There’s a shift happening in the information product industry.
I was scrolling through Instagram the other night (a rare event for me), and I saw an ad that caught my attention.
Tai Lopez is selling the same program that he sold for $997 (or maybe it was $697) for $9.99 per month.
This is a shift I’ve seen happening industry-wide.
It’s the attempt by businesses that have historically lived and died by acquiring new customers at $1k-$5k price points, to now repackage their products into MRR offers.
And in my opinion, it’s the future of selling information for a few reasons, namely:
1. Information is a notoriously difficult product to sell, and even more difficult to build a business around.
When a customer purchases information, it is by definition a product that becomes obsolete once consumed (once you buy and watch a training course, you generally don’t need to continue consuming that course).
It’s not a tool in the sense of a SaaS product that continually adds value with each use, and with the exception of some proprietary data services, information is typically not something that needs to be updated often -if ever.
The value of information to the customer is delivered in a “lump” as soon as the information is consumed, hence the historic tendency for information businesses to charge relatively high, one time fees for information products (as opposed to monthly recurring charges).
The value of the product is delivered all at once, so the price should reflect the exchange of value.
2. As the price of advertising continues to rise, it is becoming less profitable to acquire customers (though it can still be highly profitable).
Where once upon a time it was perfectly acceptable to build an information business where 100% of month over month revenue was built on new customer acquisition, and customer retention was virtually 0 (for the tendency of information products to maintain zero utility after consumption as detailed above), this business model is now becoming less attractive as the cost of advertising continues to increase.
Businesses in this industry capable of looking more than a few quarters into the future are realizing that at some point, the CAC party is going to end, and they’re going to be (in the words of Warren Buffett) swimming naked when the tide goes out.
3. Information is essentially a commodity.
And like any commodity in a free market, the price of that commodity eventually falls to the cost of marginal production.
Which, in the case of information (just like software), is zero.
Unlike software, however, the value in providing information as a service is significantly reduced with a few exceptions (ex. proprietary data subscriptions), due to the first point above – that the utility of information is to be consumed once and then discarded.
In addition, information (aka content), is what drives traffic on the internet. People click and pay attention to the most valuable content they can find.
Therefore, to get the most attention possible, it behooves you as a publisher to give away the most valuable information possible.
And therein lies the conflict – how can you simultaneously give away the most valuable information for free (to optimize for traffic and attention) and at the same time hold your best content back to justify charging for it?
You can’t – there has to be a trade off. You have to justify the price of your product, and so you have to hold content back, which leads to less valuable free content, which means fewer people will pay attention to it, correspondingly higher CAC costs, which requires a higher ticket product to offset those increasing CAC costs….all in a market where the perceived value of the product (information) is constantly trying to nosedive.
And what happens if one of your competitors as an info business owner decides to go rogue and give away ALL the information for free – holding nothing back, choosing instead to monetize via a service or software product?
Assuming your competitor’s content is roughly the same quality….All of a sudden, your competitive advantage is gone.
All you have left to differentiate yourself is brand, and due to the CAC party that we’ve been having for the last few years (see Point 2 above), MOST businesses in the information product space aren’t building brands, they’re optimizing math equations (nothing wrong with it – for the record. It’s just a fact).
And it is for this EXACT reason (the vulnerability and upside of giving information away for free) that SaaS companies employing this strategy (giving away courses many businesses are charging $1k-$5k for in exchange for signing up for their SaaS product) are absolutely crushing it right now.
I’ll break down that strategy in greater detail in another post.
So how do you maintain margin, acquire customers for cheaper, and increase LTV in a world where ad costs are doubling Year over Year and on a platform (the internet) that is DESIGNED to make your product as commoditized and easy to attain (read: free information) as possible?
You have to package your course with something that is non-commoditizeable, and you have to create an offer that encourages repeat consumption.
Enter the community and group coaching MRR information product model.
Courses and information can be duplicated easily. But 1-on-1 or 1-to-many live interaction can’t be done by anyone other than the brand itself.
And therefore, we’re starting to see a shift to Course + Coaching MRR offers.
And from my perspective, the entrepreneurs selling 4-hour-workweek style “evergreen” courses and doing nothing to add additional value to the backend are going to go extinct if they stay too comfortable in the current CAC party.