Entrepreneur & Business Developer; Like to blog about Growth, Business Models, Technology, Innovation & Strategy.
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Building a product which customers may want is the key to good business idea. Hence working out Use Cases for your product is very essenti...
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THE MODEL : A digital banking platform for those who do not have a credit rating. ‘Underbanked’ users are given a credit score using big d...
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Getting coverage (generally free coverage) is a great tool to see a growth spurt. For an online/tech startup, spikes in usage can be see...
Social Media Changes the Landscape of the Legal Discovery Process
As the internet has increased our ability to communicate and
share information, the volume of electronically stored information (ESI) has
multiplied exponentially. As a result, ESI has become a routine and critical
component of litigation.
In 1986, the US Congress enacted the Stored Communications
Act (SCA) to provide Fourth Amendment protections for ESI. The discovery
process now includes “e-discovery,” which allows litigants to demand copies of
ESI when relevant to a case. For cross-border litigation, this means professional
translations becomes essential. The laws regarding ESI also pertain to
businesses in that they must be all the more watchful and cautious of what is
shared online.
Social Media Expands
Discovery Opportunities
Online communications have become second nature for
individuals and businesses. Blogs, websites, databases, and email are all part
of ESI now and accessible through the discovery process in court. The
evidentary value to lawsuits of all kinds, from personal injury to family
matters, cannot be underestimated.
The online nature of evidence goes beyond the their textual
content. Date-stamping, authorship, key-logging and more all fall under the
umbrella of discovery now. Courts have even allowed disclosure demands for
passwords to protected material. Considering the international nature of the
world in which we currently live, the need for legal language translators has
become integral to e-discovery, too.
Discovery Must Become
Social Media-Savvy
Companies large and small are leveraging the web for
marketing and communications. Among the Fortune 100, at least a third maintain
active blogs, over half have Facebook pages, and nearly three-quarters have a
Twitter account. Increasingly, this material is also translated into foreign
languages to serve local markets, requiring more retention and the need for
translation services.
All this ESI comes with the legal requirement to save and
store it. Often, this is done using digital means.
Companies have legal duty to preserve ESI. The legal system
has taken steps to enforce compliance with e-discovery rules and come down hard
on litigants who have deleted, altered, or tampered with ESI.
Individuals Can Be At
e-Discovery Risk
Anything someone says, writes, or stores in a digital format
might someday become relevant to a court case. With the ease of deleting, and
the fact that it is often routine habit, it is tempting to delete ESI when
faced with a lawsuit. Individuals should be aware that deleting potential
evidence is a crime that can result in severe penalties.
The best way to avoid this situation is to not post
potentially harmful information in the first place. If an individual or
business doesn’t want certain information to end up in a lawsuit, it should not
be posted.
The Complications of
a Multilingual, Online World
Companies that specialize in e-discovery bring a high level
of expertise to finding and acquiring ESI relevant to court cases. To meet the
challenge, they can also provide sophisticated language translations services.
The informal nature of social media materials are
particularly difficult from a translation point of view. Professional legal
translations capture unique information and provide accurate representations of
foreign language content that might be crucial in court.
The Demand for
e-Discovery Grows Daily
The stakes are high for the legal industry to utilize
translations in their ESI discovery process. Facebook has close to two billion
users. Twitter users post over 500 million tweets daily. LinkedIn is available
in 20 different languages. The market for e-discovery software and services has
a value over $8 billion and that figure is expected to rise to over $21 billion
in the next five years.
The sheer volume alone requires professional services to
search, collect, and translate this information into a useable, legal format.
If individuals and businesses are not prudent in their postings, anything might
end up in court and be a resource for the prosecution.
Bio of
the Author:
Sirena Rubinoff
is the Content Manager at Morningside Translations. She earned her B.A. and
Master’s Degree from the Medill School of Journalism at Northwestern. After
completing her graduate degree, Sirena won
an international fellowship as a Rotary Cultural Ambassador to Jerusalem. Sirena covers topics related to software and
website localization, global business solutions, and the translation industry
as a whole.
Pricing a Cryptocurrency: Reddcoin
CRYPTOCURRENCY: Reddcoin
DESCRIPTION OF
BLOCKCHAIN APPLICATION: Reddcoin is a digital currency which can be
integrated with all major social media platforms to make payments and transfer money
between users. It is based on the Blockchain and has an innovative “Proof of Stake Velocity” algorithm
driving it.
