Idea+team Market Product Biz Model Execution Finance Project

Flow of CourseFlow of CourseFlow of CourseFlow of Course

Plan to

create value

Plan to

capture value

Segment

Direct Validation

Competition

VP

Competitive Advantage

Development Plans

Where extract rent

Pricing

Go to Market

Sales

Marketing

Fin Statements

Investor Strategy

Pricing Pricing Pricing Pricing

and CLTVand CLTVand CLTVand CLTV

Pricing requiresPricing requiresPricing requiresPricing requires

• knowing your customers well (+DMU+DMP)

• knowing what they're willing to pay

• knowing what your competitors are charging

Some questionsSome questionsSome questionsSome questions

• What is the customer willing to pay for my product? (value)

Interviews.

Different customers have a different willingness to pay, and even the same customer will vary in their willingness to pay based upon the purchasing occasion.

• What kind of customer do I want to target?

customers who value your product the most + charge a high price.

mass market + a lower-priced product .

Some questionsSome questionsSome questionsSome questions

• How should I react to my competitor's prices?

Who provides an alternative to my product?

Is mine better or worse? (Real vs perceived benefits)

Does the customer care?

• Can I offer different levels of products or services at different price points?

Some questionsSome questionsSome questionsSome questions

• Have I given the customer a reason to pay more for my product?

Real vs perceived differences.

With Hershey's you're getting a great chocolate bar, but Godiva is selling love and a means of pampering yourself.

• Should I discount to get people to buy my product?

Promotions are fine from time to time.

Some questionsSome questionsSome questionsSome questions

• How does the customer want to buy my product or service?

Customer Lifetime ValueCustomer Lifetime ValueCustomer Lifetime ValueCustomer Lifetime Value

CLTV attempts to determine the

economic value a customer brings over

their “lifetime” with the business

Photo by clemsonunivlibrary (CC BY-SA 2.0)

Breaking down CLTVBreaking down CLTVBreaking down CLTVBreaking down CLTV

• Marginal profit / Gross Margin

• Customer retention rate (RR)

• Customer’s lifetime: 1 / (1-RR)

• Discount rate (cost of capital)