Pricing/monetisation stragtegy for start up idea

[GlenCB]

Hi all,

I have an idea to start a business which helps businesses maximise the benefits of technology in the modern business landscape. I have a background in software development and implementation and I frequently see small to medium businesses missing out on opportunities, doing lots of extra work, or just being inefficient because they lack the knowledge or experience to know what software or hardware is available to make business run more smoothly, make it easier for customers to buy, pay invoices, manage staff, etc.

My intention would be to do appraisals where I can identify areas where a business might benefit from using technology to solve problems, and then make suggestions, implement and oversee the solutions for them.

The stumbling block I keep hitting with this is how to build a pricing structure that works be attractive to small business owners, do I consult for free and build in my fee to the cost of solutions, could a retainer style work for ongoing support etc?

Any suggestions or food for thought gratefully received.

 

[Porky]

Sort of like a “change management” Consultancy role you are looking to offer?

Not sure about demand but, where I have personally seen this this sort of thing has been in medium enterprises but on a three to six month employment appointment basis. Offering the service as freelance contractor could have its merits but I haven’t a clue how you price the service. You need to justify the benefits and ROI somehow.

You could agree kick backs from the software partners you introduce but of course you then could loose impartiality. You probably need to estimate average time to review / report/ implement / oversee and charge it out as a fixed consultancy x per day or so much based on progress stages maybe?

Probably look at how others offer these services - the big elephant in the room though is how you connect with business that would benefit and moreover prepared to trust you / believe your service would add value and actually then part with fees for your services.

But wish you very well with your venture, sorry I can’t be of more help to you

 

[WaveJumper]

Consult for free to get going

 

[fisicx]

It's complicated. Rather than offer this service to anyone and everyone narrow down your target. Focus on a particular type of business and their needs.

Don't sell the technology, sell the savings or improved performance. If you can show your suggestions will save them £50,000 per year then you could easily charge £10K. If you are only saving them £1000/year then they might pay you £50.

That being said, marketing is going to be a problem. Once you have exhausted the local supply of businesses that need help what happens next? What do you do if they only want to pay a one off fee and aren't interested in ongoing support?

Business improvement management isn't anything new, there are thousands of consultants all doing exactly what you propose. And many of them look at business processes rather than just implementing technology.

I know one consultant who said to change how internal approvals were managed and the company saved £20,000 every year. No technology required, it was just a process change.

 

[GlenCB]

It's complicated. Rather than offer this service to anyone and everyone narrow down your target. Focus on a particular type of business and their needs.

Don't sell the technology, sell the savings or improved performance. If you can show your suggestions will save them £50,000 per year then you could easily charge £10K. If you are only saving them £1000/year then they might pay you £50.

That being said, marketing is going to be a problem. Once you have exhausted the local supply of businesses that need help what happens next? What do you do if they only want to pay a one off fee and aren't interested in ongoing support?

Business improvement management isn't anything new, there are thousands of consultants all doing exactly what you propose. And many of them look at business processes rather than just implementing technology.

I know one consultant who said to change how internal approvals were managed and the company saved £20,000 every year. No technology required, it was just a process change.

Thanks, I saw this as a more holistic approach as there is so much that can be done and it’s not necessarily just problems for a single type of business, most businesses could benefit from an online presence, some way to order or pay invoices remotely, manage staff more efficiently, effective stock management, data insights for buying trends and such but just don’t have the time around day to day BAU tasks to implement such things. But I do see the benefit of becoming and expert in solutions for a particular type of business, so will definitely bear that in mind.

As for marketing I thought that giving something for free such as a scorecard ‘how smart is your business’ survey e which could ask questions about how businesses currently use tech and give a score on areas which they could improve which starts the conversation. This could be used to find a wider audience outside of my local area and businesses which I have connections which I hope to use to test my idea.

 

[fisicx]

Thanks, I saw this as a more holistic approach as there is so much that can be done and it’s not necessarily just problems for a single type of business, most businesses could benefit from an online presence, some way to order or pay invoices remotely, manage staff more efficiently, effective stock management, data insights for buying trends and such but just don’t have the time around day to day BAU tasks to implement such things. But I do see the benefit of becoming and expert in solutions for a particular type of business, so will definitely bear that in mind.

But they need to know they need these things. Which means you need to arrange a visit and sell the benefits. You need so show them the numbers. For example, if they had invoice payment systems in place they would save £X/month.

As for marketing I thought that giving something for free such as a scorecard ‘how smart is your business’ survey e which could ask questions about how businesses currently use tech and give a score on areas which they could improve which starts the conversation. This could be used to find a wider audience outside of my local area and businesses which I have connections which I hope to use to test my idea.

This only works if they know about your scorecard. And you are just one of many doing the same thing.

Not saying your business idea won't work. But it's going to be hard work getting Jones the Butcher to consider anything other than the way it's been done since forever.

 

[GlenCB]

But they need to know they need these things. Which means you need to arrange a visit and sell the benefits. You need so show them the numbers. For example, if they had invoice payment systems in place they would save £X/month.


This only works if they know about your scorecard. And you are just one of many doing the same thing.

Not saying your business idea won't work. But it's going to be hard work getting Jones the Butcher to consider anything other than the way it's been done since forever.

You’re absolutely right, if I can demonstrate an ROI then it virtually sells itself, but it’s not always as straightforward as that, with certain things like marketing you could build in certain guarantees but something like building an invoicing/payment platform is more about time saved, potentially fewer delinquent accounts etc so it’s a bit more up in the air.

Funny you should mention the butcher, my son is an apprentice butcher and it’s partially his description of their lack of systems that’s encouraged me to go on, they have instances where they are over-ordering, throwing produce away due to lack of demand etc and not adjusting their production accordingly so throwing away half of the next batch too, so some stock control and sales analysis could save them a small fortune.

 

[Mark T Jones]

The direct challenge you have is that business owners hate being told they aren't doing things correctly, or worse still, letting someone in to pull their business apart.

Indirectly, is the whole value/outcome question. 'free' s in itself trick, as it comes with a near certainty that you will find a problem to solve.

My first thought is that it might be best in companies going to the 'next level' whether next-gen family, or scaling up for sale or float,.

Preferably go for a specific sector (case-study your son's employer as a gratis project for example)

 

[linkator]

With small and medium business the most difficult part - to understand what they are doing wrong. Nobody wants to show their troubles to stranger. I experienced that mostly only businesses in distress finding couradge to ask for help proactively - when the problems are obvious. And "firefighting" is a challenging task. There are two possible strategies for marketing:
* find the common problem and solve it for one business. Tell the success story to proper audience - if many businesses have similar problems they will ask for you help or just opinion for starters
* offer some popular/regular services for competitive price or even for free - those should be a related to your specialisation. When you do this at a scale you'll have smaller costs "per unit" and consider providing those services at a cost as a "marketing activity". Once you have regular contact with people you'll able to open a channel for inquiries about your "main" services as a trusted supplier. At least you can inform them about what do you do and be considered when demand will come. Remember that consulting is not what people need on a regular basis usually. So just "be around" when they need some.