Homework due for today
Legend: : Participation | : Early | : PDF | : Team | : Zipped
- Strategic Analysis: An entrepreneur has to learn to think strategically, analytically and carefully when evaluating what to do, how to do it, and what to do next. Read Delivery Startups are Back like it’s 1999. Think about the idea of a delivery startup on campus. What might be some of the advantages of targeting college students? What are characteristics of them as a customer base which would make it hard for a fedex or amazon to deliver to them? What are some of their needs which might be different and hard to meet by a general business? How would you test some of these questions and assumptions? What kinds of products might be amenable? Is there room to capitalize on the slowness of the mailroom? What products, services, customers, campuses, geographies, and any other characteristics might be relevant? Is this a worthwhile idea to pursue? Deliverable: Write up your thoughts on some of the questions I raise above. Submit to Latte as a 1 page pdf.
- Self and Peer Assessments: Assess your own and each of your teammates contribution to your team. Consider attendance and timeliness to the team meetings, contributions in words and deeds to the work and the deliverables, contribution to positivity and harmony, willingness to step in when things go wrong. Write up a brief justification of your assessment, one or two lines for each team member including yourself.
Put the team members in order from most positive to least positive. Give each one a number between 9 (most) and 1 (least) and don’t give two people the same number
Deliverable: Posted on latte as a pdf. It should be around 5-10 lines of text total. Failure to follow the format, or giving two students the same rating will lead to a loss of 20 points. Follow this format EXACTLY:
Pierre Stone (me): Was present for all meetings, feels like I was the leader.
Kept track of deliverables and wrote a major section of the report. - 7
Oleana Root: Pretty good, tried hard to help and was reliable. Good worker. - 5
Ronin Oscar: My partner who was as reliable and had a lot of key ideas.
Figured out the pricing model and did a great job on the mockup. - 4
Chris Abelson: Missed so many meetings, even when promised didn’t show up.
Nice person though - 2
Continuing work
- Continue to work on Stage 2: Will be due on November 13. Decide on and do more out of the building testing: survey, 1-1 interview, landing page, anything else you can think of. Make sure you know and indicate what the hypotheses were that you were testing as well as the methodology and results of the test. Record your work and the results. Remember we are looking for non-trivial amount of outside testing. You will need it for your term report.
For further study
Funny but true
"The coffee is free, but now we rent the tables."
Introduction
- What makes a “good” pricing model?
- Customers are willing to pay it
- It has a logical or reasonable story attached to it (which may or may not be true)
- It can be contextualized with related products that have established a price
- You can make an argument that your business will grow and profitwith that pricing model
- How do you “test” a price?
- A price and a pricing model are hypotheses!
- Ultimately, that customers are paying it
- Ask possible customers to react to it
- Find related or competing products that use a similar model
- Develop a rationale that makes sense to the Customers
Pricing Models
- My terminology
- A subset of the business model
- Explanation of who pays and what they pay for
- Ask yourself some questions:
- Who is getting value out of this business?
- Who is willing to pay for that value?
- What exactly are they willing to pay for?
- When are they most likely to be willing to pay for it?
- How often are they willing to pay for it?
- Is your pricing model “logical” or “reasonable”?
Excercise
- 4 groups, random, 20 minutes
- You are a 10 year old entrepreneur running a neighborhood lemonade stand. You want to make some money doing this. What are some models that you could put in place?
- Charge 50 cents per glass of lemonade
- Chare 25 cents for a small, and $1.00 for a large lemonade
- There are many other possibilities
- Work with your team on the following
- Come up with many variants of pricing models as you can
- Try to come up with a classification of those models, in other words look for the patterns, for example: what is being charged for, what is free? who is paying, who is getting something for free, what costs are fixed and which ones are variable, and so on.
- Prepare to present the results using the whiteboard if necessary.
Discuss
- What are some principles we learn from this exercise?
Pricing
- Pricing as a hypothesis
- How to test
- “What would you pay for this?”
- “Would you buy this for $20?”
- “How much do you think this is worth?”
- “What’s the most you’d pay?”
Freemium vs. Free Trial
- Play on words with “Premium” and “Free”
- Freemium:
- Base product is free
- Has some limitations
- Pay for “full product”
- Tiers of “full product”
- Contrast with “free trial”:
- Full product
- Can use it only for limited time (e.g. 1 week)
Discussion: When is freemium more or less appropriate than free trial?
Discussion about “our” products
- Each team come up with at last TWO distinct pricing models for your product.
- Take 15 minutes. Consider:
- Will the model “make sense” to the buyer?
- Will they be willing to pay it?
- Is the pricing anchored with any other prices or expectations?
- Present them to class
- How it fits into the financial model
Next Class