Forecasting revenues for a radically new service.

MatthewLM · Mar 22, 2012

Hello.

I've been looking at the revenue forecasting for a very new type of service. The service takes commissions based on the value of transactions. What I have done is estimated the volume of transactions, the fraction of them which are relevant and then the fraction of customers that would be willing to pay and at what price (Based from market research).

This might give some idea of the market potential but by no means does that mean my business would be able to achieve the potential. Even if the market research is spot on, the service would need to be recognised by all the potential customers.

This service is applicable to this new electronic currency called bitcoin and I will be able to offer this service through free software. This software has benefits over alternatives which could promote fast adoption of this new software and lead people to use my service.

The question is how could I calculate how much of the market potential I could attain? So what I'm looking for is the rate of adoption. Is there anything I should be looking at to estimate this?

Also while x amount of respondents to my research said they would be willing to use my service, are these types of answers usually trustworthy? Should I just use margins of error based on the sample size or could I also assume to some degree that people were too "nice" for the pessimistic forecasts?

Moneyman · Mar 22, 2012

If this is a simple online or mobile trading system I saw about 20 of them at the mobile show last month. One will make it. some of the big boys are throwing tens of millions at it just in marketing. Just a warning. these things tend to stagnate even at very low rates until they hit a tipping point where companies "have " to adopt it to keep customers happy.

sla3 · Mar 22, 2012

You describe bitcoin as an "electronic currency': if that is true (rather than it simply being a payment method) then I suggest you also need to consider the probably variable and depreciating "exchange rate" for bitcoin to £, as your earnings will be in bitcoins, but your expenses are in £.

However if as I expect, bitcoin is a payment method then I suggest take-up will largely be function of the number, size and type of merchants adopting the method. You will therefore need to factor in TWO sets of take-up metrics - merchants and consumers.

The take-up by merchants might itself be a function of the promotional spend on bitcoin, its financial credibility, and its ability to compete with e.g. Paypal.

MatthewLM · Mar 22, 2012

Thanks for the two answers.

Moneyman said:
If this is a simple online or mobile trading system I saw about 20 of them at the mobile show last month. One will make it. some of the big boys are throwing tens of millions at it just in marketing. Just a warning. these things tend to stagnate even at very low rates until they hit a tipping point where companies "have " to adopt it to keep customers happy.

What I'm doing is in part designed (Only part of the benefits) to protect payees from fraud. Also the basic software will be free for both payee and payer. It's not just for keeping businesses' customers happy.

You describe bitcoin as an "electronic currency': if that is true (rather than it simply being a payment method) then I suggest you also need to consider the probably variable and depreciating "exchange rate" for bitcoin to £, as your earnings will be in bitcoins, but your expenses are in £.

However if as I expect, bitcoin is a payment method then I suggest take-up will largely be function of the number, size and type of merchants adopting the method. You will therefore need to factor in TWO sets of take-up metrics - merchants and consumers.

The take-up by merchants might itself be a function of the promotional spend on bitcoin, its financial credibility, and its ability to compete with e.g. Paypal.

Bitcoin is it's own currency (traded on exchanges with other currencies). My service would involve transfers so I have taken into account the payers and payees. I figured out the "Fraction of Willing Payers" and "Fraction of Willing Payees", from those asked according to the research, but as I've said not every single potential person that could take advantage of this technology would come across and understand it instantly.

The problem is figuring out the adoption of this technology. The main promotional strategy is to provide free software that provides access to the service and also gives future opportunities for revenue streams. Think of it like the in-app purchases in mobile phone apps, where the app is free but there is a cost to additional features. This software is targeted at the current bitcoin user-base and could spread very quickly but I don't know how to figure exactly how quickly. I'm looking for other existing technologies that could be looked at to estimate the adoption of mine, though it's not easy.

Also, as for the exchange rate for bitcoins to GBP I do indeed factor this in.

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Forecasting revenues for a radically new service.

MatthewLM

Moneyman

sla3

MatthewLM

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