Photo by Images_of_Money
I recently received the following question from a reader:
[When we spoke at a recent conference] I had been thinking of a $1/month price point [for my product aimed at teachers] to make it a “no-brainer,” and you strongly advised against it, suggesting $5-7 at a minimum. Are you concerned at all about the fact that teachers could continue using the existing work-around solution? I wonder if I provide enough value to rationalize $5-7. Maybe it would be better for me to find more ways to add value rather than lower my price point?
Trying to make money selling an app for $1/month is crazy unless your market is gigantic and you have the expertise or the funds to reach them (and even then, support will kill you).
Let’s look at some numbers:
- If your goal is a meager $2k per month you need 2k customers.
- To begin, that’s a lot of non-technical customers to support for that little money. You’ll still be working a full-time job at that point so it’ll be nights and weekends. Not cool.
- To get 2k customers with a 1% conversion rate you’ll need 200k unique visitors (total, not monthly). If you crank really hard on promotion and word of mouth I can imagine you’ll ramp up to 1k-2k uniques per month. Even at 4k per month you’ll be waiting a long time to hit that 200k mark.
- These days I’ve been advising people to go up-market and try for $30/month and $50/month price points. What can you build that people would value that much?
In your case you have a hard pricing constraint because teachers don’t have a lot of extra cash lying around to spend on software. But I don’t see any way a niche product can work with a price point of $1/month. Even at $5-7/month it’s going to be extremely difficult to build revenue beyond a few thousand dollars.
Photo by Dave Rodenbaugh
Anytime you spend 3 months planning an event, whether it’s a wedding, a product launch, or a conference, you need a post-mortem. A time to reflect on things that went right and things that needed work.
This post is my post-mortem for MicroConf 2011, which took place last week in Las Vegas, NV.
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Hot off the presses, download a free copy of this 52-page ebook for the price of a Tweet (or a share on Facebook). Visit www.MicroConf.com to make it happen.
I snapped each of the following on my iPhone during the past 8 months.
“Wines sell better when we put these orange ‘sale’ tags on them so let’s put one under every bottle!”
Lesson: Too many price reductions diminishes their impact along with the value of your product.
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Photo by Dan Taylor
I try to hang around with entrepreneurs as much as possible. I dig people with an insatiable desire to create things, and I’m not anywhere close to being cool enough to hang out with painters and musicians.
One term I hear thrown around now and again among technical founders is “business guy” (or gal…except it’s always “guy” when I hear it). This is the mythical person who’s going to swoop in once your app is built and handle all of that business-y stuff.
You know…the stuff we technical founders scoff at as tertiary to our product’s success:
“I don’t need no stinking MBA. I got code to write!”
Code that will be magically catapulted into the hands of millions once the business guy steps in.
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Photo by Stephen Poff
I’ve written a guest post for OnStartups titled The 5 Minute Guide To Cheap Startup Advertising. If you have a small ad budget and are trying to find inexpensive clicks online it’s probably worth a read. Learn from my mistakes!
It includes strategies/examples for:
- Niche advertising
- Google AdWords
- Facebook ads
- StumbleUpon ads
- Reddit ads
Read the complete article here.
How to Talk to Your Kids About Star Wars – A must see if you have kids and like The Trilogy. “Jar Jar only kicks the puppies he doesn’t eat, Junior!”
Roll Your Own Linkbait Tech Headline – I never tire of these phrase generators. Some of my favorites from this one include:
- 5-Year-Old Makes 110K On an Annual Holiday With Clever E-Trade Hack
- Linus Torvalds Goes Missing For 20 Days
- Torrent of all Zynga Passwords
Let’s Hang in Vancouver – I’m speaking at the Lean Startup Conference in Vancouver, B.C. May 5th and 6th along with Ash Maurya and the authors of The Entrepreneur’s Guide to Customer Development for Tech Startups.
Learn How Google Works in Gory Detail – Quite an infographic on how Google generates north of $20B per year.
Why Startups Fail: An Analysis of Post-Mortems – The top 20 causes of startup failure based on 32 post-mortems.
Hot off the press: my Micropreneur Manifesto was just published on Change This, a popular platform for spreading ideas. The manifesto is a look at what I believe are 16 key tenets for success as a solo entrepreneur. It’s more of a high-level view than my typical writings, but hopefully it’s worth your while.
The manifesto is free (no email required), 14-pages in PDF, and was generously formatted by the ChangeThis crew.
At this moment in history, we as entrepreneurs are able to do something never before conceived: launch a product completely on our own, with no employees and no outside funding, from anywhere in the world.
These single founders creating products for niche markets are known by another name: micropreneurs.
Micropreneurs may write software. They might design themes for a blogging platform. They may produce exquisite wedding invitations, or how-to books. Micropreneurs are agile, inspired, independent, knowledge seekers who can’t live with the 9-to-5 status quo.
Download the manifesto here. And if you enjoy it, share some tweet love!
I’m pleased to go public with something I’ve been working on behind the scenes for quite some time:
MicroConf: The Conference for Self-Funded Startups and Single Founders
A limited number of discounted pre-release tickets will be available soon.
Who Should Attend?
Anyone launching a startup with no outside funding who wants to hang out with and learn from 225 of today’s leading founders and entrepreneurs.
Sounds Awesome, What Should I Do Next?
If this is up your alley, here are the next two things you’ll want to do:
- Sign up to be notified about discounted pre-release tickets at MicroConf.com
- Tweet it!
More info to come. I look forward to seeing you in June.
Photo by dierken
Note: Some readers disagree with both the mathematics of this post, as well as its conclusion that “many try, but few succeed.” Please keep that in mind as you read.
Our best estimates put the number of developers in the world at around 5 million.
If you appply the 80/20 rule you can estimate:
- Of those, 20% (1 million) want to launch a startup
- Of those, 20% (200,000) have enough motivation to start educating themselves about the process
- Of those, 20% (40,000) will actually start building something
- Of those, 20% (8,000) will actually finish building something
- Of those, 20% (1,600) have prepared themselves enough to achieve some measure of success
To make it into the last group you have to make it through the four above it. What have you done today to move yourself closer to the last group?