DCFI Revenue Mandel

7/30/2019 DCFI Revenue Mandel

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Revenues, Costs & Profit$

By: Matthew Mandell

@mattmandell

[email protected]



Sections

- What Are Your Costs?- Revenue Strategies

- How I Price my companies- Pricing Strategy- Dan Ariely & The Economist

- Conclusion



Making Money



Provide a

Service



Product & Service



Easily Comparable Products &

Services areEasily Price Comparable



Monetize Quickly



Monetize Quickly



Is it Viable?



Sales

- CostsPositive Number = YesNegative Number = No





How Far are you From Cash?

Product /Service Money



How Far are you From Cash?

The more complex you make, the harder it is to make money.

Advertising Visitors Money





What are your costs?

- Ignore Sunk Costs



What are your costs?

- Think Scrappy- When you have nothing,you can get more done.

- Have a client be your bank.

- Leverage Other peoples Assets



“Whenever I have money,I spend it on stupid

stuff.”

- Owner $20M / yr Co



Don’t Waste Money

- A to Z Audit



Don’t Waste Money

- Don’t spend like you are Big



Don’t Waste Money

Spend money only on what is necessary,Equity Holders are the last to get paid.



One vs Many Revenue Models

- Trends will emerge- Follow the Money



Apps for Money are Bad.



Whatever is Measured Changes



Making a Realistic Model

- What to list on the Model?- Differentiation of Purpose- Core to the Business

- Assume the reader knows nothing

- You will be wrong, but that’s ok- Update & Learn early & often



Financial Models

- Complexity is not necessary- Allow for changes- Set Ranges (-20% 0 +20%)

-This is a tool for your co, be comfortable with it- Set your goals-(lifestyle biz / ego biz / biz w impact)

- Align Ops / Marketing / Financial Models



Financial Models

- Models are fiction beyond apoint…They are an insight into how

you think.-Picture in 5-10 yrs-Landscape Changes

-Market VIew



Quick ModelRevenue Price Qty 1 Qty 2 Qty 3

Pizza Sold 30 50 500

Unit Price $10 $10 $10 $10Total Rev $300 $500 $5,000

Variable Costs

Food Cost $2 $60 $100 $1,000

Labor $10 / hr $120 $120 $120

Electric $33 $33 $60 $600

Fixed Costs

Rent $67 $67 $67 $67

Internet /Phones $8 $8 $8 $8

Insurance $14 $14 $14 $14

Total Revenue $300 $500 $5,000

Total Costs $302 $369 $1,809

Profit -$2 $131 $3,191

Margin -1% 27% 64%



Joel Spolsky’s Pricing Maxims

1. You are undervaluing your product.2. B2B customers will spend more3. Pricing within Bands

1. B2B Spending Authorization:

• Up to $1000• Up to $100k Approval• Over $100k Dept / Project

2. B2C Spending:• Thoughtless Under $10• Cash Under $20• Credit Card Under $75



Idea Evaluation

• Velocity• How fast are you moving?

• Repeatability• How quickly can you do it again?

• Margins

• How much of each $ do you keep?



My Biggest Screw Ups

- Not Increasing Prices regularly- Under pricing the offering- Charging based on time

- Misaligning employee comp plans- Growth Hides Failure

- Use Accounting Software Early



Do Tactical Customers Ever Think Long Term?

- Does a customer who receives

something @ asteep discount,ever want to pay

full price?



Groupon Economics

Groupon Living SocialCoupon Value $100 $100

CustomerDiscount $50 $50

Deal Rev $25 $15

Merchant Rev $25 $35

Margin Lost 75% 65%





Dan Ariely – Predictably Irrational















Conclusion

Good Judgment

comes from Experience.

Experience

comes from Bad Judgment.

Documents

DCFI Revenue Mandel