MAIN USE-CASE:
Using Blockchain to disrupt the payments through social media platforms.
TOTAL DEMAND:
According to a research
by Juniper Research, the global digital payments market will reach USD 3.6
trillion in 2016. Cards will account for 90% of these payments. Based on the increasing
popularity of payments through social media, we can assume atleast 1% of the
total payments will be made through social media (the rest can be wallets). This implies a potential demand of USD 36
billion.
TOTAL SUPPLY:
Currently, there are 28.55 billion Reddcoins in circulation (growing at 5%
annually).
RISK FACTOR: A
lot of risks exist in this project.
*Regulatory Risk: Medium to High, as transfers can be
national or international. The coin’s utility to purely to transfer money
between people.
**Utility Risk: Medium, social payments itself is slowly
picking steam. Trust is a crucial factor and a new entrant will find it very
challenging to penetrate this market.
**Platform Risk: Low to Medium, as the coin uses a new and
innovative Proof of Stake Velocity algorithm. This ensures fast block approvals,
which is a big limitation of leading cryptocurrencies.
**Execution Risk: High, as I could not get enough
information on the team behind the Reddcoin.
Based on the above, the Risk Factor for this startup can be
(2*0+2*0.33+2*0.33+2*0)/7 = 0.19
POTENTIAL MARKET
SHARE WHICH CAN BE CAPTURED: 5% due to entry into a new and upcoming
market.
TARGET PRICE FOR REDDCOIN:
36*5%*0.19/28.55 = USD 0.012
(*I do not have any Reddcoins. This is purely my estimate
for this cryptocurrency and I arrive at it using a very simplistic approach.)
Pricing a CryptoCurrency: Game Credits
CRYPTOCURRENCY: GameCredits
DESCRIPTION OF
BLOCKCHAIN APPLICATION: GameCredits is a cryptocurrency based on a gaming
gateway built on the Blockchain. It aims to make in-game payments seamless,
easy and secure. The main advantages include player anonymity, easy integration
with games, more deposit options for local as well as international games and
the security and immutability advantages of the Blockchain.
MAIN USE-CASE:
Using Blockchain to disrupt the In-Game Payment Market.
TOTAL DEMAND: According
to market researcher Newzoo, the global
game revenues are expected to grow to USD 128.5 billion. This is almost
entirely through user spending on games, and not advertising revenue.
TOTAL SUPPLY: 84
million GameCredits.
RISK FACTOR: A
lot of risks exist in this project.
*Regulatory Risk: Low, as closed application of credits suggests
productive use of cryptocurrency. International transfers may get some
regulatory attention.
**Utility Risk: Low, as there does exists a strong use-case
based on the core advantage of the Blockchain technology, i.e. decentralized
and hence cost effective.
**Platform Risk: Medium, as the Blockchain itself does not
seem risky. However, adoption by gaming companies and integration with
different systems might be a challenge. Along with the interoperability issue,
scalability might be a concern as gaming involves small but frequent
micro-payments. Also some gaming companies might prefer private Blockchain
solutions to keep their users sticky and to build customer loyalty.
**Execution Risk: Medium to High, as though GameCredits has
a strong team of technology and business people from the Gaming Industry.
However, it will have to face powerful incumbents to gain market-share.
Competitors like Apply Pay, Visa etc. have established a very strong foothold
in the payment space. Getting market-share from these companies will be tough. Price
competitiveness would be a major factor to get market share.
Based on the above, the Risk Factor for this startup can be
(0.67+2*0.67+2*0.33+2*0)/7 = 0.38
POTENTIAL MARKET
SHARE WHICH CAN BE CAPTURED: 5%
due to distributed Gaming Industry.
TARGET PRICE FOR LBRY
CREDITS: 128.5*5%*0.38/0.084 = USD 29.07
(*I do not have any GameCredits. This is purely my estimate
for this cryptocurrency and I arrive at it using a very simplistic approach.)
Pricing a CryptoCurrency: LBRY Credits
CRYPTOCURRENCY: LBRYCredits
DESCRIPTION OF
BLOCKCHAIN APPLICATION: LBRY is a content sharing platform built on a
native Blockchain. It aims to connect content creators to content consumers
directly and payments will flow from the latter to the former through LBRY
Credits. I like this cryptocurrency as it is based on a solid use-case.
