Is Licensing Right For You?
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When it comes to making money online there are a number of ways to go. Today I want to introduce you to one of the most powerful, yet often overlooked ways of making sales more quickly and easily than you might imagine.
In this article you will discover …
- What licensing is.
- How licensing works.
- The 7 things to look for when considering a licensing offer.
Ready? Let’s get started!
First, a tiny bit of background. You may already be familiar with these ways of making money online.
- Create and sell digital products.
- Sell physical products. (Such as an Amazon store)
- Affiliate marketing.
- Content Marketing.
But what you might not know about yet, and the subject of this article, is licensing.
Licensing is a powerful way to use other people’s content to make sales and income while building your own business. In fact, it just might be the perfect way to start making money online, especially if you are not making a full time living online yet.
First things first, what is licensing and how does it work?
According to Dictionary.com, a license is “
We will build on that for our purposes.
In online business, a license is the right to sell someone else’s product as your own and collect 100% of the selling price.
It’s a pretty simple concept when you think about it.
- Mary creates a membership site full of great content so she can make money.
- Rather than just selling memberships directly, Mary sells licenses to others, allowing them to sell her content as if it were their own content.
- John buys a license from Mary (Mary makes money) and sells the content as his own, collecting 100% of the selling price.
It’s an ideal arrangement.
From Mary’s (the licensor) point of view.
- She collects a higher one-time fee than if she was making sales one at a time.
- She can focus on the quality of her content, knowing she does not need to set up sales funnels, do customer support, etc.
- If John succeeds with her product, he will be a repeat buyer for her next license offer.
From John’s (the licensee) point of view.
- He instantly has a fully developed product to sell as his own.
- He builds his list (not Mary’s) when selling or giving away memberships.
- He collects 100% of the income on all sales.
- He can run his own affiliate program on this product, having affiliates drive traffic FOR him.
- He expands his existing product line (if he has one) with one purchase.
So now we have the basics out of the way. Licensing (in our example) simply means paying a fee for the right to sell someone else’s content as if it were your own while collecting 100% of the sales price and building your business and list in the process.
Sounds good? It is! But there are seven things you need to know before paying a licensing fee, so let’s take a closer look.
ONE: Is The Quality High?
To be sure, the quality of the content you buy needs to be high. The reason for this is simple. The content will reflect on YOU, not on the content creator.
With licensing, you are tying your name to the content, even if you are not claiming authorship of the content.
So it needs to be good.
But what does “good” mean in this context?
- The ultimate end-all and be-all of the subject at hand?
- Pulitzer Prize winning writing?
- Lots of videos?
- Fancy graphics that look like they came from the Disney studios?
As good as those things sound, I believe it means none of that.
I believe “good” means this …
Helping your customer go from where they are now to where they want to be one common sense step at a time.
Let’s take an affiliate marketing course as an example. Does the affiliate marketing course you buy a license for need to cover EVERY possible method or technique of affiliate marketing?
While that can be good, more does not always mean better.
Better, to me, would be a course that ACTUALLY helps a person take important steps toward their goal.
TWO: Is There A Hungry Market For This?
Duh, right? Why would you pay good money for a license to something no one wants?
And yet, it happens ever day.
Here’s the key – if you are considering a license in a market you know something about you should be good to go. You probably know much more than you think about the market, especially if it something (like affiliate marketing) that you have been trying to do for some time.
If you are considering a license in a completely new market (or niche) then you will want to take time to do some basic research. I’ve written on this before, so I won’t repeat it all here.
The basics are this …
- Is this a large market?
- Are they buying things online now?
- Are there ways to reach them, like paid advertising or publishing content?
If the answer to these three are yes, you are good to go. If anyone can sell in a market, you can too!
THREE: Is The Content Easy To Use?
Remember, in most cases you are going to be buying the right to sell a membership site, an eBook, a course, or software.
The question now is this … how easy is it to get started.
In my own experience I have purchased licenses to sell products that required what amounted to an advanced degree in programming to use. Needless to say … not happy.
CASE STUDY: Just last weekend I did this very thing. I purchased a license to a software product, set up the product and sent a solo ad in less than 40 minutes. The result? I earned back the license fee from that one solo so now all sales going forward are pure profit.
This can be done and YOU can do it too!
FOUR: Will You Get Support If You Need It?
Support is vital in these situations. Even though you are selling this product AS your product, you are not the product creator. That means the person who did create the product needs to lend a hand if needed.
There are two levels of support here …
- Supporting you so you can support your customer. This is the most common form of support given to licensees and is to be expected. Without this you are flying blind selling someone else’s product. Not good.
