Trends #0040 — Digital Products

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🔍 Problem

We need your knowledge and experience. But providing 1:1 help doesn’t scale.

💡 Solution

You can help at scale with digital products. While divorcing your time and money.

🏁 Players

🔮 Predictions

  • More products will launch into micro-economies. Think Notion, Webflow, Figma and Canva. Million-dollar businesses, like Elegant Themes, are built on WordPress.
  • More people will combine community with digital products. This leads to network effects and members learning from each other. Makerpad combines community with tutorials.
  • Dynamic digital products will become common. See STACK$, a live Airtable database by Michael Gill. Notion docs will join the fray once Notion’s API is released.

☁️ Opportunities

  • Build an audience first. This forces you to understand prospective customers, lowers your customer acquisition costs and leads to repeatable sales. Jack Butcher compounds his audience between courses, community, planners and wallpapers.
  • Add a community to your digital product. This curbs piracy and allows members to learn from each other. See Flowmingo from Mackenzie Child.
  • Get ideas on what to build next from your community. The introductions channel in Trends Pro reveals that most members use Notion. Should there be a Notion-themed Deal of the Week? 👀
  • Presell to gauge demand and boost urgency with presell pricing. Failory used presell pricing for the Product-Market Fit book.
  • Borrow trust and attention from affiliates. Leverage influencers and platforms like AppSumo or (shameless plug) Trends.vc — Deal of the Week.
  • Establish predictable and compounding revenue with subscriptions. See Product Explorer, Egghead and Code with Mosh.

🔑 Key Lessons

  • Digital products give you leverage. As Naval says, “Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).”
  • Build a value ladder. Have a free offer and others that gradually increase in price.
  • Build a content ladder. Make the simplest version of your product first. Learn and iterate fast.
  • Every business model has a weakness. Most digital products have unpredictable revenue. Services have high marginal costs. Most SaaS businesses have no moat. There’s no free lunch. Pick your pain. Then stack business models to hedge the downsides.

😠 Haters

“Lots of people succeed without an audience.”
Yes. And this is a riskier proposition. You depend on virality and your ability to capture some of that momentum and convert eyeballs into an audience for repeatable sales. Max Rand writes about how he reached #2 on Product Hunt without an audience.

“What about doing direct sales?”
This works. But your LTV has to justify it. And do you have leverage if you can’t sell at scale?

“What if someone steals my idea or pirates my product?”
Content is a magnet. Community is a moat.

“What about subscription fatigue?”
Subscriptions don’t make sense for every product. Fatigue forces quality up.

“You missed digital product categories.”
Chances are, you can find them in Trends Pro.

🔗 Links