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ref: 89db8a0db3b15ad1a131b443ccfe2a0d5f08170a sive.rs/site/ayw5 -rw-r--r-- 3.0 KiB
89db8a0d — Derek Sivers formatting 4 months ago
                                                                                
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<title>A business model with only two numbers | Derek Sivers</title>
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<div class="blogparent">from the book “<a href="/a">Anything You Want</a>”:</div>
<h1>A business model with only two numbers</h1>
<small>2011-07-05</small>
</header>

<p>
	Like most people, I had no idea what to charge for my service.
</p><p>
	So I went to the local record store in Woodstock, where they had some local musicians’ CDs on the counter.
</p><p>
	I asked the woman at the store, “How does it work if I sell my CD here?”
</p><p>
	She said, “You set the selling price at whatever you want. We keep a flat $4 cut. And we pay you every week.”
</p><p>
	So I went home and wrote, on my new cdbaby.com website, “You set the selling price at whatever you want. We keep a flat $4 cut. And we pay you every week.”
</p><p>
	I figured if it worked for her, it was fine for me.
</p><p>
	Because it was taking me about forty-five minutes of work to add a new album to the site, I also had to charge $25 per album as compensation for my time.
	(Shows you how much I thought my time was worth in those days.)
	A few days later, I realized that $35 feels about the same as $25, so I bumped it up to $35 per album, which left me room to give discounts and still make a profit.
</p><p>
	And that’s it!
	Six years and $10 million later, those same two numbers were the sole source of income for the company: a $35 setup fee per album and a $4 cut per CD sold.
</p><p>
	A business plan should never take more than a few hours of work.
	Hopefully no more than a few minutes.
	The best plans start simple.
	A quick glance and common sense should tell you if the numbers will work.
	The rest are details.
</p>
<a href="/a" title="Anything You Want — by Derek Sivers"><img src="/images/DerekSivers-AnythingYouWant-318x450.jpg" alt="Anything You Want — book cover" title="Anything You Want — by Derek Sivers" /></a>

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