What we can learn from The Million Dollar Homepage

June 15th, 2006 by Chris

I realize now that The Million Dollar Homepage (milliondollarhomepage.com) is old news. I originally thought of this quite awhile ago when I was blogging for SitePoint though and it was on my schedule of things to write about when I stopped writing for SitePoint, then I forgot about it until today when I was talking about it with my accountant.

The obvious lesson we can take from TMDHP is that the press and press releases are powerful marketing tools. Media mentions can easily snowball and generate insane amounts of publicity. Of course the chances of such a thing happening are slim, but if they do happen you’re going to be sitting pretty.

However, the lesson I want to talk about is a less obvious one: the power of 100% margins.

What if you could sell something that costs you nothing to make or distribute, and indeed is mostly automated? Your profit margins would be 100% (or nearly so after any applicable credit card processing and hosting fees) and your business would be very scalable able to handle large volume. You could sell this item for as little as $1 and with enough volume still make a huge amount of money.

Alex Tew decided to sell pixels for $1 each. It seemed farfetched but it worked. People wanted his pixels and were willing to spend $1 to get them. So, what could you sell that costs you nothing to produce? Well, there you’re on your own.

There are some obvious choices, such as selling upgrades to forum members (a larger avatar for $1, a special user title for $1, etc). However you aren’t going to sell millions of these things. A good ebook can fit this model, you only have to produce it once and then there is no incremental cost for each sale, but again you won’t sell millions.

Keep thinking about it though, if you can create value in something that people are willing to pay for but costs you nothing, then you’ve hit upon a gold mine.

One Response to “What we can learn from The Million Dollar Homepage”

  1. peach  Says:

    Great advice Chris, I could see the ebook thing work.
    I think any large forum who isn’t doing this is loosing money, sitepoint is a good example of succesful implentation of book sales btw.

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