by Page no: S41
| Questions | Answers |
Financial Progress#3 (Financial Progress)
Share any work that you have done to date on financials. Provide links to monthly accounting, financial models, estimates, conversion analysis, research or any other work that you have done to estimate revenues and expenses. (1 Hour) |
Link to Original Forecast based on 5 revenue models
Clients
FY 2021: 34 (May 2021-April 2022) FY 2022: 57 (May 2022-April 2023) then 70, 80, 100 for following years. Pricing:
based on 5 revenue models
Competitor Analysis:
I obtained several offers for SEO improvements for one of our existing websites. Example: Cost is $599.00 USD per month plus a one time $50.00 setup fee (provided by pagetraffic.com)Pricing as compared to competitors:As opposed to competitors, we offer SEO improvements for a far lower price. It is $100 dollars per month that will rise to $200 in 2026. Customers will have to some smaller effort, which is publishing new content in the smart content engine and do some proof-reading.
As opposed to competitors, our content is loaded automatically.
Therefore our monthly support costs are only 20% of the revenue, while for competitors it is easily 40-50%.As visible in the calculation, we will be profitable in the third year, despite this challenging low price. Spinning costs
We will use pre-ready spinning software which will reduce our development costs for such software. We can buy the enterprise version of such software for less than $1000.
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Revenue Models#4 (One Revenue Model)Select One Revenue Model to pursue. Write the name of each revenue model that you have considered for your solution, and write a few sentences for each revenue model on the work that you have done to validate the model with customers, including why you think each model is attractive or unattractive to customers. Calculate the number of customers that you can realistically acquire over the next 18 months and write a few sentences on your strategy to obtain those customers. Determine what price you would need to charge those customers to earn USD $1 million in total revenue over the next 18 months from today under each revenue model. Assume that the number of customers will ramp up over time towards the end of the 18 months, and assume that you may discount your pricing for initial customers. Use the customer feedback and revenue analysis to select your One Revenue Model, and write a couple of last sentences on why you have chosen this revenue model to pursue. (2 Hours) |
Link to Forecast with 1 Million over next 18 months with all details.
5 revenue models:
Clients, same as in question #3.
2022: 34 (May 2021-April 2022) 2023: 57 (May 2022-April 2023) then 70, 80, 100 for following years Pricing:
based on 5 revenue models. Significant difference in prices as opposed to #3.
Prices are going up with time, when our quality and reputation is increasing.
Why models are chosen: The models are based on the Standard SEO pricing based on monthly models. It is important to see that our main effort is the initial work, namely the establishment of the smart content engine, while for our competitors have regular work each month.Customer Feedback: In order to achieve 1 million, prices must be significantly higher. According to interviews with potential customers, this would be achievable if they are convinced that we really deliver higher quality thanks to more and always renewed content. For one customer, we might be better because Standard SEO has difficulties in breaking into competitors’ markets / keywords. Using our “competitor keywords”, we could deliver this higher quality that allows for higher prices. |
#6 Revenue InterviewsInterview customers about the pricing of your One Revenue Model. List three alternative prices for your solution, including a low price, a medium price and a high price. The medium price should be the price you need to charge to earn USD $1 million in 18 months. The low and high price should be at least two times lower and higher than the medium price. Describe the offering for each price point. For the low price, offer fewer features than you are currently planning to build. For the middle price, offer what you are planning to release. For the highest price, offer incremental value, such as customized support. For B2C revenue models, secure a brief call with at least 5 customers from your Customer List. For B2B revenue models, secure a brief call with at least 2 customers from your Customer List. Before discussing the pricing, ask the customer how they would solve the Customer Problem, how much time they dedicate to the solution and how much money they spend on the solution. Then, describe the One Revenue Model that you are considering. Outline the three price points you are evaluating and get their feedback. Write the name of each target customer and a bulleted list of their feedback and include the amount that you anticipate they will actually pay over the lifetime of their commitment. Write a few sentences on how their feedback changed your pricing model. (6 Hours) |
I have realized that I must choose only one customer problem/segment. Therefore I have switched from
Customer Segment#2, PromoteAuthor (Growth track), where authors contribute their content into a blog of blogs. to Customer Segment#1: EasyBacklinks (rather Launch Track, see questions above) The impression is that revenue is far higher for EasyBacklinks.The products for both customer segments are based on same existing and working core system. For PromoteAuthor, we will be continuing revenue interviews and surveys that clarifies in particular
We have already interviewed 3 customers/authors All of them are not ready to pay for our services. Be aware that we still possess 3000+ more authors (aka potentially paying customers) on our websites.
We have developed a revenue model with 4 price ranges for PromoteAuthor as visible here.
For EasyBacklinks, the pricing models could look similar, based on the number feeds and Youtube channels.
