As a visionary, Will Bury is convinced that people will be primarily reading and listening to everything by means of a digital format in the very near future. As an inventor with a promising outlook, Will knows he is on the verge of success and substantial wealth. He has developed and patented a proprietary technology that increases the amount of time it takes to transfer printed word into audio. This technology digitizes words and creates a file which offers options for reading material digitally or listening to a synthetic, inhuman sounding voice.
Will currently holds a full time job at High Tech Digital Industries that pays him $200,000 per year salary plus a benefits package. He makes a good living and is able to sufficiently support his family with his earnings. After working all day Will goes home and immediately goes into his garage to work on his digitizer. Unfortunately, he has been spending so much time on the invention that he has been neglecting his family??™s needs. Including missing multiple soccer games his daughter has played in. He understands that his family??™s needs come first but also knows the earning potential of his invention would make the family very comfortable. With that in the forefront of his mind, Will must make an important decision as to whether or not to leave his employer in order to pursue his dream full time.
When beginning a new business, an entrepreneur needs to make sacrifices. Unfortunately his family happens to be that sacrifice. Assuming his wife is not working, he should employ her help in getting the business started. She can begin by simply digitizing the books while he is working at his full-time job. That will free up some much needed time to spend with his family.
Will has set up a website to sell his small catalog of digitized books. He has access to free books that are out of copyright and charges $10 for those books. Books still in copyright go for $15 on his website which includes a $5 royalty fee he must pay to use those books. Unfortunately, sales during the first six months have been extremely disappointing. He sold 1,000 books out of copyright and 2,000 books still in copyright. These numbers show that consumers are two times as much interested in more current titles over the older ones. Proper pricing strategies are important since the laws of supply and demand, according to Investopedia, say that the quantity demanded is the price amount of a product to which the consumers are willing to pay for a given product at a given price (Investopedia, 2010). A recommendation is that Will needs to invest in current website technologies that will enhance his website to attract attention and give the consumers a reason to purchase his product.
A reliable source and good friend informed Will that after she raised prices on her product she saw an increase in her sales and profit (University of Phoenix, 2010). That friend also expanded her online advertising budget. Studies have shown that digital and audio book customers have above average household incomes. These customers also heavily download digital music from iTunes or other types of online music sellers (University of Phoenix, 2010). With that said, Will should make that his target audience for selling his digitized books. For the time being, it is recommended that Will keep his prices the same for the books he sells including the books still under copyright protection. However, he needs to study the laws of supply and demand and learn how it will affect his sales before lowering or raising his price levels.
There are many items Will must take into account as he proceeds with his invention and forms his company. He realizes that he is more technical than business savvy and will have to learn quickly if he wants to have a successful business. Will has many unanswered questions that must be dealt with. He needs to continue his research to determine:
??? What applications are needed to make his technology work
??? Who wants to use his technology
??? How will it be delivered to customers
??? How many books should he buy and at what price
??? What is the best launch price for digital titles
At this time Will??™s digitizer can transfer a 500-page book in one hour. He is currently digitizing the books himself but he wants to find people to train and do the work for him. Will expects it will be easy for him to train people to use the digitizer so his next task is to determine where to find people and how much he should pay them. He wonders if he should find someone local and pay $10 per hour or send his work out of the country and pay $2 per hour. Will needs to consider these direct labor costs in his decision. He should also invest in advanced technologies that will allow him to reduce the transfer time for each book and increase the opportunity for higher production output. This will shorten the amount of hours he will need employees to digitize the books thus saving money.
Will??™s business is considered a pure monopoly in the economic world. There is currently no competition for digitizing books and he had considerable control over supply and prices (WebFinance, Inc., 2010). His digitizer is relatively inexpensive to reproduce and contains encoded security. This security feature will prevent unauthorized replication of his invention. As an entrepreneur Will has the distinct power to raise and lower his prices as the market demand goes up or down. Without being a part of the competitive industry he is able to manufacture his product at a lower output and charge a higher price. With that said, the lower he keeps his prices the more potential there is to attract new customers to his business (Schenk, n.d.).
Will has a great opportunity and potential to be highly successful and profitable in his new business venture. This is due to the unique product he invented coupled with his strong technological skills. Unfortunately, Will is lacking a strong business sense and that could prove to be detrimental if he continues to neglect the economic side of his business. By learning about how the economy works he will effectively move his company towards the future and with that he will be highly successful.
Investopedia. (2010). Economic Basics: Demand and Supply. Retrieved from:
McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems,
and policies (18th ed.). New York: McGraw Hill/Irwin.
Schenk, R. (n.d.). The Demand Curve for Output. Retrieved from:
University of Phoenix, (2010). Will Bury Scenario. Retrieved from:
WebFinance, Inc. (2010). Market Structure Definition. Retrieved from: