Kind of interesting interaction last week about the Kickstarter, in which disappointment was expressed that I wasn’t offering a normal paperback prize: I should be offering prizes in every price range, because to be successful you should reach every potential backer, was the assertion.

This was a valuable interaction, because it prompted me to re-examine my processes. After a couple of days, I figured out the core misapprehension: it was assumed I wanted to reach every potential customer. But you don’t always want every possible customer. In fact, in the case of the Kickstarter, arranging to reach every potential customer would lose me money, which makes the ‘to be successful, you should be doing something different’ advice… bad advice. As a consumer, I can sympathize with the sentiment, especially if I’m on the un-served end of the equation… there have been many times I’ve thought ‘I wish there was a price option that got me what I wanted for what I can afford.’ But that’s not always feasible, on the other end.

Your first task, when you are crafting a business plan, is to decide what you’re using your prospective project for. I tend to separate projects into two high level buckets: bread-and-butter income, and capital generation. The former’s intended to bring steady amounts of low level money, and the latter, bursts of cash I can use to top off disappointing quarters or pay for big expenses.

The strategies for these two kinds of projects have to be different. The bread-and-butter route rewards low-effort, low-to-moderate cost products that can be sustained indefinitely. High-effort, premium products are time-consuming and need to be limited, which makes them ideal for capital generating projects. What doesn’t work, in my experience, is mixing the two strategies, unless you have a workforce you can put on the task. As a single-person business, I will get myself into trouble immediately if I try to use high-effort but moderate-cost products to generate capital.

To put some concrete examples in here:

Paperbacks printed on demand and shipped by retailers without my intervention are low-effort products I can offer indefinitely. All I need to do is press the ‘make this available’ button and retailers will sell them for me until I press a ‘stop selling this’ button. Easy peasy.

Paperbacks printed on demand and shipped by me are high-effort products that need to generate a great deal of cash to offset the effort and time it takes for me to handle them personally. I need to order them (time and money), receive them (time), pack them for re-shipment (time and money) and mail them individually (time and money). There is no reason I should be doing that when Amazon or Barnes & Noble will do it for me… and for cheaper. I can’t offer free shipping.

Since any paperback I touch is already extremely costly, turning them into a premium, high-cost object is the only way I can profit off them… which makes them a perfect fit for short-term capital generating projects.

My Kickstarters—intended to generate capital quickly—are the right tool for premium products. I can offer low cost prizes only when they are cheap in time and production costs, which means, essentially, anything digital. But a Kickstarter project is the wrong tool for a moderate-cost paperback option, which I would lose money on… particularly since that paperback option will be available later via my bread-and-butter route, which is retail sales. I would lose money offering an unsigned, cheap paperback option via my Kickstarters. Which means, for that kind of project, the moderate-budget backer is not a potential customer I want to serve.

This doesn’t mean I don’t want my moderate cost customers. It just means they can pay me at a different time: after the Kickstarter has generated the capital I’ll be using to create the project, not before.

There was a later comment that basically went ‘she’s overfunded, so I guess it’s working for her, but…’ ‘It’s working for her’ should end that sentence. If it’s working for me, it’s successful, and on my terms. I’ve spoken many times about controlling your successes. I don’t want to limit my success based on tasks I could offload to people hired for the extra work. But when I can’t see a way to do that offloading—when the work is the creative part that can’t be outsourced—then I don’t want to attract so many people wanting so many things that I spend a year struggling to keep on top of all my commitments. I’d much rather be done in a few months, and then be free to continue trying new things and working on new projects.

It may be that this is myopic; that the reason I’m not living in my Italian vineyard with my private plane waiting to fly me to my yacht in Greece is that I’m too good at keeping my business from sprawling out of control. But I also think that when you stray too far from your core business, you’re more apt to end up doing things you don’t enjoy… at which point, you might as well work in a cubicle. The pay’s more predictable.

My most important observation, after thinking about this for a few days, is to remember that advice that sounds like it should work may not work in practice, and that you always, always have to run the numbers. “To be successful, you should have a product in every price range” sounds good on the surface, but might actually be the opposite of what you need to do to succeed. Trust the math. 🙂