March 15, 2005

Too greedy!

Textlinkbrokers has a new thing where you can sell and buy permanent links in directories. I contacted them about both buying and selling. When you sell you get 5.00/link. When you buy you pay 25.00/link.

Do they really have to quintuple their money every time they sell a link? I mean how about providing some good value instead (like charging 10.00/link) they still dounle their money but the buyer gets a really good deal too.

Yes I know I'm not factoring in other their expenses (hosting, software, etc.), but seriously!

Posted by James Trotta at March 15, 2005 6:29 PM


Geez! I got a proposal from them for "Five new permanent, relevant links every month with unique Class C IP addresses. All links are PR2 and higher. 5 links @ $35 per = $175 per month".

Way too pricey (IMHO). Did get a nice complimentary link analysis/report of my site though.

Posted by: HELOC at March 23, 2005 12:12 PM

they have to have high markups as some inventory goes unsold and they still get stuck footing the bill for expansion and marketing costs.

some brokers probably spend hundreds of thousands a month

Posted by: aaron wall at April 2, 2005 6:32 AM

If they have to mark up product 500 or 700% to cover marketing, they should reconsider their plan. They had my permission to sell me links but they didn't offer me a decent value. Now I'm looking to take my business elsewhere so their marketing effort to find me was wasted and their inventory remains unsold.

Posted by: James Trotta at April 2, 2005 6:46 AM

Hey Guys,

Supply and demand rules all. We pay between $5 and $15 per permanent link, depending on the value of the site. We sell them for $15 to $35 depending on the quantity and the customer. SEO resellers can get them for as little as $15 each.

Why is there a markup? heh, because thats what successful businesses do. But, without sounding to capitalist I would like you to consider the following as well.

We have 35 full-time employees at textlinkbrokers (30 more then our nearest competitor). Yes our service may cost more then others, but unlike our foreign counterparts or some of the short term overnight companies that are out there, you can actually reach us by phone during our normal business hours. We will also be there to educate those that need it and here to support and resolve your problems when they arise.

All of this does not take into consideration that there are no other companies in the world offering a permanent links program that can actually do what they say they can do. Probably because it is extremely hard to coordinate, and not as cheap as some would like to believe.

I know of one other one company copying our program and from what I've heard, its one guy working out of his house and he never even gets back to you when you send an email. Good luck trying to find a phone number that works.

We have 7 active Sales/Customer service agents that spend an average of 30-60 minutes educating every new customer. The days of being able to sign up link buyers through auctions or through cheap advertising are over. Our average customers costs around $60 to close, after advertising, labor, billing etc..

Resellers and large buyers will always get bulk discounts, as they rightly should because there is an overall lower cost to working with those people.

I hope this post doesnt sound too defensive, but truthfully, it is. Im sorry you cannot afford to buy our links James, its definitly not for everyone. You can criticize our pricing model but the fact is; it works. We sign up 30 to 50 new customers every week. The ones that stick with our programs see fantastic results and usually end up coming back for more. With over 2000 active, monthly recurring, clients and a 2 year+ track record of success, I think it is clear that at least some people think our prices are justifiable.

Thanks for the free advertising :)

Posted by: Jarrod Hunt at May 17, 2005 4:11 AM

Alright, I just cant keep quite on this one. I'm usually a pretty level headed guy, but it really urks me when someone who knows nothing about me or my business calls me "greedy".

I am not in the business to turn customers away. If I could buy unlimited supplies of links for $5 bucks and sell them to an unlimited customer base for $6 bucks, and still stay in business, I would be the first to do it. More customers means larger market share, which is what we wall want. Or at least the people that want to stay in business for a long time, want.

The reality of it though is I cant. Theres a reason why most of the link brokers out there are now either out of business or still working out of their homes. This "idea" that you can buy for high and sell for cheap is ubsurd and has been the downfall of too many companies to count. That idea is a consumer model not a successful business model.

Supply and Demand 101

You charge what you can in order to stay in business. If customers are willing to pay more for a service then you have a responsibility to both your business and your customers to charge more. If there is not enough supply, then you must also charge more. It has to be this way. If we sold links for $10 apiece there would be wayyy too much demand and we would sell out our inventory before we could even service 10% of our customers. What do we do then? Tell 2000 people to go elsewhere?

Under this model of yours, where we charged $10 per link and had no inventory, textlinkbrokers would have to scramble to hire as many people as we could to go out and find "more inventory". At that point of desperation we would have to pay our inventory partners as much money as they demanded, in hopes, of finding enough inventory to meet the demand, thus increasing our cost for inventory. Before long we would be paying $9 per link and selling for $10 and quickly draining our bank account trying to pay payroll and all of the other major expenses that "real companies" have. No, advertising is not a huge expense, we spend about 5% of our budget on advertising. 90% of our business comes from referrals. Our biggest expense is Payroll, Inventory, Development, and infrastructure.

Now instead of us doing like you propose and selling links for ubber cheap and trying to please all the little guys, how about this for a model. We sell links for the price that is calculated when trying to balance between how much inventory we have and how much demand there is. In this model 80-90% of the people that contact us are actually able to get the links they want, textlinkbrokers makes enough money to continue growing its inventory, and every one is happy. We make enough money to hire more people and develop more programs that allow us to continue to be the innovators that we have always been. Allowing us to stay ahead of the search engines and allowing our customers to make money from the rankings that they receive. We also make enough money to hire customer support staff, billing staff, copies of microsoft office (not cheap!, speaking of Greed). Now instead of going out of business and leaving our customers high and dry, we stay in business and are able to give them the support that they so enjoy and deserve.

Supply and Demand seems like such a basic concept to me but very few people ever seem to fully grasp it. Very few businesses can afford to be greedy. Supply and Demand and Competition simply wont allow it. Businesses set prices based on supply and demand. As a business you try and keep as many customers happy, while at the same time keeping your prices at a point where your not overtaxing your supply lines or cheating your customers by not giving them what they ordered , (sorry for the run-on)or by not being able to answer the phone when they call. If your lucky the price that the market comes to will mean a profit, if your not lucky then youll be out of business soon, cause you will never be able to sell your product for the right price and pay all of your bills at the same time.

I hope that over time with some of the automation we are creating, we will be able to create enough supply and new programs which will allow more people to participate for less. When that time comes, prices will fall naturally. For now, we will set our prices as cheap as we can while making enough money tostay in business.

I hope the 5 people that read this will actually take something from it.

James Trotta, I'm sure you meant no personal insult when you called my company "Greedy". I'm sure its real easy to believe that a company that is short supplied, and has as much demand as we do, could actually stay in business with your 200% model, but its just plain ridiculous. I challenge you or any of your readers to do it. I would be the first one to congratulate them on "beating the system". I will probably also be the first person to make them an offer on the remains of their businesses when they go under. I'm not saying that no business can survive with a 200% model, this just doesnt happen to be one of them.

For all of you other bloggers out there, please take the time to do some research before you accuse someone of one of the seven cardinal sins. I personally believe that you should only treat people with respect unless they have given you reason otherwise. I think I have earned a bit more respect in this industry then to be called Greedy

Now, if you'll excuse me I have to get back to trying to find more inventory to meet the demand of our new perm links program.

Posted by: Jarrod Hunt at May 17, 2005 7:06 AM
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