Selling Into The Future

When the transistor was first invented, it enabled television makers to replace vacuum tubes with devices that were a fraction of the size, many times less power-hungry, more reliable & durable. Did these new transistors get adopted right away? Did TV makers rush to incorporate the new technology into their products?

No, they didn’t. As described by Kevin Kelly in his book New Rules for the New Economy, one particular transistor made by Robert Noyce and his partner Jerry Sanders was all these good things. Problem was, the transistor was significantly more expensive to make ($100 each) than the vacuum tube that was being sold to TV makers for $1.08 each. The partners wanted to sell the devices to UHF tuner makers but they couldn’t sell a part that was nearly 100 times as expensive regardless of how small and efficient it was. They knew that as utilization and production rose, the cost to product the new part would drop to the point it would be more economical than a vacuum tube (not to mention the size, power and other advantages). But they also knews they couldn’t build traction for the adoption of the new part at the higher price.

What did the partners do to motivate people to use the new device and help it take off? They dropped the price to $1.05 each – a few pennies less than the vacuum tube! They dropped the sell price on the part despite the fact they had at the time no sales volume and hadn’t even built the factory to churn them out! As Sanders said, “We were selling into the future.”

How well did this work? UHF tuner manufacturers indeed bought transistors at $1.05 each. Within two years, the cost to manufacturer a transistor dropped so much, the partners could sell them for 50 cents each and still made a profit!

Can this apply to education? I think it can. Take the idea of doing tutoring over the internet. At first this is very costly to set up – hardware; software; technology infrastructure; recruit, train, certify & moderate tutors; build scheduling systems; design customer communication and relationship management tools; curriculum and education resources – this takes a huge investment. But instead of charging what it costs you come up with a price that you think makes sense in the long term. You hope they come and you anticipate the cost efficiency you expect to realize when the volume is there. You sell into the future! That’s what we’re doing at TutorVista.com with unlimited tutoring for a fixed price each month. Make the tutoring budget predictable and part of a simple subscription fee so a student doesn’t need one eye on the tutor and the other eye on the clock.

“If you build it, they will come!” It’s built! Time will tell, but the goal is to revolutionize and redefine what education services should cost and make quality, convenient and effective tutoring available to everyone. …And education for all!


Dr. John Stuppy, john@tutorvista.com