pricing: Practical pricing The problem
Firms dont have access to elasticity information. Base on existing competitors Gross Profit Margin Target What The Market Will Bare intertemporal strategies: sales max, market share max
Not audited
CEO, CTO, ops, other positions?
governance processes?
Departments to benchmark Data to use
Selection of peers
Internal dashboard with key metrics. Key to get employee buy in Measure outputs not inputs Pair conflicting outputs like Customer satisfaction and fraud detection and false positives Look for outliers eg eBay users, people looking at themselves on LinkedIn Measure what you want to target. Identify key metrics and track them
Funnel chart
What is the mission? One line summary of product Building blocks Does the product copy or combine old blocks, or add new blocks? What is valuable? What is the problem I am solving? Can I be the best product to a specific set of users?
Core competencies What areas must I be an expert in? What skills are unique? What beliefs are unique?
Product lifecycle Product Market fit Which consumer segment are you targeting? Expand later Why couldn’t it be done now? Why will it be too late soon? Is this unique? What scale needed to achieve profitability? Is your product ripe for competition? Network effects good, external tech improvements bad Vertical integration can be very valuable. Nature, benefits, barriers, costs - Spacex and tesla can be examined through this lens Industry timing Early entry has unique advantages and disadvantages What scale of the market is relevant when looking at competition? Costs
Can I ensure longetivity? Product creates x value, y captured, reasons, implications? Scientists tend not to capture value, Wright, Einstein, implications Huge boost in cars, airlines, but most investments bad
Rounded prices, eg 20vs 74, feel better. Called fluency
However overly rounded feels artificially inflated. 100, 5000
Left digit fluctuations. 1.99 vs 2. Charm
pricing: if previously free can be dangerous. reference price or category? eg red cross donuts, airline baggage vs calls, christmas dinner
Longer lead times to integrate with software. Deal with intermediaries Established competitors, needs a new product to enter
Much bigger market Cloud computing allows easier deployment Mobile access needs to be managed
Innovative companies more likely to use startups Most industries undergo large changes resulting from tech market drifts. How does your product react to this?
Monopoly in small market and expand Launch gradually not suddenly, reflects nature of client growth Partnerships with big users overrated as a method of growth
International scaling. Write website in strings and crowdsource translations to English strings
Referral program? Eg x pounds to referer and referee Paid growth? Customer acquisition cost CAC vs clv Which users to physically target? Those like yourself facing the same problem Shotgun approach and target the most involved Get small users manually and listen to feedback Viral K factor
Customer life time value? Clv. Increase stickiness, and increase viral for sustainable growth Clv timing and discount rate?
What are the metrics for active users, intensity?
Emails Do not get on spam list! Notifications better than newsletters, consider user types, what do they value for retention?
Processes which should be automated, like client registration, may better be done manually first so allow for better designed automation
Optimise for power users, and marginal users, notifications?
Company wide memos of meetings Maintain transparency
Consider the knowledge gap between zero and what is required to use the app. How can you help people move, how can you move the end, what is the impact of new features? Faqs, tooltips, page specific help Customer support from high levels crucial and can drive improvements
Notifications of new features on login
What are the magic moments of the site for each segment, how to get them to reach them? What are the emotions your users should have while on the site, signing up? How can design facilitate this? More of a relationship with the site, eg commentary during sign up
Limited liability Public limited liability Partnership Sole trader Franchise
Can think longer term Owner, manager principal agent lessened Deaths, family issues can have large impacts
start up big: how to assess profitability of existing products? how to assess barriers to entry?
how to do market research? page on minimum viable product
Model sales in each period, eg month, quarter, year
sales have attrition rates, new customers
maybe different in not substription or regular
revenue per sale
total revenue
expense modelling: staff
salary projection for each type of staff. annual increase assumpotions. inc tax, bonus, other costs, benefits
get total operating expenses
then net income = rev-op expense
cash balance: + start with cash value + each period gain net income and investment interest? taxation? depreciation? amortisation? EBIT? EBITDA?