Tuesday, April 11, 2006

Video Professor Doesn't Want My Money

Obviously, I haven't been posting enough. I'm constantly thinking of things to write about, but then I get to work on a PC or five and there goes the day.

I'm thinking that maybe I should set my PocketPC to ring at a set time every day, and wherever I am, whatever I'm doing, I'll write a little and then post it as soon as convenient. Maybe.

But anyway, here's what's on my mind. I've been running my PC business since January. Things are going well. I'm learning a lot, and I've been a little feast-or-famine lately, but I think my trend is good so far.

Running your own business exclusively gives you a perspective on business and economy that nothing else will. Here's an example.

You've probably heard of the Video Professor. He's the guy on TV that says that if you don't know or are struggling with a computer program like Excel, PowerPoint, Outlook, Quicken, and so forth, he'll send you CDs with lessons on them to try, and if you don't want to keep them, you can send them back and only pay the shipping.

Here's why this is an incredibly smart business model:
  1. CDs are dirt cheap to press. He probably pays 10-25 cents per pressed disc (maybe less). If there are three discs in each lesson set, we'll be liberal and say that's $1 worth of discs, and another $1 worth of printed materials. He charges $8-12 (in my experience) to ship the package to you, and probably pays USPS $1.25 or so to First Class the parcel to your house. If we figure that's about $3.25 of up-front costs to get it to you, then his (exorbitant) shipping charge nets him about $5 (or more) even if you fall off the face of the earth after he sends it to you. He says it's free, you think it's free, and he still makes $5 if you disappear. Smart? Damn right it is.
  2. If you forget to return a disc so that you don't have to pay the $80 for the set, then he already has your credit card number and authorization to charge to it. Genius!
  3. If you do return a disc to avoid paying further, you still have his marketing materials and will treasure them, because he has assigned an artificial value to them: $80. HE DOESN'T CARE ABOUT THE DISC HE'S GETTING BACK!!! It doesn't matter! He probably trashes it, but you having to send the disc back to avoid paying sells you on the value of the rest of the set. He doesn't want the other discs and printed stuff back because it's advertising that you paid to get from him! I love it.
  4. Finally, if you really aren't a technical type, and everything in one of these training kits is a revelatory experience, then $80 can be a really great deal. You don't even have to leave your home. I'm sure there are plenty of people who are happy to pay it. For me, it's way overpriced. I usually learn a couple of tricks from Disc 3, and the rest is a waste of my time. That's not worth $80, but I'm also not the target market. He's got a great market, and I'm sure he's making a killing, $5, and then $80 at a time.
Do you see why this is a doozy of a business? He makes money on you coming and going, and then he sells you on keeping his ads around so that the next time you have a computer problem, you think of him. It takes a special kind of entrepreneur to come up with a business model like this, and he usually only has to do it once. Then he retires in Maui.

But there's trouble in paradise.

I have my wife using QuickBooks Pro for our small computer business. She's smart, and very PC literate, but QuickBooks is a comprehensive, complex program, and it's been difficult for her to adjust to it. So I ordered the Video Professor QuickBooks Pro lessons, fully intending to send back a disc before the deadline so I don't have to pay $80 for the set. I did this same thing with the Vid Prof Outlook, Access, and FrontPage sets, so it's no big deal for me by now.

But when Crystal called to arrange to send a disc back, they told her that I've ordered from them three times now (Outlook, Access, FrontPage, QuickBooks...isn't that four?), and I'm only supposed to do it once, so I can't order again.

Ok. Now, John W. Scherer, Founder and CEO of Video Professor, I'm talking to you. What's the deal with this? You and I both know that:
  • You make money whether I keep the whole set and pay the $80 or not.
  • I'm keeping the materials that you send because you've magically convinced me that they're valuable.
  • I'll pay you to send me advertisements again when I need a little help with another program.
  • One of these times I just may keep the whole set and happily pay $80.
  • Even if I don't, my grandma might at my recommendation.
  • (And now that you know I have a PC business,) My clients might too, at my recommendation.
But now, I'm hesitant to even try doing business with you again, and I certainly won't recommend a service to my clients that I feel shaky about.

Was this a rogue employee? Do you really not want me to try your products again? Can it really be that you don't want recommendations from me just because I'd rather pay you $5 than $85?

And I'm not being sarcastic here. I really do admire the smart business model, and I really am mystified by the incongruity of what I'm hearing from your phone agent. And I would genuinely love to hear from you about it, Mr. Scherer. If you're so inclined, please drop me an email at slybevel**at**gmail**dot**com, on or off the record; it's up to you. I'd love to post your reply here, but if that's not ok with you, I'll respect your wish.

2 comments:

Jake said...

I used the "Contact Us" form at www.videoprofessor.com to send the following note:

Dear Mr. Scherer-

I'm a young entrepreneur. I've written about your brilliant business on my blog, and I have posted a question for you there also. I'd be very grateful if you'd read the post and reply with an answer to my question.

Here is the link to the post:

http://phischkneght.blogspot.com/2006/04/video-professor-doesnt-want-my-money.html

I thank you in advance for your reply.

Sincerely,
Jake Wilcox.


Here's hoping he replies!

Alex said...

This is too funny. Have you heard from them yet? I have to admit, I have wondered for years in this internet age how these old school cd's continue to be advertised and sold. They are constantly on TV, but I haven't seen an ad in a long time.

With regard to your analysis of their business model I have to think that it doesn't work they way you think it does or they would welcome multiple orders. Why would they turn down free money (in essence, that is what you are saying they are doing)? Maybe that is why they aren't on TV anymore???