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I write this with true love for your effort, but do I read your 2021 annual retrospective correctly stating that you made $13K on $477K in revenue? Maybe some

• mtlynch 5y ago
  >I write this with true love for your effort, but do I read your 2021 annual retrospective correctly stating that you made $13K on $477K in revenue? Maybe some of your expenses are paying yourself for software development, and that's just your corporate income? Thanks for reading! No, that doesn't include paying myself. But it's also worth mentioning I also had $59k in raw materials at year-end. If I had to liquidate everything, it would cost about $5k to assemble the raw materials into ~$200k of product and ship them to customers, so I'd theoretically walk away with $195k. I've always had a hard time assessing the financial health of the business because I'm investing a lot into future growth. Because of the supply shortage, I have to stockpile a lot more raw materials, so as sales grow, I'm also buying more materials to meet the new scale. And a lot of my costs are one-time events that I expect to pay dividends over time (e.g., hiring EE vendors to design a new product, hiring a design firm to overhaul the website, paying developers to add features). >I would really consider raising your prices. I found that when I first started my business, I had a subconscious desire to replicate my income at my previous job, which caused me to irrationally underprice my products. After 2 years, I got over it, and it transformed my life. You've done an amazing amount of work. You should get paid for it (or, if people won't pay for it, get out). My dad used to say, "I don't do work for practice." Thanks! This is something I have trouble with because it's hard for me to measure the optimal price. My volumes are too small to really A/B test different prices effectively. Over the course of the business, I keep raising the $50 thinking the new price is crazy, and then people continue buying anyway.
  • ttcbj 5y ago
    > I keep raising the $50 thinking the new price is crazy, and then people continue buying anyway. Yes! It is your business, and you know best, but this sounds promising to me and reminds me of my situation. That is why I recommend that book. It argues compellingly that you want to sell less at higher margins, all things being equal. That gave me the courage to raise prices, and I ended up selling just the same/more at higher margins. Raising prices takes courage, and clearly there is some point where you go too far, but it's worth really pushing yourself emotionally to consider it early in the business. If I had not radically altered my pricing 15 years ago (15 years of massively higher income potential and counting! crazy) my life would be so different than it is now. Rather than thinking of A/B testing, I would try to think of how much value your product adds for your customers, and then capture some reasonable percentage of that. Think of it very broadly (again, see the book). There is more value here than just the hardware/software. Your customers may value dealing with you instead of dell, etc. Try talking to some good customers about how much they would really pay. Some won't feel comfortable, but others may blurt out "we spent $3k on your hardware last year, and the truth is it's a rounding error for us. We just want someone who delivers a solution and answers the phone in person (or whatever)" Anyway, I wish you the best of luck. After writing my original comment, I realized you had only been operating for 18 months. That, combined with your inventory assessment (I am in software, and have no inventory, so I didn't think of it), seems very promising!