BJM Free Press |

HOW TO GET RICH WITH CD-ROMS (1 OF 2)

CD-ROMs are the way of the future. Not only do the turn your computer into a super-high-powered knowledge and entertainment machine, they can make a LOT of money for you, if you have vision and the willingness to try some new things. This report will explain exactly what CD-ROMs are, and how they can bring high profits for you.

A CD-ROM is basically a compact disk (like the kind music comes on) that can be used in a computer. CD stands for Compact Disk, ROM stands for Read-Only Memory (which means your computer can read what’s on the CD, but it can’t write new information to it). In order to use a CD-ROM on your computer, you must have a CD-ROM unit, much like a disk drive, installed in your system. These CD-ROM units can either be internal (installed inside the computer case) or external (hooked to the computer by a cable). Note: Most CD-ROM units can also play regular music CDs, as well as the new Kodak Photo CDs.

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. In other words, this is a HUGE market!

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. Or, they may have bought a CD-ROM that they just plain didn’t like.

START YOUR OWN USED CD-ROM BUSINESS! HERE’S AN OVERVIEW…

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.

This is part one of a two part report.  Part two will be published on Wednesday the 23rd.