The #1 thing to do to successfully monetize your product
Starting a new business is an exciting adventure. You’ve got this great idea for a product that you can’t wait to deliver to customers. And once they have it, you want feedback on how you can make it better. But delivering an awesome product isn’t the only critical input. In order to survive in the marketplace, you must determine a monetization strategy for your product. And that’s where many budding entrepreneurs stumble.
Figuring out how much you want to charge, in which formats, and with what frequency is a lot to consider. And that’s not taking into account all the other variables you are managing - customer feedback, issue resolution, and product development, to name a few.
There’s one really important thing you can do to create a successful monetization strategy: keep it simple.
You’ve probably heard it before, but it couldn’t be more true when it comes to monetizing your product - and here’s why:
A complex monetization strategy isn’t a good use of your time.
When you’re just starting your business, you’re still trying to figure out what your product is, much less what to charge for it. It’s understandable not to know exactly how to monetize it. Creating an ambitious monetization project can take precious hours that could be dedicated to more pressing parts of the business.
Instead, take a look at what’s in the marketplace that’s similar to what you’re offering. How are these existing businesses charging for their product? Is their strategy compatible with your business model? In addition, talk to your customers - if you have some already. What type of value are they deriving from your product, and what are they willing to pay? And of course, consider the revenue streams your company needs to grow.
The answers to these questions can provide input for creating a quicker, more simple monetization strategy. That means you can focus your time and effort on more urgent matters.
Simple, straightforward monetization is easier for customers AND employees.
Let’s say you have an online product, and you’d like to offer 3 subscription plans for $100, $200, and $500 per month, respectively. Customers can choose the plan that fits for them - great! But in addition to those plans, you want to offer customers the option to pay what they want, and choose between payments of a single month’s subscription or an annual one.
That’s a pretty complex offering - 3 subscription plans, plus “pay-what-you-want”, and the option to choose single or multiple months. Think about what that does to both your customer relationships and employee workload.
Your customers are probably like most people - they get overwhelmed by too many choices. And you’re giving them a lot here. That level of choice alone may turn them off to a purchase, and you definitely don’t want that.
On the other side, consider how your employees will have to manage the back-end of this pricing strategy. Developers will have to account for countless variations due to the number of choices. Accounting staff will either have to manage the invoicing process manually (yuck), or find an invoicing platform that supports automation for this many conflicting variables (not likely).
Fewer choices makes the purchase process easier for customers, and the invoicing and accounting processes less time-consuming for employees.
Don’t make monetization harder than it has to be.
Creating a monetization strategy for your product doesn’t have to be a time-consuming, complex process. Remember that it can change. As your product evolves and your customer base grows, you’ll learn more and probably make some tweaks. To make that easier on yourself, customers, and employees, set yourself up with simple pricing guidelines to start out.