MAIN USE-CASE:
Using Blockchain to disrupt the Paid-Content Market.
TOTAL DEMAND: The
Paid Content Market in 2017 is estimated to be USD 180 bn (source: article byJuniper Research). This includes digital content like videos, music, games,
articles etc. LBRY intends to target this market and capture this value. Owing
to strong incumbents and being conservative, we can say that LBRY might be able
to gather upto 10% of this value in due course. Also we can ignore growth of this space to be extra conservative and get a as-is-where-is value.
TOTAL SUPPLY: 1
bn. LBRY Credits will be available at the end of 20 years of the project.
RISK FACTOR: A
lot of risks exist in this project.
Regulatory Risk: Low, as closed application of credits suggests
productive use of cryptocurrency.
Utility Risk: Low, as there does exists a strong use-case
based on the core advantage of the Blockchain technology, i.e. decentralized
and hence cost effective.
Platform Risk: Medium, as the Blockchain itself does not
seem risky. However, certain features like an ongoing public action of domain
names on the LBRY network is a risky one for content publishers.
Execution Risk: Medium to High, as though LBRY has a strong
team, it will have to face powerful incumbents to gain market-share. Competitors
like Netflix, Spotify, Youtube, iTunes etc. have established a very string
foothold built on strong content and excellent customer experience. Getting
market-share from these companies will be tough. However, small content
creators might find it useful to go with the LBRY project in return for more
control over the returns on their content. Slowly, this trend could pick up and
spread.
Based on the above, the Risk Factor for this startup can be
(0.67+0.67+0.33+0)/4 = 0.41
TARGET PRICE FOR LBRY CREDITS:
180*10%*0.41/1 = USD 7.51*
(*I do not have any LBRY Credits. This is purely my estimate for this cryptocurrency and I arrive at it using a very simplistic approach.)
Investing in a Cryptocurrency
I believe the Blockchain is a truly revolutionary technology which
can impact many industries in the future. Crypto-tokens are essentially the
store of value of a particular application of the Blockchain. Since the
underlying technology is robust and sustainable, the currencies built on it are
also the same.
To make an investment in a cryptocurrency, I would recommend the
following steps:
1. Check out various currencies and read about the underlying
Blockchain applications.
2. Shortlist a currency which has a clear, concise and
understandable use-case. The use-case should be around a real world problem,
where the application of the Blockchain has the potential to add value.
3. Read about the currency – the total supply, distribution
structure, mining rewards, consensus mechanism etc.
4. Checkout the team behind the currency. The team should be a
good mix of people having the necessary skills and experience to execute.
5. If all seems fine, go further. Else go back to Step 2.
6. Try to arrive at a fundamental value for the currency. Check
out my post on this. If this is difficult to do, check out any comparable
currencies and compare their metrics (price and quantity traded) to arrive at a
value.
7. If the market value is fairly below the fundamental value calculated
above (atleast 30-40%), INVEST!
Pricing a CryptoCurrency
Cryptocurrencies have been getting a lot of attention lately. With increasing capitalizations of the major currencies in circulation now (like Bitcoin, Ether, Litecoin etc.), investors are increasingly looking at making these currencies a part of their portfolios. Since retail investors can also invest in these currencies without restriction, understanding how these currencies are valued becomes crucial.
The value/price of a currency is based on the demand for the
currency, the supply of the currency and risks associated with the currency.
Demand of the
Currency
A cryptocurrency is generally a token which is issued around an
operation which happens in the background. The demand for the currency is essentially
the value which can be generated through the operation backing it up.
To arrive at this value, we need to start by identifying the major
use cases of the currency. The next step is to quantify these use cases with
regards to the value for customers they can potentially generate. Taking an
example of the Bitcoin, one major use case was that Bitcoins can be used to
transfer money abroad at a significantly lower cost and time. To calculate the
value of this use case, we can estimate the total amount of money which gets
transferred internationally around the world. We can then add a haircut on it
to take into account that some countries do not allow Bitcoins and also that
only some customers might migrate to this solution. This final value will constitute
the demand for the Bitcoin for this use case.
