5 ms·

Wouldn't that only work until a competitor with a sufficient product crops up with a cost+ price?

by mikemol 16y ago

jacquesm 16y ago
You'd be surprised how big the world really is. Plenty of people will have never even heard of you or your competitor. Good luck marketing your product to the point where you've gotten 100% saturation in terms of reaching your target audience. Even coca cola and google can't claim that.
- maxawaytoolong 16y ago
  I'm pretty sure Coca Cola can actually claim 100% saturation.
  - jacquesm 16y ago
    In fact, they probably can, after all, they're the #1 global brand. And those that they haven't reached yet they probably can't sell to. But it can be quite surprising to hear people say 'google? what's that?'. It still happens to me occasionally (but rarely), and it never ceases to amaze me that there are still people living under rocks thick enough to block out information like that. Same with wikipedia, you'd think that the news is out by now. But there are still people that have never heard of it.
    - dflock 16y ago
      There are also a _lot_ of people who have heard of Wikipedia, and used it, but have _absolutely no idea_ that it's user generated and that you can edit it. They are generally pretty stunned when I demo it.
    - teach 16y ago
      Random anecdote: Back in 2002 I spent a week in a village in rural Haiti trying to get an electric generator set up. We had car trouble between villages and our resident mechanic was fixing it on the side of the road, when a woman from a small hut came out and asked us if we wanted Coca Cola. She sold us bottles of Coke kept cool in a hole with a tarp over it. I've never looked at the Coke brand the same way since.
      - jacquesm 16y ago
        How is that for saturation? Amazing story. I heard that Coca Cola was pretty much the first western brand in to the most unlikely places.
        maxawaytoolong 16y ago
        In rural Kenya, Coca Cola is the only thing visitors are advised to drink.
  - jodrellblank 16y ago
    http://www.google.co.uk/search?q=define%3Asaturated http://www.google.co.uk/search?q=define%3Asaturated
- mikemol 16y ago
  Hm. For truly niche software, I suppose I can see that, but for anything with more than even a few hundred customers, I don't think it'd last. Someone (like me, for example) would smell an opportunity and sell for less. I suppose it's not a bad thing for you in the short term, but I'd caution against getting comfortable on the profit cushion, and reinvest in revenue sources that can't be taken away by the same opportunistic competitor.
  - petervandijck 16y ago
    Selling for less doesn't always work, because the more expensive guy can spend more on marketing. Also, for consumers, $19.99 is pretty much a fixed limit. Above that, you loose people, but below, you don't necessarily gain more signups.
    - mikemol 16y ago
      I suppose that's true; below a certain point, the effect of a price is pretty inelastic.
  - wensing 16y ago
    I can almost guarantee you wouldn't build an entire product/website/SaaS just because you 'smell an opportunity' in a market 'with more than even a few hundred customers', would you?
  - jacquesm 16y ago
    I'm not sure how long 'it would last' would need to be for you to be convinced, but for me it has been going for about 6 years now since that conversation and it still works. The interesting bit is that I was just as skeptical as you are (and probably even more so) and in the end decided that trying it was the easiest way to see if it was true or not. The second time I was even more skeptical but then I figured 'in for a penny, in for a pound', just to be able to tell Richard that he was wrong the second time. But he wasn't. It doesn't hurt to try though, and if it does work for you then it's free money, which is nothing to sneeze at. Keep in mind that if your product costs you $2 to put out there per paying member and you manage to increase your sales price to $19.95 you've just gone from a 50% gross profit margin to 90%.
jsolson 16y ago
As long as your product is not actually identical to the competition, you'll be amazed at what little things count as differentiators for customers. An anecdote: My company produces a PDF reader for iOS+. There are, give or take, 20-30 competing products. One of them is iBooks, which is heavily marketed by Apple, a high quality product, and free. Most of the others are cheeper than us, but we're out-grossing and out-unit-selling many of them. There are at least a dozen products with non-zero day to day unit sales. One day before we went live in the App store I discovered that there were not one but two products with basically the same name as ours++. We can't credit marketing for this either. To be frank, our marketing has been terrible. We've tried to build a better widget, but mostly I think it's that we have a slightly different widget. From the perspective of a customer: I pay for Lighthouse and Github every month. Github offers issue tracking, and both Github and Lighthouse try to keep things pretty minimal, but I prefer Lighthouse. It just feels more like the bug tracker I would build if I decided to go down that road, and that's worth a few bucks to me every month. + Plug: http://ballisticpigeon.com/folio http://ballisticpigeon.com/folio ++ We did our due diligence when we started writing the app... about a month in... before we started writing our user manual, but at about two weeks from launch we were in crunch mode and stopped checking anything. They were both released in this window.
deleted 16y ago
[deleted]

Wouldn't that only work until a competitor with a sufficient product crops up with a cost+ price?

by mikemol 16y ago

Wouldn't that only work until a competitor with a sufficient product crops up with a cost+ price?

