The Math To 100K Per Year
Lesson 8 Chapter 1
$100,000 a year seems like a lot of money, but let's put it into a different perspective... You don't need an email list of 100k people.
This is what Seth Godin wrote:
“Instead of trying to reach everyone, we should seek to reach the smallest viable audience and delight them so thoughtfully and fully that they tell others.” — Seth Godin
More than a decade ago, Wired editor Kevin Kelly wrote an essay called “1,000 True Fans,” saying that the internet would allow people to make a living off their creativity. Rather than pursuing widespread celebrity, he argued, creators only needed a small base of “true fans”—those who will “buy anything you produce”—to the tune of $100 per fan, per year (for a total annual income of $100,000). Here is part of the letter:
"To be a successful creator you don’t need millions. You don’t need millions of dollars or millions of customers, millions of clients or millions of fans. To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.
"A true fan is defined as a fan that will buy anything you produce. These diehard fans will drive 200 miles to see you sing; they will buy the hardback and paperback and audible versions of your book; they will purchase your next figurine sight unseen; they will pay for the “best-of” DVD version of your free YouTube channel; they will come to your chef’s table once a month. If you have roughly a thousand of true fans like this (also known as super fans), you can make a living — if you are content to make a living but not a fortune.
"Here’s how the math works. You need to meet two criteria. First, you have to create enough each year that you can earn, on average, $100 profit from each true fan. That is easier to do in some arts and businesses than others, but it is a good creative challenge in every area because it is always easier and better to give your existing customers more, than it is to find new fans.
"Second, you must have a direct relationship with your fans. That is, they must pay you directly. You get to keep all of their support, unlike the small percent of their fees you might get from a music label, publisher, studio, retailer, or other intermediate. If you keep the full $100 of each true fan, then you need only 1,000 of them to earn $100,000 per year. That’s a living for most folks.
"A thousand customers is a whole lot more feasible to aim for than a million fans. Millions of paying fans is not a realistic goal to shoot for, especially when you are starting out. But a thousand fans is doable. You might even be able to remember a thousand names. If you added one new true fan per day, it’d only take a few years to gain a thousand.
"The number 1,000 is not absolute. Its significance is in its rough order of magnitude — three orders less than a million. The actual number has to be adjusted for each person. If you are able to only earn $50 per year per true fan, then you need 2,000. (Likewise if you can sell $200 per year, you need only 500 true fans.) Or you may need only $75K per year to live on, so you adjust downward. Or if you are a duet, or have a partner, then you need to multiply by 2 to get 2,000 fans. For a team, you need to multiply further. But the good news is that the increase in the size of your true-fan base is geometric and linear in proportion to the size of the team; if you increase the team by 33% you only need to increase your fan base by 33%."
Making 100k per Year
How many items do you need to sell in order to make that much money?
Here are some of the breakdowns, find the one that fits you best.
1. eBooks, books or guides
- Price: $37 per e-book
$37 * 2703 e-books = $100,011
2703/12 = 225 sales/month
2. Online courses, seminars
- Price: $47 registration
$47 * 2128 people = $100,016
2128/12 = 177 people registered/month
3. Subscription/membership: e-letters, DVDs
- Price: $67/month
$67 * 1492 = $100,000
1492/12 months = 124 subscribers total/month
4. Webinars: power‐points, etc
- Price: $67/registration for webinar
$67 * 1492 = $100,000
1493/12 months = 124 registered webinar attendees/month
5. Tools and Templates: software or day planner, apps, programs, website templates
- Price: $97/ software
97 * 1031 downloads= $100,0073
1031/12mo= 86 downloads/month
6. Audio Programs:
- Price: $297 per program
$297 * 337 = $100,089
337/12 = 28 sales/month
7. Seminars/ Live Events:
- Price: $497/ ticket
497 * 202 people=$100,394
202/12 = 17 sign‐ups/month
8. Online Course
- Price: 997
997 * 100= 99,700
100/12 = 8 sales/month
9. Video Programs, Premium Courses
- Price: $1000 Video course
$1000 * 100 courses = $100,000
100/12 = 8.3 sales/month
10. Coaching/ Consulting
- Price: $2000/program
2000 * 50 transactions = $100,000
50/12 = 4 people/month
11. Being a Speaker
- Price: $5000
5000 * 20 = 100,000
20/12 = 1.7 speeches/month
12. Mastermind Programs
- Price: $10,000
$10000 * 10 people= 100,000
10/12 = 0.8 signups/month
I could list more variations of these with different price levels and there can be combinations, but I think you get the idea.
As you can see, you only need somewhere around 1,000 fans to make a living in a business, not considering taxes. The number 1,000 is not absolute. Its significance is in its rough order of magnitude.
A thousand customers to shoot for isn't an unrealistic goal, even when you are new. If you added one new fan per day, it’d only take a few years to gain a thousand.
This also means that you don't necessarily need a large niche. With the internet, the most obscure under-selling book, song, or idea, is only one click away. Even if only one out of a million people were interested in your product, that’s potentially 7,000 people on the planet.
The thing is, the big corporations are not equipped to connect with small niches of people. That means the long tail is wide open to you.
How about physical products?
13. Hot Dog Stand
- Price: $9 per hot dog menu
1,000 regular customers
Each buying 1 menu per month
$9 menu * 12 months * 1,000 customers = $108,000
1,000 menus/month = 50 menus/day (Mon-Fri)
Now let’s get out there and start to make you money!