Values for all major uses cases of a currency are calculated and
added to arrive at a final value of demand for the currency. A small premium
might be given to a generic coin like the Bitcoin which may have a large number
of other not-as-big use cases.
Supply of the
Currency
Most cryptocurrencies tend to have a limit on their lifetime supply.
For example, the Bitcoin has a limited supply quantity of 21 million coins.
The Risk Factor
Now that we have calculated the present demand and potential supply
of the currency, we need to assess the risks in the future. Some major risks
may include the following:
Regulatory Risk: Currencies like the Bitcoin which target
a big and systemically important use case like international money transfers
have significant regulatory risk attached to them. Different countries will
have different regulations to deal with such coins. These regulations will
determine how much of the potential value of the currency can be realized.
Utility Risk: A cryptocurrency
is as valuable as the utility of the operation behind it. Use cases which are
not sustainable and have a high risk of substitution add utility risk to the
cryptocurrency’s value.
Platform Risk: The Blockchain is
an evolving technology. Different Blockchains face different challenges and
these might affect a currency built on it to achieve its potential value. For
example, the Bitcoin Blockchain is facing problems of scalability and security.
Hard forks (major changes) are being suggested to counter these problems. This
has caused the Bitcoin community to divide and is causing problems in the
Blockchain.
Security Risk: Blockchains face
security risks both from outside and the inside. Hackers & interested
parties may try to attack and alter the working of the Blockchain. Also within
a Blockchain, some stakeholders like miners might try to collude and gain control
of the Blockchain for their own benefit. The Bitcoin Blockchain has been facing
a security issues. Some Bitcoin exchanges got hacked. Also there is a risk of
miners colluding as a majority of miners are centralized in China.
Execution Risk: A coin may have a good plan backing it. But can the plan be executed? This is particularly important in the case of Initial Coin Offerings, when most coins raise funding with a prototype or just a whitepaper about them. The team behind the coin issue plays a big role in the assessment of execution risks.
Execution Risk: A coin may have a good plan backing it. But can the plan be executed? This is particularly important in the case of Initial Coin Offerings, when most coins raise funding with a prototype or just a whitepaper about them. The team behind the coin issue plays a big role in the assessment of execution risks.
These risks need to be included in the price of a cryptocurrency.
A discount factor can be applied to the fundamental value of the currency to
account for these risks.
To summarise, the price of a cryptocurrency is the following:
Price of Cryptocurrency = (Demand of Currency / Supply of
Currency)*Risk Factor
THE CUSTOMER SEGMENT CANVAS
To analyse any business, in addition to the Use-Case Canvas, it is important to analyse the various customer segments targeted by the business. To do so, we can use a 'Customer Segment Canvas' which helps in identifying the various customer segments targeted by the business with details about the segment itself and the main value drivers for the particular segment.
Note: Every customer segment should be analysed using a separate canvas.
Note: Every customer segment should be analysed using a separate canvas.
The Use-Case Canvas for Bloomon
Bloomon is an Amsterdam based flower delivery services startup. It sources flowers directly from the growers and offers subscription services to customers.
The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers flower delivery services for occasions like birthdays, anniversaries etc.
The Use-Case Canvas for Bux
Bux is an Amsterdam based stock trading app. It offers quality content, a practice account for first timers and a platform with sophisticated tools for stock traders.
The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers stock trading services to first timers.
The Use-Case Canvas for WhyDonate
WhyDonate is an Amsterdam based crowdfunding platform for social projects. It caters to non-profit organizations, fundraisers and social projects.
The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers crowdfunding services to social projects.
The Use-Case Canvas for Symbid
Symbid is an Amsterdam based equity crowdfunding platform for companies.
The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers equity crowdfunding services to startups.
The Use-Case Canvas for AdviceRobo
AdviceRobo is an Amsterdam based alternate credit scoring company offering credit scoring & lending portfolio risk management services for Banks & FIs. Credit scores are generated through identity check and psychometric tests.
The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers credit scoring services for thin files to Banks & FIs.
The Use-Case Canvas for PaymentGenes
PaymentGenes is a Amsterdam based company offering consulting and recruitment services to Payment & Fintech companies.
The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers consulting services to payment startups.
The Use-Case Canvas for 1 use-case of the company is shown below. The use-case in focus is where the company offers consulting services to payment startups.
