The Problem With Premiumisation
The pandemic has challenged our existing business models. For a lot of small creatives and entrepreneurs, this includes an important idea – premiumisation.
‘We’d like you to submit five or six unpublished features on your favourite undiscovered locations in Japan. Please include a few photos for each article.’
What sounded like a freelancer’s dream offer was, once I read the fine print, something close to a scam. As I explained back in 2017, a high-profile magazine had asked me to submit a whole bunch of work for their consideration. Maybe they’d publish it; maybe they wouldn’t. Maybe I’d get paid; maybe they’d send a cheaper in-house writer to do the job instead.
This is just one of the challenges freelancers face today. On one side, you’re often working for free or expected to accept ‘exposure on social media’ in place of payment. On the other side, if you want to be paid well, the accessibility afforded by the internet means you’re often competing with the best in the business.
‘An increasing number of individuals in our economy are now competing with the rock stars of their sectors.’
– Cal Newport
The solution a lot of creatives aspire to is leaving freelancing for making. Instead of selling your time, you sell your products. It’s an idea expertly explained by Paul Jarvis in The Company of One, (which I discussed here).
If your work involves selling your time for money, then you soon hit a limit for how much you can earn. Even if you’re the best in the world, there’s a limit to how much time you can trade for money. If you’re not the best in the world, then you’re competing against free. There’s always someone willing to do it for less – or for nothing more than likes online.
And if you’re not working, you’re not making money.
You need to break the connection between the amount of time you work and the money you make.
Of course, making stuff isn’t easy. If you’re going to replace a freelancing income, you’ve still got a big hurdle to overcome. Broadly (and at the risk of making an either/or simplification), you have two choices: scale or premium.
Scale simply means you make a lot of things. Premium means you make fewer things but charge more.
Premiumisation is the ugly word we use for the process of trying to cultivate a premium business. You aim to make things that are better, unique, or perhaps limited in availability and grow an audience of people willing to pay a premium for them.
For me, releasing the limited edition version of my book was an eye-opener. There were the usual products – a paperback, a Kindle version – but then I also produced a $65 hardback version handmade by a Japanese printer. And it sold surprisingly well. I’ve also had a lot more success selling big, expensive prints of my photos than chasing scale by selling my images to stock libraries. So my focus shifted to premiumisation as well.
Premiumisation During A Pandemic
The premiumisation strategy has been effective for everything from boutique guitar pedals to handmade stationery for most of the last 20 or 30 years.
But with the economic consequences of the COVID-19 pandemic now affecting so many people, premiumisation feels problematic.
The question of where to go with premiumisation has been on my mind all summer. From email exchanges and Zoom calls, I’ve discovered I’m not the only one wondering about this. Looking at my online store makes me wonder where to go from here. It’s even seeped into my writing, like when discussing the cost of things like the Building A Second Brain course.
The problem of premiumisation in an age of pandemics came up on The Pen Addict podcast. Brad Dowdy discussed a thoughtful update from the owners of Musubi, a premium stationery company. Musubi’s statement outlines three strategic pillars for addressing the challenge anybody in the business of premiumisation is now facing.
First, Musubi plans to focus on products that promote their consumers’ creativity and mental health. As they put it, ‘…many of our customers use their Musubi journals as part of their daily routine, whether to write, draw, or journal in, and we play an important role in helping people cope.’
This will mean paying even more attention to materials and design of the products to make them more joyful and satisfying to use.
Next, Musubi plans to cut FOMO (fear of missing out) from the marketing strategy. They’re getting rid of ‘special edition’ language, or anxiety-inducing processes like expecting consumers to log in at specific times, or within narrow opportunities, to place an order.
Finally, Musubi is going to explore ways to be more affordable, most likely through new products that can be offered at lower price points.
This threefold strategy involves being positive, patient, and price-sensitive. It resonates deeply with how I’ve been feeling about adjusting my premiumisation model. Healthy consumers, healthy purchasing decisions, and a healthy market feels like the right response.
What Musubi isn’t doing is massively cutting the price of all their products. Rather, they are thinking deeply about the benefits they provide to their customers.
It does feel like the mix of kindness and commerce we need right now.