- Them supporting your customer FOR you. This is the best you can expect, especially if their support team is good. Very few people understand the cost of great support (it ain’t cheap) and if the company you buy the license from offers this, jump on it. In some cases you might need to pay a fee, in others it is factored in to the license price already.
Here is an often overlooked factor when buying a license to sell products online.
A great license can help you earn profits for YEARS.
I know, because it happened to me.
One of my first licensing purchases was for a software product that helped you write great headlines. It was a stretch to buy the license but I had confidence in the need, the market size and the quality. So I took the plunge.
Within a few days I was in profit. Soon after, the product became one of the top sellers in our product line. Because I was a license holder, and not just an affiliate or someone who bought PLR, I had many options.
- I could give it away as a lead magnet.
- I could sell it for a dollar as a tripwire.
- I could make it a bonus for one of my higher-priced core products.
- I could bundle it with other products to increase profits.
- I could bundle it with a service (copywriting) for even more profits.
Over time, I did all of these.
So how long did this license last before the software became obsolete?
That’s right …
ONE license provided consistent, steady profits for a little over nine years!
Not a bad return on investment!
So always ask yourself this, how long might this last?
SIX: The Sales Process
Another key factor is the sales process. What I mean is the process YOU will use to make sales.
In today’s world it is almost impossible to send cold traffic to a sales page and expect any sort of conversion. This has been proven time and time again. And it’s the reason most affiliate marketers fail to make more than $100 … ever.
So what is the answer?
There are three answers actually.
- You must have a great squeeze page to collect leads.
- You need something totally FREE to give away.
- You need built in upsells along the way. This can be email or image ads (or both) strategically timed to make the sale.
Most people cannot pull this off.
That is why you must examine the sales process for the license you are considering.
The ideal sales process looks like this …
- You have an excellent squeeze page from which you are making a free offer.
- The customer gets instant access to what you are offering.
- If possible, the free offer is access to the product, or part of the product.
- What they are allowed to access is high quality and helpful.
- Inside the product itself (be that software, an eBook or membership site) there is a logical path to upgrade.
- You are able to send follow up email that both educates and sells the upsell.
- Nowhere along the way is the customer made to feel stupid or inferior if the do not upgrade.
If you find something that has ALL of this, you have found a winner. While you don’t need them all in place, you do want at least a squeeze page, high quality free information and good email follow up.
With those three you can do quite well.
The entire point of buying a license is to make money. So it is vital to count the cost before you begin.
The first factor is the cost of the license. Write that down on a piece of paper before you do your potential profit calculations.
Now it’s time to figure out how you are going to get that fee back, how you are going to make profit, and how fast each can happen.
Because this varies so widely, based on the fees involved and the product demand, it is impossible to give you a hard and fast formula. But I can give you guidelines, and they are these.
A. If you are giving away free information, make sure it helps the client AND leaves them wanting more.
Memberships with multiple levels work well for this. Software with limited features, or fully-featured but for a limited time, work very well too. Coaching with a free first call can be ideal.
B. The more upsell paths you have the better.
People buy things online in many different ways.
- Some will respond to a well-placed banner ad in a membership site.
- Some will respond on social media faster than any other medium.
- Some want to be educated before they consider buying.
- Some buy from an email they receive.
The more of these marketing channels you are using the better. You ideally want to use them all because, in so doing, you are reinforcing the sales message and reminding them why they should upgrade.
C. Can you offer complimentary products?
If you can offer complimentary products you will have a sure path to profit. The reason this is true is that customers are up to 20 time more likely to buy the second time than the first.
It is just much harder to make that first sale than to sell again to a happy customer.
So look for situations where you can combine a license product with your own product or with other licensed products (or affiliate products) for maximum profitability.
D: What will your cash flow look like?
You’ve heard that cash is king, and it is. But cash flow is a powerful factor as well.
By cash flow I mean this … how soon will you get paid after the sale is made?
- For many affiliate marketers, that number can be 60 to 90 days.
- For product owners, the payout is immediate.
But what about license holders?
One of the best factors when considering license products is the cash flow. Because you are selling this as your own product, you get paid immediately when sales are made!
This is powerful because it means you can “turn” that money back into a way to reach new and larger audiences while taking out profits for yourself.
When it comes to profitability, cash flow should be a major consideration.
Well there you have it, seven things to look for when considering purchasing a license to sell someone else’s product.
Feel free to print this article out or write down the seven points for later reference. They can come in very handy.
Purchasing a license is the best of both worlds in my view.
- You don’t have to create, or update, a product.
- You often don’t have to host a website or even have a hosting account.
- You don’t have to create marketing materials.
- You don’t have to create an upsell path.
- You don’t have to create a sales funnel in some cases.
And … you get to sell as many copies as you want and keep all the money while getting paid instantly.
I don’t know about you but, to me, those are beautiful things indeed!