Suppose you do have an ebook. Theoretically, certainly, you can find the price at which no consumers purchase your book, and the price at which nearly every consumer who sees your book purchases it. Thus you have a demand function. Optimize your demand function, and you have the ideal price for your book.
Sure, you can go backwards. Again, theoretically, peg a price, then write an ebook such that its demand curve results in your desired optimal price. Practically, it's impossible to measure potential consumer preferences and interest with much accuracy, but at least it starts you off thinking about what the consumer wants. And the more your consumer wants your product, the more demand shifts outward. I agree that this "backwards" model may be a beneficial mindset, because your product will already be optimized for consumer wants.
But why would you use Google AdWords as your measure of demand? I could spend a month writing a speed-reading ebook, create an search-engine-optimized website, and notify my friends. With $5/month hosting I already own, my cost structure is essentially zero. Every e-book I sell is pure profit, and I never touched AdWords.
The trick is optimizing AdWords spending. For every $1 I spend, will I gain $1 of revenue? If yes, keep spending until that's no longer true. Ceteris paribus, a $100 video course will generate more revenue per $1 of marketing spending than a $20 ebook, because you have 5x more chances to make the sale. That's too much of an abstraction, however. Maybe only 0.01% of click-throughs will be a $100 video course, but a solid 1% of click-throughs will buy a well-reviewed $20 ebook. So thus it's actually more profitable to advertise on Google AdWords
Perhaps a conversion rate of .015 is a decent ballpark for estimating AdWords revenue. But not total demand for the product.
He's trying to eliminate ideas for products, not sell an existing one. I.e. if he writes an e-book, is the cost of sales going to make it a net loss, if so, he should make a product at a higher price point or pick a different niche.
Adwords is appealing since it's an auction, and they let you see some of their data. In your example of using SEO instead, you have to do the SEO work with either your time or someone else's, so it's not like the cost is zero.
Suppose you do have an ebook. Theoretically, certainly, you can find the price at which no consumers purchase your book, and the price at which nearly every consumer who sees your book purchases it. Thus you have a demand function. Optimize your demand function, and you have the ideal price for your book.
Sure, you can go backwards. Again, theoretically, peg a price, then write an ebook such that its demand curve results in your desired optimal price. Practically, it's impossible to measure potential consumer preferences and interest with much accuracy, but at least it starts you off thinking about what the consumer wants. And the more your consumer wants your product, the more demand shifts outward. I agree that this "backwards" model may be a beneficial mindset, because your product will already be optimized for consumer wants.
But why would you use Google AdWords as your measure of demand? I could spend a month writing a speed-reading ebook, create an search-engine-optimized website, and notify my friends. With $5/month hosting I already own, my cost structure is essentially zero. Every e-book I sell is pure profit, and I never touched AdWords.
The trick is optimizing AdWords spending. For every $1 I spend, will I gain $1 of revenue? If yes, keep spending until that's no longer true. Ceteris paribus, a $100 video course will generate more revenue per $1 of marketing spending than a $20 ebook, because you have 5x more chances to make the sale. That's too much of an abstraction, however. Maybe only 0.01% of click-throughs will be a $100 video course, but a solid 1% of click-throughs will buy a well-reviewed $20 ebook. So thus it's actually more profitable to advertise on Google AdWords
Perhaps a conversion rate of .015 is a decent ballpark for estimating AdWords revenue. But not total demand for the product.