You'd be surprised how big the world really is. Plenty of people will have never even heard of you or your competitor. Good luck marketing your product to the point where you've gotten 100% saturation in terms of reaching your target audience. Even coca cola and google can't claim that.

maxawaytoolong 16y ago
I'm pretty sure Coca Cola can actually claim 100% saturation.
- jacquesm 16y ago
  In fact, they probably can, after all, they're the #1 global brand. And those that they haven't reached yet they probably can't sell to. But it can be quite surprising to hear people say 'google? what's that?'. It still happens to me occasionally (but rarely), and it never ceases to amaze me that there are still people living under rocks thick enough to block out information like that. Same with wikipedia, you'd think that the news is out by now. But there are still people that have never heard of it.
  - dflock 16y ago
    There are also a _lot_ of people who have heard of Wikipedia, and used it, but have _absolutely no idea_ that it's user generated and that you can edit it. They are generally pretty stunned when I demo it.
  - teach 16y ago
    Random anecdote: Back in 2002 I spent a week in a village in rural Haiti trying to get an electric generator set up. We had car trouble between villages and our resident mechanic was fixing it on the side of the road, when a woman from a small hut came out and asked us if we wanted Coca Cola. She sold us bottles of Coke kept cool in a hole with a tarp over it. I've never looked at the Coke brand the same way since.
    - jacquesm 16y ago
      How is that for saturation? Amazing story. I heard that Coca Cola was pretty much the first western brand in to the most unlikely places.
      - maxawaytoolong 16y ago
        In rural Kenya, Coca Cola is the only thing visitors are advised to drink.
- jodrellblank 16y ago
  http://www.google.co.uk/search?q=define%3Asaturated http://www.google.co.uk/search?q=define%3Asaturated
mikemol 16y ago
Hm. For truly niche software, I suppose I can see that, but for anything with more than even a few hundred customers, I don't think it'd last. Someone (like me, for example) would smell an opportunity and sell for less. I suppose it's not a bad thing for you in the short term, but I'd caution against getting comfortable on the profit cushion, and reinvest in revenue sources that can't be taken away by the same opportunistic competitor.
- petervandijck 16y ago
  Selling for less doesn't always work, because the more expensive guy can spend more on marketing. Also, for consumers, $19.99 is pretty much a fixed limit. Above that, you loose people, but below, you don't necessarily gain more signups.
  - mikemol 16y ago
    I suppose that's true; below a certain point, the effect of a price is pretty inelastic.
- wensing 16y ago
  I can almost guarantee you wouldn't build an entire product/website/SaaS just because you 'smell an opportunity' in a market 'with more than even a few hundred customers', would you?
- jacquesm 16y ago
  I'm not sure how long 'it would last' would need to be for you to be convinced, but for me it has been going for about 6 years now since that conversation and it still works. The interesting bit is that I was just as skeptical as you are (and probably even more so) and in the end decided that trying it was the easiest way to see if it was true or not. The second time I was even more skeptical but then I figured 'in for a penny, in for a pound', just to be able to tell Richard that he was wrong the second time. But he wasn't. It doesn't hurt to try though, and if it does work for you then it's free money, which is nothing to sneeze at. Keep in mind that if your product costs you $2 to put out there per paying member and you manage to increase your sales price to $19.95 you've just gone from a 50% gross profit margin to 90%.

jsolson 16y ago

As long as your product is not actually identical to the competition, you'll be amazed at what little things count as differentiators for customers. An anecdote: My company produces a PDF reader for iOS+. There are, give or take, 20-30 competing products. One of them is iBooks, which is heavily marketed by Apple, a high quality product, and free. Most of the others are cheeper than us, but we're out-grossing and out-unit-selling many of them. There are at least a dozen products with non-zero day to day unit sales. One day before we went live in the App store I discovered that there were not one but two products with basically the same name as ours++. We can't credit marketing for this either. To be frank, our marketing has been terrible. We've tried to build a better widget, but mostly I think it's that we have a slightly different widget. From the perspective of a customer: I pay for Lighthouse and Github every month. Github offers issue tracking, and both Github and Lighthouse try to keep things pretty minimal, but I prefer Lighthouse. It just feels more like the bug tracker I would build if I decided to go down that road, and that's worth a few bucks to me every month. + Plug: http://ballisticpigeon.com/folio http://ballisticpigeon.com/folio ++ We did our due diligence when we started writing the app... about a month in... before we started writing our user manual, but at about two weeks from launch we were in crunch mode and stopped checking anything. They were both released in this window.

deleted 16y ago

[deleted]