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PUBLISHING WITH CD-ROMS! * *Why would anyone want a CD-ROM unit? Well, for one thing, a CD-ROM *can hold tons more information and programming than a regular computer disk, *almost 400 times as much, to be exact. For example, there are whole *encyclopedias that come on only one or two CD-ROMs! And these aren't just *plain, boring encyclopedias, either. The high amount of storage on a CD-ROM *allows full-motion video, digitized sound, and other special effects to be *included. For example, if you look up the first moon landing, you might see *an actual short video of Neil Armstrong stepping onto the moon, and you might *hear him say his famous "one small step" speech! CD-ROM games are incredible! *Many CD-ROM games are ultra-realistic, with real actors, real speech, and *thousands of possibilities. * *Desktop publishers love CD-ROMs, too. There are CD-ROMs available *that hold thousands of typestyles and clip-art graphics. The ability to use *CD-ROMs is almost essential these days if you run a BBS (Bulletin Board *System, accessible by modem users). There are dozens of CD-ROMs available *that contain hundreds of shareware programs each. Callers to your BBS can *download these programs to their computer, so they can use them. With a *few of these, you can have the largest file base of any BBS in your area *literally overnight! * *Major software companies are jumping onto the CD-ROM Catalog *bandwagon. Some companies are now putting all of their programs onto a *CD-ROM. These programs will be hindered in some way from functioning 100% *(for example, a word processing program may not be able to save what you've *typed). They do this so you can try the program and see if it's what you *want. If you like the program, you can call them, give them your credit *card number, they will charge you for the cost of the program, send you *the manuals, and give you a code you can type in to make the program fully *functional. They are discovering that it is very cost effective to operate *this way, plus, people get to try more software out, and potentially purchase more. *So, this is the "why" of CD-ROMs. Just how can they make money for you, *you might ask? First, you need to know how popular CD-ROMs are becoming. *According to an article in Fortune magazine (February 21, 1994), about 15% *of the 5.85 million computers sold last year contained CD-ROM units. That's *over 877,000 CD-ROM units, just in 1993. That doesn't count the tens (or *hundreds) of thousands of people who are adding CD-ROM units to computers *they already own. * *Have you ever been to a music store where they sell used music CDs? *Used CDs are as good as new ones, and you can usually buy them for half the *price of new CDs. This has become an industry in and of itself. People *naturally want to save money, but get the same quality of product. Remember *the number of people I mentioned earlier who either bought a computer *containing a CD-ROM or bought one to add on to their current system? *They'll be buying CD-ROMs. After awhile, they'll get tired of the particular *CD-ROM they purchased. They may have finished a game, and not want to play *it again. They may have bought a CD-ROM that they just plain didn't like. *You can run a used CD-ROM business much like the used music CD business is *run. Here's a nutshell description of what happens in a typical used music *CD store. Almost everything will function the same for CD-ROMs. A customer *brings in a CD that they want to trade-in. If the music store owner wants *it for his or her stock, they'll usually offer the customer $2 to $5, *depending on the demand for that particular CD. Then, they'll slap a *price of $6 to $10 on the CD, and put it out for sale. That's basically all *there is to it. The difference with CD-ROMs is the price. Music CDs, at *least in my neck of the woods, retail for around $14 to $16 each. CD-ROMs *usually start around $25, and can cost over $150! The price varies with *the type of program on the CD-ROM (games are cheaper than encyclopedias, for *example). If you were looking for an encyclopedia CD-ROM, and could buy the *same one for either $150 new, or $75 used, and they'd both function the same, *which would you buy? The basic formula for this is to offer the customer *who brings in a CD-ROM 20% to 40%of the usual selling price for that *particular item. Then, you retail it for 50% to 75% of the usual selling *price, depending on the demand for that item. If it's a hot new game, give *the customer a bit more and price it higher. You don't have to give the *customer money, either. You can give them credit toward another CD-ROM *from your stock. One used music CD store in my area might give me $3 for *a CD I bring in if I want cash, or one new or used CD for every two I bring *in. This makes a lot of sense. For example, if they paid $4 for the CD I *want and I give them two CDs, they've basically paid $4 for TWO CDs, which *they might sell for $8 each. Thus, they paid $4 for $16 worth of CDs. Not *bad, and you can do this too, with your used CD-ROM business. Be sure to *keep good track of the amount you paid for the CD-ROM your customer selects *in this sort of trade, making sure that you will profit from the two they *bring in. Well, that's an overview of the used CD-ROM business. Now let's *get down to details. I'll tell you how I would run a business like this. *You put your thinking cap on while you're reading this, and I'm sure you'll *think of some ideas, too. and *HOW TO START THIS BUSINESS and *First of all, immerse yourself in the CD-ROM world. If you don't *already have a CD-ROM unit, spring for one. Here are two sources for *low-priced CD-ROM units: CRAZY BOB'S (yes, that's the actual name of the *place), 50 New Salem St., Wakefield, MA 01880 (800) 776-5685 (an