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The perfect business model
In one of our podcast episodes, Ethan broke down the business model that all the successful media companies use.
When Ethan explained this model to me, I instantly saw how applicable and simple it is to execute. Since then, I’ve completely transitioned my personal brand to this model and I am also in the process of transitioning Copyblogger to this business model.
There are 3 levels to the model, each level can monetize on its own and creates a psychological bridge to the next level. Here’s how it works.
1. Start with free content.
Everything starts with free. In this example, free is my weekly newsletter that I send out. The newsletter monetizes through ads, and in addition, the newsletter serves as a marketing channel for your next level.
You can either promote your product on the newsletter itself, or use the emails as a way to create a funnel, which is what I do.
As your newsletter grows, the more valuable the ad space will become.
2. Front end product.
This is the product that most people see and that is the most affordable. You want this to be a low cost product with a low barrier to entry. With that said, you want it to be expensive enough that it portrays value.
This usually comes in the form of a membership site, a course, a digital download, or even a subscription.
For instance, my front end product is called The Bootstrapper. It’s an online community that has access to a weekly newsletter, courses, and a monthly mastermind call. The product costs $99 for the year.
Over time, I will continue to increase the price, but for now my biggest priority is to sell memberships.
3. Back end product.
This is a premier product with a high price point.
In my case, I created The Power Hour. This is an hour long coaching and strategy session where I work directly with a customer to analyze their brand and their goals. The cost is $1000.
From there, we develop a strategy that will help the customer set the foundation for their business.
Every time someone joins a level, I have broken down a psychological barriers, which makes it more likely they will buy the next level.
The model works every time, because there is only progressive upside for the customer.
In order for this to work, it requires an audience in your free level. This is the part of the process where people become frustrated, because going from 0 to 1000 subscribers is more difficult than going from 5000 - 10000.
But, if you can stick it out long enough to start building an audience in your free level, then the rest can monetize on auto pilot.
This works for any industry.
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