It Matters How You Make Money

It may seem obvious, but it matters how you make money from your product. That is, when you are researching, defining, and developing your product, you can't dedicate all your effort to solving problems that your prospective customers face (no matter how urgent and pervasive those problems may be). If you want to make any money from your product, you have to formulate a profitable business model.

One key part of formulating your business model is understanding how your customers will pay. Sometimes your paying customers are users of the product; sometimes the "customers" are third parties such as advertisers or partners. Besides deciding on who will pay, you also must research them to understand:

How much they will pay. How much money do they have? How much money do they make? If confronted with a real buying scenario, will they pull the trigger?
How they will pay. Do they have access to on-line payment systems (e.g. PayPal)? Do they require CFO sign-off? Do they have and use credit cards? What do they use to pay for similar products?

As you can see, market research isn't just important for understanding users, but also for understanding the other stakeholders that play a role in the payment process.

Comments

Why Spreadsheets Suck for Prioritizing

The Goal As a company executive, you want confidence that your product team (which includes all the people, from all departments, responsible for product success) has a sound basis for deciding which items are on the product roadmap. You also want confidence the team is prioritizing the items in a smart way. What Should We Prioritize? The items the team prioritizes could be features, user stories, epics, market problems, themes, or experiments. Melissa Perri makes an excellent case for a " problem roadmap ", and, in general, I recommend focusing on the latter types of items. However, the topic of what types of items you should prioritize - and in what situations - is interesting and important but beyond the scope of this blog entry. A Sad but Familiar Story If there is significant controversy about priorities, then almost inevitably, a product manager or other member of the team decides to put together The Spreadsheet. I've done it. Some of the mos

Interaction Design: the Neglected Skill

Your product development organization has a big, gaping hole in it. (Be prepared to feel defensive as you continue reading.) One of the most important roles in product development is the role of interaction designer. An interaction designer designs how the users will interact with the product and conceptualize the tasks they perform. He decides whether, for example, the user interface will be command driven, object oriented (clicking on objects then specifying what to do with them), or wizard based. The interaction designer decides the individual steps in the use cases. Every company has one or more people that play the interaction designer role. Usually, those people have little or no expertise in interaction design. Sadly, they typically don't even realize how unqualified they are. Let's see who typically plays the role at companies. Engineer . An engineer is an expert on building what is designed. Yes, an engineer may know how to design the internal structure of the hardware

Stop Validating and Start Falsifying

The product management and startup worlds are buzzing about the importance of "validation". In this entry, I'll explain how this idea originated and why it's leading organizations astray. Why Validate? In lean startup circles, you constantly hear about "validated learning" and "validating" product ideas: The assumption is that you have a great product idea and seek validation from customers before expending vast resources to build and bring it to market. Indeed, it makes sense to transcend conventional approaches to making product decisions . Intuition, sales anecdotes, feature requests from customers, backward industry thinking, and spreadsheets don't form the basis for sound product decisions. Incorporating lean startup concepts , and a more scientific approach to learning markets, is undoubtedly a sounder approach. Moreover, in larger organizations, sometimes further in the product life-cycle, everyone seems to have an opinio

Cauvin

Search This Blog