excellent *source for CD-ROM units starting at $259, plus tons of CD-ROMs at low prices *- call for their catalog); and CORPORATE SYSTEMS CENTER, 1294 Hammerwood *Ave., Sunnyvale, CA 94089 (408) 734-3475 (new and refurbished CD-ROM units *from $149). Read the computer magazines, especially ones dealing with *multimedia topics. Many of them will have lists of the top selling CD-ROMs. *Become a frequent visitor at your local computer stores - pay attention to *what people buy. * *All these will give you clues as to what the big sellers are. Take *good notes, and keep them handy! Next, decide how you will run *this business - in a store, or by mail. This business can be run equally *well both ways, though the methodologies are a bit different. If you run *it retail, you'll need to be in a good, visible location, with a decent *amount of advertising and publicity. If you operate as a mail order *business, you'll need to put together a catalog of what you have to offer *and get it out to CD-ROM buyers. * *Now, put together a starting inventory. You can do this by *advertising in local and national magazines. Put a classified ad out *saying something like this: "CASH FOR YOUR CD-ROMS!!! Excellent condition *only, must have all manuals. Send your list for quote. (Your name and *address)." Good places to put this ad include Computer Shopper Magazine, *Computer Monthly, PC Magazine, multimedia-oriented magazines, BBSs, and *local computer user group newsletters. When you receive lists in the mail, *compare them to the information you compiled earlier. Find out what your *local dealers and national mail order retailers are selling the titles for. *Offer the person an average of 25% of the normal selling price. Most of *them will take it, rather than have the CD-ROMs sitting around on a shelf, *gathering dust. You should try to compile at least one to two hundred *CD-ROMs before you advertise them for sale. * *When you DO start advertising, emphasize that you will take *trade-ins (remember the two for one deal described earlier) in addition *to selling for cash. This is a very cheap way to build inventory. Remember *to get at least double what you paid for each CD you sell. * *If you want to run your business as a retail store, you should *consider stocking some new CD-ROMs. Allow customers to trade their old *CD-ROMs in for new ones, keeping your costs in mind. There's no reason why *you have to have a hard set concrete rule, such as "you get one new CD-ROM *for every three used ones you bring in." You can set a certain dollar credit *amount for each CD-ROM they bring in, if some are more desireable than *others. Also, you don't have to take EVERY CD-ROM that people bring in. *Like any other product, some CD-ROMs will be total dogs that no one will *want to buy, except someone who's never heard how awful it is. Don't take *these. If you manage to pass one off on an unsuspecting customer, good for *you, but you'll probably never see them again. You want customers to return, *and return, and return. You want them to buy a CD-ROM from you, come back *and trade it in, then do the same again and again. That's where the real *money is. After all, say a customer buys a CD-ROM from you for $50 that *you paid $25 for. You've made $25 profit. That customer comes back in a *few months later to trade it in. Now, that CD-ROM might only be able to *bring in $35, so you offer $17 for it. You still have $8 profit. You'll *make $17 profit on it when someone else buys it, bringing the profit amount *back up to $25. The customer now buys another $50 CD-ROM, giving you another *$25 profit. And so on... * *If you're running a retail walk-in store, you won't need a huge one. *In fact, a smaller store can be better than a large one. Your products are *small, so a large store will just look empty, even when fully stocked. Plus, *get four or five people into a small store and it looks busy. Put four or *five people in a huge store, and it looks dead. You want your store to at *least LOOK busy, don't you? The best way to display your stock is to put *the CD cases out and keep the disks behind the counter. You can either put *cheap racks on the walls to put the cases on, or build some cheap bins for *people to flip through. The advantage to the racks is that people can see *the artwork on the front of the case, which draws their attention. The big *advantage is that you can store more CD cases in less space. Plus, it *appeals to human curiosity to rummage through the bins. I'd have bins *in my store. If you build your own bins, all you need to do is make a wood *box that's 16.5 inches wide and anywhere from 10 to 15 inches deep. Now, *divide the box into three compartments that are 5.5 inches wide. You will *be able to stack the cases in each compartment so that the spine with the *CD-ROM title is showing on the top. That will make it easy for customers *to flip through them. Arrange them alphabetically by title in the bins. To *keep the disks, get some 5 inch wide strips of 2 inch thick high-density foam *(not the styrofoam that flakes apart - you want the tough stuff that can be *sawed). Glue this foam to strips of plywood that you have nailed either *under your counter or on shelves. Next, saw slots 3/4 of the way into the *foam every 1/2 to 3/4 inch. Use a vacuum to get rid of any foam dust. *Now, you can insert the disks into the slots, where they will take up little *space. You may want to put labels on the foam and corresponding labels on *the CD cases, so the disks are easy to locate when a customer wants to buy *one. *
*A good idea, if you can afford it, is to have a computer or two out,
*so customers can try out the CD-ROMs. This will drastically increase your
*business, because customers will be less warry of being "taken". Plus, when
*it isn't busy, you can play some games...!
