Finding Profitability – The Tipping Point for Expansion

In response to my question – “tell us about your blog’s ‘tipping point'” Collis Ta’eed from PSDTUTS and (Freelance Switch) responded with the following comprehensive guest post.

Years ago when I had more time to spare, one of my favourite pastimes was to play computer games. In particular, I rather liked those real-time strategy games like Warcraft and Starcraft, which brought hours of enjoyment, to the decline of my studies and chagrin of my girlfriend of the time.

I’ve not had the time to play one of those games recently, but now and again I do think about them, and how they relate to blogging and business. In particular they are useful for looking at the tipping point for a blog that I run called PSDTUTS, and how it went from small site to expanding little business.

Strategy Games

So in case you’ve not had the great pleasure to play one a real-time strategy game, let me outline roughly what happens in them. Generally you begin every round with a starting set of resources like gold and timber, and a few little guys to do your bidding. It’s your job to build a base by constructing buildings with your gold, use the buildings to train more guys and use the guys to harvest resources so you can then build more, train more, and so on.

Now the trick to these games is that you need to balance your growth and expansion if you want to be successful. You have to use your resources wisely and make your base self-sufficient, as your initial resources will run out quickly and you’ll be left floundering.

So what’s this got to do with blogging?

PSDTUTS

In September last year, I started a Photoshop tutorial blog called PSDTUTS where we post comprehensive tutorials and general articles about Photoshop. My early tutorials brought lots of traffic because they were longer and more in-depth than anyone else was really writing at the time, so the site stood out. But because I work on lots of projects, I have only a limited amount of time and could only put together one tutorial each week. And while the traffic was good, there wasn’t much income from the site. From memory it was just under a thousand a month from Adsense, some affiliate links and some text-link-ads I was selling.

So in many ways, it was kind of like being in one of those strategy games I mentioned earlier. I had a little base, with a few posts going up a month, some resources coming in, and one guy to do my bidding – me! While not a bad situation to be in, I wanted to expand.

So I started spending what little income I had, and hired a tutorial writer. I also offered cash for contributions that we published and started accepting community contributions. After a few months of this we’d gotten to publishing two, and sometimes three tutorials a week, and correspondingly income had gone up. Unfortunately, so had costs. Because PSDTUTS is and has always been popular, hosting all those masses of big images on every tutorial meant that I was serving up over a terabyte of data every month. Plus our tutorial writers cost money, because if you want the best content, you have to pay for it. And the more time I spent on the blog, the more I thought that I should be accounting for my own time in the accounts.

This status quo lasted for another three months. The site grew, but slowly. I was tied down to it, having to keep up my own work on the site. And though it wasn’t really losing (much) money, it certainly was not profitable. Without profits, there wasn’t really any way to expand, and so I was stuck.

So the question was how to harvest more resources. In strategy games, there are usually some key buildings that you need to build, that allow you to get more out of what you’ve already got. This was important because it was clear that if I simply hired more writers, built more sites, stuck more ads in, or a host of other expansion ideas, I wouldn’t really be getting anywhere.

The Tipping Point

In the end it was an idea that I’d shelved because it was too hard that made the difference. Where previously we’d been giving away the source Photoshop (PSD) file, then selling them individually, now we built a paid membership system. The system, which we call PSDTUTS Plus costs people $9 a month to join. For that they get to download the source files and we put up periodic extra tutorials that only they get to read. It’s built using aMember and WordPress, and took me a good two weeks to put together initially.

It took a little while of saving and a bunch of work to get the system up and running. But as all players of strategy games know, this is often the case in building a pivotal part of your base. And as in strategy games, it paid off when a few hundred loyal readers joined! Sure there is extra work now, because it’s really important that these readers get value for their money, but the tradeoff is extremely positive.

So all of a sudden the site went from break even, to profitability. So what to do next?

Expand, expand, expand!

The smart thing to do here would probably have been to not do too much, and build up some cash reserves. But where’s the fun and excitement in that? And besides, it wouldn’t really be a tipping point, if all I did was collect money. As we know from strategy games, there’s only one thing you can do when your resources have grown – build more!

So in the months since, I’ve hired an editor, commissioned some celebrity writers, expanded the posting schedule, and a few weeks ago built the first sister site at NETTUTS (http://nettuts.com). And as these new expansions increase revenue, we can expand more, train more, and harvest more resources.

What’s the lesson here?

Well aside from learning that playing Warcraft wasn’t a waste of time after all, I suppose you could say that thinking strategically about your blog is important if you want to build a business with it. Look carefully at what you are spending versus what you are getting back. Think long term and don’t be afraid to spend money along the way – so long as it’s wisely spent. And good luck!

Read how other Pro Bloggers answered the question about their blog’s Tipping Points at:

• Andy Beal
• Leo Babauta
• Brian Clark