Prices however must be higher, given that customers most probably will pay more and our manual effort is higher, e.g. proof reading (see in the deck) First customer see #7. I have just started the customer interviews on pricing for a 2nd customer. The customer is not ready to pay a monthly 700€ , which is the normal price for good SEO services that improve his Google ranking for his product. He gave hints that he is ready to pay about half of it.
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#7 (Interview Competitor Customers)Identify customers of competing or similar products or alternative solutions and encourage them to switch to your solution. If you are focusing on a business to business (B2B) Customer Problem, identify 1 customer of an alternative solutions, and use email or a phone call to encourage them to switch. The ideal scenario would be to get them to actually pay you money for the solution now, or, if that is not possible, try to secure a letter of intent or LOI. NOTE: an LOI normally includes (1) the name of the customer, (2) a statement of intent to buy, (3) with a contingency such as ‘if we are happy with the prototype’ or other words to make the statement non-binding and (4) possibly with a price and other terms. If you are focusing on a consumer (B2C) Customer Problem, identify 3 customers of alternative solutions, and use email or a phone call to get them to sign up for your solution. The ideal would be to have them agree to use the current minimum viable product (MVP), or, if that is not possible, have them agree to join a user group for feedback on product development. Write a paragraph on what you learned through trying to encourage the customers to switch, including an analysis of your success rate. Provide a bulleted list of any LOIs, user groups, contracts or payments that you have been able to secure. (3 Hours) |
Customer: Rene Irniger, ONYX Lamps was using an alternative SEO provider/competitor, that tried to improve his Amazon conversion ratios.
We have now obtained the following agreement. Definition of “additional sales”: The client is aware that the selection and publishing of the blog entries and proof reading is his job. Learning: |
#1 (Expert Interviews)Speak with experts about your revenue models. Identify three financial people, such as a CEO, CFO or Controller, who has worked or is working at a startup in a similar industry to your Customer Problem. set up a 30-minute discussion about financial models with each of the three financial people. During your discussion, ask them about revenue models that either work or do not work for this type of business, the challenges of each model, the key metrics for each model, the Customer Acquisition Costs and any other details that they can share.
Write the name of each financial person, their title, the company they are associated with, and a bulleted synopsis on the lessons learned from the discussion with that person. (3 Hours) |
1) SEO Peter Limonov of a SEO Agency
2) Rene, Irniger, SEO Client 3) SEO Yani Nikolov, Deavita.com , SEO Agency Revenue model: One Setup fee + Monthly fees
His company has a different revenue model which is more stable and with fixed prices. They’re selling articles for a fixed amount and they also provide advertising in their website which is nearly fixed per month again. About our revenue model:
1) Our revenue model allows a drop out each month. This can lead to a high churn rate. He thinks that it is a risk revenue model, because of
Low fee in the beginning (100$ monthly), which will not cover our expenses (in 200k revenue model) There is no obligation and the client can stop paying whenever they want
Benefits of this will be:
Up-sale
In our revenue model currently, we do not have up-sale strategy. Peter suggests that we should introduce at least 3 plans, which will include different features. Usually, the clients always take the middle plan, which means more money for the company since the beginning. Also, this means that we can have a very cheap plan for clients who are not fully convinced of the service we provide. B2B or Reseller
Having such a service, Yani thinks that most of our customers can be different SEO agencies.
Currently, 70% of his business is through other partner SEO Agencies. In our offer, he strongly suggests thinking about such plans or bulk discounts. This leads to the following Customer types:
Costs: SEO Agencies
Both agencies usually have costs of 25%- 30% of revenue. in order acquire a client. For both costs are Sales Agents. Additionally, they have 4-8% marketing expenses. advised us to put at least 25% expenses (direct costs with sales) and 5% marketing expenses. Learning:
Start: One-Revenue model should start with 6 months minimum term.
We need to think about how we will maintain 10 or 50 customers at the same time like support, billing platform, and so on. We must be very flexible in our pricing tables over longer-term
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KPI#3 (Key Performance Indicators)
Identify the key growth metric for your One Revenue Model. Based on your Expert Interviews and Steps to Revenue, write a bulleted list of the key metrics that are needed with your One Revenue Model for you to secure revenue, referred to as Key Performance Indicators (KPIs). For example, with B2B businesses, a common KPI is the number of sales leads, and, for B2C businesses, a common KPI is the number of users. With each KPI, carefully think if there is another metric that needs to come before it. For example, with sales leads, there may need to be prospecting calls, and, with users, there may need to be marketing campaigns. Write a couple of sentences describing each KPI. With most businesses, executing on one KPI drives the entire business model. Rank order the KPIs by importance, and write a couple of sentences on why you chose the most important KPI. (2 Hours) |
KPIs for Prospective Clients:
KPIs for existing clients:
it will verify how good is our idea and if clients are satisfied with the service.
Based on this KPI we will also know how good the customer service and general user experience are.
We will have to clearly articulate that changes in Google rating will only happen after 4-6 months. 3. What initial fee the client is ready to pay (without having results), if the client is ready to commit with us for 6, 12, or 24 months. |
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