Download and read the free eBook '10 Ways to Make Money in a FREE World' from Nicholas Lovell, author of The Curve.
"The heart of the Curve is to enable those who love what you do to spend lots of money on things they truly value."
Pricing policy has both immediate and long-term consequences on a creative business and has an impact not only on the economics of the enterprise but also on the perception of its products and/or services.
Prices can be derived from costs and this is a useful exercise to do, though it’s not the only way to decide how much to charge. All the direct costs must be included of course, including the cost of labour. More difficult to calculate is a proportion of the indirect costs that should be allocated to products and services - in other words, how much should the sale of each item contribute to the overheads of the business? There is no exact way to do this but there are conventions of management accountancy, which can help. Whatever method you use, income from sales must be sufficient to cover both the direct and indirect costs of producing goods or services.
One of the points I make in my training workshop 'How to Make Money While You Sleep' is that 'Ideas Don't Make You Rich". I quote multimillionaire Felix Dennis, publisher and poet, who wrote in his book 'How to Get Rich': "Ideas don't make you rich, the correct execution of ideas does." In other words, ideas are necessary but not sufficient. My workshop is about intellectual property, its creatiion, protection and commercialisation.
In terms of intellectual property rights, you cannot protect an idea, only its expression in a tangible format. These intellectual property rights can then be sold or often even better) licensed or 'rented' to make money while you sleep. My article about Guilherme Marconi, 'Don't Sell It; Rent It' is one example of this. However, what's crucial, is a feasible business model, in other words a system for turning a great idea into the generation of profit. This system can also be called a Profit Model, a Revenue Strategy or other name. And it's this that is the hard part! It involves creating your own 'Business Formula', developed into a workable strategy, plus lots of hard work, resilience, and luck. This is the hard part!
Whilst working with the creative and digital businesses in New Zealand, I had the pleasure of meeting digital media guru Helen Baxter of Mohawk Media in Wellington's creative quarter.
Helen has written about crowd-funding for Generator on The Big Idea, the home of New Zealand's creative community. Written from a NZ angle, the articles provide additional information and inspiration for creative entrepreneurs everywhere.
On the page 'Attracting a Crowd', Helen Baxter says of crowdfunding, “Without a good promotional strategy across old and new media to back up your campaign, it’s like putting a poster on your bedroom wall and hoping the world will see it.”
Related articles explain more about Planning, Platforms and Performing. Platforms mentioned include New Zealand's own Pledge Me, Australia's Pozible, as well as internationally renowned KickStarter, Rocket Hub and Indiegogo. The advantages and disadvantages of various crowdfunding platforms are set out clearly in a table on the Platforms page.
As well as a wealth of information on this Generator site, there are links to David Branin's Crowdfunding Cheat Sheet and a free eBook: The Crowdfunding Bible On Campaigns That Succeeded & Those That Failed.
Here's a fascinating interview with fashion design guru Paul Smith, who talks about many aspects of growing a creative business, including:
- How he succeeds by saying no to many potential clients, choosing only those projects which fit his brand and excite his creativity. He has (politely) rejected the opportunity to design 3 hotels, 5 mobile phones and 2 cars - and that's just in the last year!
- How he manages his company's finances and business growth in such a way that he can be selective. He avoids the pressure to constantly grow. Crucially, he manages cash flow carefully so that he has never needed to borrow money from a bank.
- How he became 'big in Japan' by being respectful of Japanese people and culture (when others were being brash), and took his time to build solid business relationships.