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*Where to advertise? *or even know what a CD-ROM is. Good avenues for targeted local advertising *and other media that appeals directly to computer users. Be sure to put *flyers up around school campuses, especially in computer labs, if possible. *It may have occurred to you that there is a hidden possibility for profit in *the used CD-ROM business... CD-ROM RENTALS! Why not? Video rentals brought *forth video game cartridge rentals, which have exploded nationwide. Rent *your stock of CD-ROM disks. You'll get the student who needs an encyclopedia *for the big term paper; rent them an interactive CD-ROM encyclopedia. You'll *get the game freak who just has to play something new; rent them your newest *and most exciting CD-ROM games. You'll get the parent who's looking for a *new educational program for their kids; there are hundreds of educational *CD-ROMs out there. You'll get the business person who needs special *reference material; rent that CD-ROM in your stock that contains the names *and phone numbers of every buyer for every large company in the U.S. How much *to rent your CD-ROMs for? Well, it's pretty much an open market, since there *aren't many (if any!) CD-ROM rental stores around. I'd say, start your *rentals at $3.50/day, and see how it goes. You need to find the highest *price the market will bear, without damaging your business. For example, *if you can rent 100 of your CD-ROMS per day for $3.00 ($300), or 75 for $3.50 *($262.50), it should be easy to see which price to charge. As with any rental *business, you should get a heavy supply of standard rental agreements. *Standard video rental agreements should do. Your customer needs to fill *one out and sign it before the first time they rent. Basically, the *agreement states that anything they break or steal, they buy. * *Should you charge for memberships to your CD-ROM rental club? I *would answer a resounding NO!!! Many video rental stores charged for a *membership. Those days are over. The smart rental stores realized that *they'd make far more bucks down the line by giving out free memberships *and having many more potential renters, than they would make by having *only the people willing to pay $10 to $25 up front, before they rent. Make *up some inexpensive rental membership cards (plain cardboard will work fine), *and give them out FREE, after the renter fills out the agreement. A good *idea is to stock up on CD-ROMs that contain collections of specialized *programs. For example, get a collection of CD-ROMs with shareware programs *on them. Let BBS owners know you have them available. Keep in mind that *there are over 60,000 BBSs out there, with more starting every day. Sounds *like a good market for rentals and sales. Or, put together a stock of *CD-ROMs containing typestyles and clip art graphics. Then, do a special *mailing to desktop publishers, businesses that have in-house art departments, *schools, etc., any business that could need these CD-ROMs. Be careful about *renting these, though. If you're dealing with CD-ROMs that contain programs *that can be copied, such as graphics, make sure the contents of the CD-ROM *aren't protected by copyrights. If they are, they are only intended to be *used by the PURCHASER of the CD-ROM. If they are public domain, then you *may rent them as many times as you want. * *I hope you can see the profit potential locked inside CD-ROMs. They *are not a fad, they are a coming wave. Look at how CDs revolutionized *music... they WILL do the same for computers. Establish yourself as a *source of quality new and used CD-ROMs, for sale or rent, and you'll do well! *This is a fantastic business that is easy and fun. Start right away, *though. It's hard to open a profitable video store these days, because *everyone's in on the technology. CD-ROMs are the new technology on the *block, waiting to be picked up and used profitably by you! and and |
