4 ms·

This is a great article. When raising my prices, I'm always worried that my competition will be able to see and roughly gauge how profitable I am. I'm worried

by Sealy 13y ago

This is a great article. When raising my prices, I'm always worried that my competition will be able to see and roughly gauge how profitable I am. I'm worried that this will give them an incentive offer products that overlap what I offer and undercut me. Many price-sensitive customers will just leave at that point. Does anybody share the same fears or have experience of this?

JacobAldridge 13y ago
I'm always worried that my competition will be able to see and roughly gauge how profitable I am. Not a chance (or, specifically, not a chance likely enough to concern you). They're focused on their baby, not yours, and 'profitability' as a meaningful factor depends on variables including overheads, business owner salaries, and vision which are next to impossible to guess with any clarity. I'm worried that this will give them an incentive [to] offer products that overlap what I offer and undercut me. This is more likely, but is the very definition of competition. If you want to compete solely on price then you (and your competitors) are signing up for a never-ending arms race. Find other ways to compete, and know that success breeds imitators so you must always be a step ahead in regards product or service innovation, or market penetration. Many price-sensitive customers will just leave at that point. Yes. That's usually a good thing. Moreover, you will lose far fewer than you expect - switching services requires an investment in research, deliberation, time to change, time to re-learn, and risk of something new. The cost-savings need to fund all of that as well, and often don't.
- Sealy 13y ago
  Thanks Jacob, if anything that was an encouragement to keep me focused on my overall goal of service improvement rather than to get intimidated by the 'business side' of running my website. Can I tap your knowledge further. How important is it to have a clear division of roles in a startup? What I am asking is, for greater success, can the techy guy really be the business guy at the same time? (I'm thinking about the partnership between Woz and Jobs)
  - JacobAldridge 13y ago
    Clear divison of roles is important BUT (here's the trick) one person can fill more than one role. There are loads of case studies where an innovative, entrepreneurial spirit has teamed up with a more detailed focus operationally-minded colleague. As long as their values and risk profiles are aligned, it can be (really, really) great. There are also many advantages to one person looking after both tech and sales [1] - for one, it avoids building a product that customers aren't asking for. So the clearly defined roles are still there - say product build and sales. You might do both, so just make sure you keep yourself accountable to doing them both justice - for example, scheduling blocks of time for each, and not giving in to distractions. You will almost certainly prefer one to the other - success is keeping the balance, and not one day finding you've been coding for 3 months without talking to a single customer or investor. In the startup stage there will always be a lot of roles that aren't full time and will be filled by a founder - think accounts, marketing, customer service. As you grow, these can be handed over - and if you've always treated them as separate roles, not just part of your job, then that role succession will be much easier for you and your new recruit. I'm always happy to answer business questions - email address in my profile if you prefer. [1] At startup, "the business guy" means "the sales guy". They're either selling to customers or selling to investors; if they're writing 5 year plans and applying their MBA's management reporting course, then they don't understand startups.

by Sealy 13y ago

JacobAldridge 13y ago

I'm always worried that my competition will be able to see and roughly gauge how profitable I am. Not a chance (or, specifically, not a chance likely enough to concern you). They're focused on their baby, not yours, and 'profitability' as a meaningful factor depends on variables including overheads, business owner salaries, and vision which are next to impossible to guess with any clarity. I'm worried that this will give them an incentive [to] offer products that overlap what I offer and undercut me. This is more likely, but is the very definition of competition. If you want to compete solely on price then you (and your competitors) are signing up for a never-ending arms race. Find other ways to compete, and know that success breeds imitators so you must always be a step ahead in regards product or service innovation, or market penetration. Many price-sensitive customers will just leave at that point. Yes. That's usually a good thing. Moreover, you will lose far fewer than you expect - switching services requires an investment in research, deliberation, time to change, time to re-learn, and risk of something new. The cost-savings need to fund all of that as well, and often don't.

Sealy 13y ago
Thanks Jacob, if anything that was an encouragement to keep me focused on my overall goal of service improvement rather than to get intimidated by the 'business side' of running my website. Can I tap your knowledge further. How important is it to have a clear division of roles in a startup? What I am asking is, for greater success, can the techy guy really be the business guy at the same time? (I'm thinking about the partnership between Woz and Jobs)
- JacobAldridge 13y ago
  Clear divison of roles is important BUT (here's the trick) one person can fill more than one role. There are loads of case studies where an innovative, entrepreneurial spirit has teamed up with a more detailed focus operationally-minded colleague. As long as their values and risk profiles are aligned, it can be (really, really) great. There are also many advantages to one person looking after both tech and sales [1] - for one, it avoids building a product that customers aren't asking for. So the clearly defined roles are still there - say product build and sales. You might do both, so just make sure you keep yourself accountable to doing them both justice - for example, scheduling blocks of time for each, and not giving in to distractions. You will almost certainly prefer one to the other - success is keeping the balance, and not one day finding you've been coding for 3 months without talking to a single customer or investor. In the startup stage there will always be a lot of roles that aren't full time and will be filled by a founder - think accounts, marketing, customer service. As you grow, these can be handed over - and if you've always treated them as separate roles, not just part of your job, then that role succession will be much easier for you and your new recruit. I'm always happy to answer business questions - email address in my profile if you prefer. [1] At startup, "the business guy" means "the sales guy". They're either selling to customers or selling to investors; if they're writing 5 year plans and applying their MBA's management reporting course, then they don't understand startups.