Revenue is the money you get when people use your digital product. Cost is any money that has to be spent or given up in order to get your digital product going. Basically, the revenue will be used to pay for your costs. When you can afford to pay for your monthly costs, the surplus will be used to offset the investment of the months when the monthly revenue didn’t cover the costs.
Both revenue and costs should be checked out month over month. It is important to categorize your costs, so it can help you to understand where you are spending the most and where you can save.
These are the 3 categories for digital products costs::
- Infrastructure: it’s all the necessary costs to keep the service running. In this category I include website and app hosting costs, domain register, tools for e-mail marketing, SEO, A/B tests, online chat system etc. Usually, these costs are recurrent; therefore require a lot of attention every time you hire a new service like the above.
- Development: here are all the costs to develop and implement new features in your website or application, including programming, interface development, visual design, logo design etc
- Marketing: Attracting clients requires various investments such as AdWords, Facebook ads, and ads on websites, magazines, newspapers, and TV. Additionally, expenses such as flyer printing and distribution, coupons, and folders can also be considered. But, to determine which promotional strategy would be suitable for your marketing, it is best to click here to know about it in detail. In the beginning, stages, investing time in free tools can attract long-term clients and help save on marketing expenses. Alternatively, if you continue to invest in paid advertising, it can increase revenue over time.
In order to have a profitable digital product, the monthly income should be higher than the monthly expenses. It is as simple as that. However, it is easier said than done.
The following E-book will help you on this regard.
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