Now, listen carefully, because this is really important. It may seem a little crazy, but trust me, this is the key to building a successful business: you have to actually SELL your product, you know, for money. Now, how much money? Well, that depends on what you are selling. Are you selling B2B SaaS solution that helps small businesses manage their taxes? Then maybe you charge $30 a month. Or are you selling a luxury consumer product, that only a few people want or can afford? Then maybe you charge thousands of dollars. Either way, the math is simple: number of purchases * price of each unit sold = revenue.
Absolutely incredibly solid, sound and quantifiable advice given by melanie.io.
From my own personal experience with talking to startup-types, the one flaw I always see is that people are building products rather than businesses. They’re assuming we’re in a “.com 2.0″ era where you can build anything and be swallowed up by Google or Facebook. That’s not where we are.
Technology is about solving real world issues, and the web is a way to connect those issues to people. Building a product isn’t about a startup lifestyle, it’s about having customers and helping them solve a real problem with an affordable (note that affordability is a sliding scale) price that makes sense. As your customers grow, so do you in an ideal world.
The number of startups in Dublin is staggering. The percentage of those who are actually charging for what they do is even more staggering. Staggeringly low. People are in startups to be in a startup, rather than to build a viable business that customers love. People who get free stuff don’t value your work and won’t feed back into that ecosystem nearly as much as those who end up paying for it. I can’t even imagine how awful it would be to switch your model from “we will sell to someone else” to “lets start charging”. If I got something for free for 2 years, I expect it to be free for 2 years more. Suddenly charging because your business model stinks, or doesn’t exist, hurts customers. And if you hurt customers, they’ll go elsewhere – or worse, develop a better competing product.
The other thing is the lack of iteration in startups I’ve seen. They build a product & sit on it, waiting for Google to buy them. Iterate, charge for the improved product and build a customer base that really cares about you. Charge a sliding scale if you need to (i.e. if users use more, they pay more – ideally their usage of more resources is an indicator of their own growth, so grow with them!). But importantly, charge for your service and product. The more money they make off you, the more you should make off them.
The more money you make, ironically, the more viable you are to get VC money. And the more money to get in the door the more you’re able to spend on R&D, more devs, sales people and importantly, good people. Then as you get more disposable money because your devs work hard on new cool features that your sales teams can actively sell to prospects, you can do cool culture stuff like spraypaint walls and keep the beer fridge stocked. That’s “startup culture” but in a viable, working business.