Prasanna KrishnamoorthyGrowth & Product Coach

Traction & Product coach. Startup Bullshit Detector. Coached 120+ tech startups on PMF & growth

Recent Answers

Too little information to answer.

Ask yourself these questions:
* What can they get in your community they can't get anywhere else?
* Is your community going to see a value *more* than what the people in the community provide, i.e., are there tools, processes, vetting, moderating work that you do, that provides high value
* Are they going to save significant time, effort, money if they join your community?

If you are able to answer yes to these, then perhaps charging would work.

There are negative consequences too. Would be happy to help over a call.

Questions to ask yourself:

* Do you already have customers for this product?
* What is the value to the customer in buying/using this?
* Are there competitors selling similar products? How do they price it?
* Is there a cost per customer for you?
* Is the value to the customer more than what it would cost you, and the competitors price also high enough?

The difference between a product and a business is a sustainable profitable revenue model. A revenue model needs value to the customer higher than cost of the product.

If you use the business model canvas, you will find that the product related parts are about a third of the canvas, a third is revenue/profitability, and a third is execution. Sketching one out will give you more clarity.

I can help you map out the non-product parts in your business model over a call. I've done this with more than 50 startups in the last 18 months.

Questions you should think about (assuming you have existing customers)

* Can you run these case-studies past your existing customers' buyers to see what you're missing? Basically why is a use-case, whitepaper not convincing enough?
* Can you get prospects to talk to existing customers or do a walk through of an existing installation? This is very key in high ticket sales, esp where you are making big claims.
* Can you get video testimonials, including walk-throughs of the installs?

On the pricing model for the trial
* How good/measurable is the RoI? If it's very measurable, can you put in a pricing model which goes up if they make/save more money?
* How fast is the RoI? Will they get an indicator in days/months/years? Your strategy will change based on the period
* What is the install cost? To me more than the monthly recurring, the install cost might be a bigger barrier. Can you fold that into the recurring for a few customers?
* Can you offer a 100% refund if unsatisfied after trial?

To me this sounds less like a pricing issue, and much more like a sales/pre-sales issue. I have done technical pre-sales, sales & mktg, and can help with thinking through this problem over a call.

From a corporate law perspective, the money is being invested into a COMPANY, not a product or portal.

From an investor perspective, they are investing in
1. Team
2. Business

NOT in a portal or a product.

As an investor, if you're doing two completely different things with one company, I would be very wary of investing.

Typically one startup == one line of business, one product when you start. Once you cross a few million USD in revenue, you can think of more product lines.

This is more of a corporate structuring question, so a lawyer and your investor are the best people to help you with this.

Congrats! You've solved the first big problem, having a few happy customers who love your product/service.

Questions you need to think about (and the traction book is the absolute best resource I'd recommend to DIY growth).
1. How many customers do you need/want to pick up in the next 6m, next 12m? Without overwhelming your team/resources.
2. If you take a 10X goal, 200 customers, when would you want/expect to reach that?
3. Do your customers have good networks with others like them? If they do then that's the absolute best source for you.
4. Assuming you have a recurring revenue relationship with your customer, how can you touch base with them (on phone perhaps), and actually ask them for referrals? And if they give you referrals reward them with swag/goodies?
5. How many customers do these FB groups have? Can they give you 200+ customers?
6. Does the nature of the end-result you produce give you a marketing advantage? i.e., doing case-studies for each design, posting it on the fb groups, etc. which are value add and not spammy in nature?

Referrals are the best channel, since you will have a warm lead who is looking for your services, rather than a cold lead that has to be educated about your benefits, so I would heavily invest in them.

If you'd like to know more about how you can grow more strategically in the early stage, first read the traction book, and then I can assist on a call if you still need help :)

* What is the customer RoI?
* How much do they save/earn per unit of use of your product/tool/service?
* How many users do you have right now?
* Are the free users likely to upgrade?
* Are they needed to provide a different value (community, content, network, ...) to the paid users?
* Are the free users providing an increased SEO or other lead gen surface area for you? A la widget with your link on their site which steers traffic and link-juice your way?
* Is your different audience better paying, more mature, in-a-tearing-hurry, or is it the lower end of the market?

There is no easy answer to your question. It will depend on many many factors. But the questions above should help you think through and choose an option.

I've used my own custom frameworks in the past to help many hard tech founders with similar questions.
If you want to go deeper, will be happy to do so over a call.


Assuming that you have a product in market and have some traction
1. What is your growth plan?
2. What is your 3, 10, 20, 30, 60 day retention numbers?
3. If you have UGC, what is the % of DAU who are creating content?
4. What is the ratio of DAU to MAU to install base?
5. What is the viral coefficient, what is the viral cycle time?

If you don't have traction
1. What evidence do you have that this product will work?
2. How will it stand out from competition?
3. What is the market size?
4. How balanced is your team?
5. Why is your team likely to crack this product/market?

If there's more context, I can probably help better over a call.

Start from the user: resident homeowner.
* Are you looking for people who are in a specific context, doing a specific action? For instance if they install a new alarm system, are they are more likely to use your app
* What do they read in general?
* Where do they go for articles when they are in their 'my home' context?
* What do they look at or read after they installed the alarm system?

The answers to these and further questions will help you identify the right segment.

Congrats! You've reached a milestone few entrepreneurs do - you have paying customers!

More tactically:
1. If you have CAC < ACV for an initial trial that's a great sign of existing market demand. Especially if this is an unoptimised PPC campaign.
2a. You've not mentioned how long this experiment ran. If it was a few hours, it suggests that the market is significantly large. If it ran for a week, not as much.
2b. If you're paying $1.5 per click, that suggest low or no competition (depending on the segment, keywords, optimisation).
3. If you got your money back, and your COGS of the product are low, keep pumping at least the $500 back into PPC. There is no downside, and you will quickly find out what the limit is.
4. May be relevant for an angel investor (friends, family, fools) not institutional. The ticket size is low, churn is unknown, and market size is unclear.

There is a huge amount of work ahead of you in segmentation, targeting, to find adjacent segments, building a referral program, and understanding market scale.

But this is an awesome first step! I've helped multiple B2C products & marketplaces scale revenues 2-10X over 6 months, can help more over a call.

Very tactically, at the early stage valuations are mostly arbitrary.

Typically it goes by the market rate, geography, relative strengths of the investors vs founders, growth rates, ARR, etc.

For a $1M seed round (similar to filament):
A VC firm will look to get 10%-20%
A group of angels/seed will look to get 15-25%.
This is assuming you have some traction with good growth.

Your negotiating position and skill will determine which end of the scale it will be. The funding scene is also quite variable based on who you are, and hence YMMV.

[Advising 50+ startups in Microsoft Ventures, seen a dozen angel/seed/VC rounds up-close]

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