MARKETS, SELLING MODELS & PRICING

+ a primer on business models

Agenda

■ Market Sizing ■ Selling Models ■ Pricing ■ Customer Development

Repeat after me…

■ I’m an entrepreneur ■ Half my ideas are amazing ■ Half are crap■ We need to find out which one this is!

MANY OF YOUR ASSUMPTIONS ARE

WRONG – GET OVER IT

Market Sizing

■ TAM – Total addressable market ■ SAM – Service addressable market ■ SOM – Service attainable market – what market

share could you get ■ LAM – Launch addressable market

Total AddressableMarket

Service Addressable Market

Service Obtainable Market

Launch Addressable Market

Off the Record Example

■ TAM – 40M traffic tickets in US X$250 average ticket or $10B x20% fee or $2B (for your service not for tickets) ■ SAM – 5% of people that fight tickets, or $100M

– Plus any you can get to fight for the first time ■ SOM – what sort of market share over three years do

you think you can get? ■ LAM – Washington State?

$212,000,000 WAtickettotal20% TransactionFee

$42,400,0005% Peoplethatfight

$2,120,000 LAM

1000

100

10

1

How do you get your first….

In a scalable way?

Selling Models

■ Web Direct – requires prospects are searching for your product ■ Direct Sales – requires outbound sales effort –

minimum price point of $2k? ■ Indirect/Channel Sales – channels only fulfill demand ■ Non Recurring Engineering (NRE)/Productize a service ■ Retail

PICK ONE

Business Model Primer

■ B2B – 9 business models

■ B2C – 10 business models

■ http://dkparker.com/businessmodels/

PICK ONE

Pricing

■ Pricing is more art than science ■ Use pricing to lower friction (complex is bad)■ Find a “Proxy”■ You will price too low ■ CAC – Customer Acquisition Cost Assumption ■ LTV – Life Time Value Assumption

PICK A NUMBER