$2 Digital Items are a Loss

[BibleJournalLove]

Why do people sell a digital product for $2 or less?

Fixed Cost for a $2 item:
0.07 - Etsy 3.5% transaction fee
0.20 - Etsy Listing Fee
0.36 - Paypal 2.9% + $0.30 Paypal transaction fee
Fixed Cost TOTAL: 63 cents.

Variable costs
~Hosting fees ( for file storage)
~Auto delivery fees ($15 to $75 per month)
~Etsy ads ($25 - $50 a week or more)
~Etsy relisting (add up real quick)
~Paypal monthly merchant fees (about $30)
Variable costs: easily add up to another $1.00 to $3.00 per item

Not to mention, your time, your computer cost, software, electricity, etc.

I can see occasional sale to boost business, or a few low priced items to get customers. But when the whole store is under $2 an item they will soon be out of business. IMHO.

[JoArtyJo]

Well I sell individual colouring pages for $2.... Now you have got me thinking!

But I don't have any extras other than PayPal and etsy fees. All is do is send an email with a PDF file attached. So even when I send an email for just one page I am making $1- not a lot for the time taken but I am often on my computer anyway, often sending more than one order, and many people spend waaaay more than $2. (People often buy more than one page, and I also sell more expensive digital products)

I think any more than $2 would be too much for one page.... Would like to hear other opinions on this too?

[Former_Member]

Tricky subject.

I don't sell patterns for my items for other reasons than this (as in, I don't want them floating for free online) but I see both sides of the argument.

I can see people selling digital items to get viewers in their shop--once you've set it all up, it's just a couple clicks for each sale. And I do think more than $2 would be too much to pay for a coloring page....but is it worth the small profit for the sake of a sale? Perhaps, in some cases.

Sorry, I wish my response was more definitive!

[ScrapendipityDesigns]

Not for me! Yes I have to sell a lot more of them to make the same as someone who sells $100 items. Or maybe not, depends on their costs, they could be selling at a loss too, a higher price doesn't always mean profit. I see plenty of items listed on Etsy where I can't imagine the seller gets their money back for their time invested, but I guess it's up to each seller to decide what works for them. For me, Etsy is only one branch of my entire business model.

Rachel

[JoArtyJo]

Rachel I agree. Seems you have a similar positive experience as me!

My digital files are fantastic for making money. I need no supplies other than pen, paper, scanner and computer. So my profit % is huge! On a $2 coloring page it's perhaps 50% profit. But my coloring books sell for $12 each, and again all I do is send one email. I don't know much about *business* but I do know that 50% profit is very good, and that's on my cheapest item.

I really do not feel I am making a loss with the individual,pages- and they also bring in customers. Sometimes someone will buy one sheet, like it and then come back for loads more days later.

I also don't have to go to the post office, put anything in an envelope, wait for good light to take a photo, and so on. I love it :-)

[ScrapendipityDesigns]

I am right there with you Joanne! I love doing what I do and I know I am not working at a loss. But when you are selling at a low price point, you do have to be careful to keep your expenses low or I guess you could run into trouble.

Rachel

[Former_Member]

Auto delivery is optional, search ads are optional, and as a buyer I would buy many at $2 a piece, and probably none at $5 or more.

[Former_Member]

Most of the things you list are optional, and most people agree that search ads are pointless. I will admit that I tried them out for a couple of days until I realized I was paying around 11 cents for each view.

[Former_Member]

I wouldn't pay more than $2 for a regular digital image. A lot of people just download images from royalty-free sites, and sell them here. I'd rather just pay the membership to the same site and have access to more images.

I WOULD pay more for a printable coloring book or party invitations, or a PDF tutorial, obviously, since the seller had to actually work to create them.

[JoArtyJo]

I certainly do not pay for search ads!
Auto delivery sounds interesting though- does this mean the seller doesn't send any emails some how?

[Former_Member]

I'm jealous of anybody who has a PDF business! You go girls! The WORST part of selling is packing/shipping....takes forever, costs a fortune, really difficult to predict costs (since you cannot predict customer location)...seems many new sellers (me included) get killed a few times before you get it right.

Plus you have customers who need your item yesterday, so there's alot of time spent back and forth figuring out which shipping they want/can afford. Etsy IS doing a great job simplifying the process by listing offerings up front, still....it seems like heaven to have a PDF shop.

[JoArtyJo]

^^ my point exactly!

I used to sell prints and printed coloring books.... But the time spent packaging and shipping meant my actual profit was much much lower. So I soon put a stop to that! I know I coul make shed loads more money if I offered them still but my time is worth too much to me at the moment. I have a 2yr old so trips to the post office are not easy!!

[PebbleCreekStudio]

It all adds up. ;)

[MythOfTheWild]

digital items are bought an awful lot. They can be used on websites, in website designs, they could be artwork that can be printed on whatever format the customer wants, though those are usually more than $2.

Because they're so cheap, they arrive so fast, are not a problem to replace if the email gets blocked or lost and would serve the customer no purpose if they lied to get more, people buy them a LOT. People are also more inclined to buy more in one purchase. I've only purchased digital items once. I stumbled across their shop, saw the $3 price, and ended up browsing because my pocket allowed it, and ended up purchasing 3 pieces. No, it's not a huge number, but I bought them without the need of them, just because I liked them, and because they may well come in handy in the future (this was a few months ago, and I ended up using one as my blog background).

So $2 may not seem much, but it's uncommon for people to buy one piece from them anyway. I have a couple of friends who have digital shops that sell tiny priced things and more expensive things, too, and the cheaper things make them just as much money as the pricier things.

It's a sound business choice for the longrun, but only if they can get a lot of people's attention, and they have a very wide selection.

[JoArtyJo]

Very insightful Kim- I'm sure a lot of my customers are just like you, stumbled upon my shop, thought "$2 why not?" and bought a page or two. And many of these customers come back many times :-)