The Most From Every Experience

Look inside - the experience grows

Look inside - the experience keeps going

Do you suffer from tunnel vision? If you do, it’s probably costing you money.

Let me tell you a story about how you can turn one simple thing into a half dozen revenue streams.

Cindy Shebley, my partner at The Web Sellers’ Circle, recently went to a live auction in Edmonds, WA.  Among other things, the auction featured box lots of “new-old” camera equipment – stuff that had been sitting unopened in boxes since a camera store had closed its doors sometime in the 70’s.

Cindy sells camera equipment on eBay, as well as teaching others to sell on eBay. So that auction was one part fun (photography buffs love combing through boxes of filters and mysterious paraphernalia) and one part work (product sourcing).

Cindy bought some old cameras and some darkroom equipment, which has a good potential to at least double its value.

That’s where most resellers would stop. And that’s why tunnel vision leaves money on the table.

The auction provided a wealth of side projects well beyond items to sell on eBay:

  • Cindy wrote a detailed description of how she previewed and researched items before the auction.
  • She wrote a guide on how to prepare for an auction, how to determine your upper bid limit, and how to avoid getting swept away by the excitement of the moment.
  • She has incorporated the auction experience into her eBay classes – using real-life examples of attendees’ bidding to illustrate the psychology of both buyers and sellers.
  • She photographed some of the older, collectible equipment and placed the pictures for sale on stock photography sites.
  • She found a few old cameras that will make nice bookshelf decorations in the office as well as interesting props in future videos.
  • She made contact with potential customers (collectors) and potential dealers; this sort of face-to-face networking can’t be duplicated online.

When you begin a new project, don’t focus so intently on the goal that you lose sight of all the extra marketing and sales opportunities.

Experiences that are old hat to you are exciting and new to someone else. Turn every step into an adventure, and every adventure into a story. Document your preparation. Teach others what to expect. Take pictures, shoot a video, write an ebook.

Like a dozen clowns tumbling out of a tiny circus car or a set of Russian Matryoshki dolls, each “thing” you sell contains a dozen more things inside itself. Make use of them all.

Photo by L. Marie Released under Creative Commons License

Free Business Form Templates

Free Business Forms and Templates

Free Business Forms and Templates

Re-inventing the wheel can become one of the biggest time wasters in a one person business.

If you need something, and you have no one’s experience but your own to fall back on, you may end up building a spreadsheet from scratch when a template is already available – or writing a contract, designing a business card, creating an invoice, building a custom database… There are hundreds of daily tasks that someone has already simplified if you know wher to look.

If you are looking for basic business letters and forms in Word and Excel format, begin your search at Free Business Forms and Templates.

Site navigation is a bit funky. The collection of links on the front page isn’t a collection of links at all – nothing is clickable. To download the forms, click on the Download Forms button on the top navigation bar instead.

The few minutes you spend deciphering this web site’s poor design will be repaid in the hours you save not (re)creating documents.

h/t makeuseof.com

Starting A Membership Site – Price Considerations

Are You On The Right Track?

Are You On The Right Track?

In our survey so far, Membergate has come out on top in terms of features, support, and ease of use. But there is no denying that it is one of the most expensive solutions.

The difference between aMember’s $300 price tag and Membergate’s $4,000.00 one can be the difference between starting and giving up. Many people just don’t have the cash on hand needed to buy into Membergate. For some, even aMember’s relatively low fees are too high. So let’s come at this another way.

Here are a few questions to ponder while comparing software:

How complicated is your recurring billing? Maybe PayPal’s Subscription solution will work for you. If your monthly subscription fee is low enough (say, under $25.00) and you are willing to shoulder some administrative tasks in return for lower start up costs, you can run your billing through PayPal, e-Junkie, or even ClickBank without a Merchant Account. Is it ideal? No. Is it better than doing nothing at all? Infinitely!

How many members do you expect in your first year? Tracking members, re-issuing lost passwords, answering support questions, etc, will eat up a good portion of your time. Can you find a way to give your members the support they deserve without breaking the bank or burning yourself out? Since you can’t do everything yourself, can you find a piece of software – a plugin, a script, some custom written code – that will take care of some tasks? Elance and Rent-A-Coder have made it easier than ever to find freelance help (though the quality is variable).

What sort of software skills do you really possess? Can you learn how to administer a forum? Will you be able to add content regularly? Do you need to hire outside help just to insert a hyperlink? Be honest with yourself. If you can do it yourself, and you are willing to spend the time, you can save a substantial amount of money. If, on the other hand, you have to turn to an independent contractor for everyday tasks, you risk running up hidden costs that far exceed those you “couldn’t afford” to begin with.

Can you find partner(s)? Partners can help financially, of course. They also add skills, hands, time and talent. Someone to bounce ideas off of can be worth her weight in gold, if you are so close to the project that you can’t objectively calculate risk any more. On the other hand, do you want to split the profits? Are you willing to share authority? Can you delegate? Be ruthlessly honest with yourself. The right partner can make a business. The wrong one… well, just don’t go there.

What do others in your niche do? If there are other sites catering to your target audience, what sort of format do they follow? If your customers have come to expect a high degree of professionalism and functionality, an amateurish WordPress site could harm your reputation. On the other hand, if the client sees the web site as nothing more than a portal to a conference call or a bulletin board, you might skate by with a minimal investment.

If you are planning for success (and not just hoping not to fail miserably), when you’ve run through your checklist of  candidates, questions, and options, you’ll want to weigh Return On Investment (ROI) and Total Cost of Ownership (TCO) and not just out of pocket costs. How much are you spending to acquire members? How long will they stay? How much will you spend on tech help, custom scripts, and even your own sweat equity to keep your site running?

There is no one right solution. Many successful sites are built on WordPress, Free Conference Pro, and a low cost web hosting plan – with an investment of less than $15.00 per month. Others have found that their free site turned into a money pit or a straight jacket and have had to spend hundreds, sometimes thousands, of dollars to migrate their users to a more stable site.

But even those who wish they’d started differently have one thing in common with wildly successful membership site owners – they started a site. Whatever you decide to do – even if you just test the waters with a free, but password protected, members only blog or forum – don’t let costs stop you. Take your first step and build from there.

Photo by macie3k Released under Creative Commons License