The 2 Types of Business Ideas
From the customer’s perspective, broadly all business ideas
can be divided into 2 categories – the “Help Me” ideas and the “Show Me” ideas.
Help Me Ideas: These are business ideas which aim to solve a
current pain-point of the customer. The customer is feeling a pain and the idea’s
goal is to solve the same. For example, TripAdvisor was a business idea which
aimed to solve the customer pain of not having enough and trusted information
to make decisions about travel.
Show Me Ideas: These ideas, on the other hand, have a goal
to enlighten customers about how things can also be done. The customer may be
reasonably happy with the solution which is already available in the market.
The Show Me Idea will show the customer a better way to do the same thing. For
example, Uber would be a classical example which was able to provide a better
customer experience using technology.
Having said the above, all ideas of a particular
category also have certain elements of the other category. A Help Me Idea will
also partly play the role of a Show Me Idea and vice versa.
THE USE-CASE CANVAS
Building a product which customers may want is the key to good business idea. Hence working out Use Cases for your product is very essential. Once, you figure out the Use-Cases, analyzing them is also a must.
The Use-Case Canvas enables you to do that. It clearly defines the use-case, the market targeted, all external stakeholders and all other details which can help assess whether the use-case is strategically valuable and sustainable.
Note: The Canvas should be used for 1 use-case. Multiple use-cases should be analysed with multiple canvases.
The Use-Case Canvas enables you to do that. It clearly defines the use-case, the market targeted, all external stakeholders and all other details which can help assess whether the use-case is strategically valuable and sustainable.
Note: The Canvas should be used for 1 use-case. Multiple use-cases should be analysed with multiple canvases.
Are You Guilty of Self-Validation?
This is a big bias entrepreneurs tend to have when starting
up. I have been very guilty of this.
How do you know your business idea is good? Do you feel it
or do your potential customers say that? A lot of the times we feel that there ‘should’
be a need which our product/service caters to. This should can be quite risky.
Before proceeding with the idea, a proper validation is a must.
Self-validation, i.e. validating the idea yourself, is a trap entrepreneurs
often tend to fall into.
A proper and adequate validation involves doing the
following:
Assessing whether a
need exists: Some good ideas to do this are
- Talk to/survey potential customers
- Identify whether customers are interested in
your product by analysing their current behavior
- Create a MVP and test out your hypothesis
- Conduct a comprehensive research (including
primary and secondary research)
Is the market big
enough: Try to estimate the potential market size the idea is catering to.
Will the customers be
willing to pay for your product/service: Analyse whether your business idea
has advantages and customer would be willing to pay for it.
This
is very crucial as following up on an idea which has not been adequately and
appropriately validated can result in waste of time, energy and resources.
Top Reasons Why Startups Fail
Startup Failure is considered a taboo in many parts of the world. However, it is a phenomenon which is highly prevalent and cannot be avoided. Nearly 90% of startups fail within the first 3 years of operations. Top 20 reasons why start-ups fail include the following:
#1 – Building a solution looking for a problem, i.e., not
targeting a “market need”
#2 – Ran out of cash
#3 – Not the right team
#4 – Get out-competed
#5 – Pricing/Cost Issues
#6 – A “User Un-Friendly” Product
#7 – I got this product. Now I just need a business
model.
#8 – Poor Marketing
#9 – Being inflexible and not actively seeking or using
customer feedback
#10 – Release product at the wrong time
#11 – Lose Focus
#12 – Disharmony with Investors/Co-founders
#13 – Pivot Gone Bad
#14 – Lack Passion and Domain Expertise
#15 – Location, Location, Location
#16 – No Financing or Interested Investors
#17 – Legal Challenges
#18 – Do not use your connections or network
#19 – Burn Out
#20 – Failure to pivot when necessary
Source: CB Insights via Seraf Investor
The Power of the “Crowd”
We live in a world where customer is the king and her
preferences are changing ever so quickly. For an entrepreneur, it becomes very
difficult to understand customer preferences and requirements and to find a
good product-market fit in the process. Hence in this world we are living in,
tapping into the “Crowd” makes complete sense.
The “Crowd” refers to a mass of people who may be connected
or not connected to you. Crowdholding is a
platform which tries to connect entrepreneurs with the “Crowd” so that they can
derive the host of benefits the latter has to offer.
The benefits of the “Crowd” are listed below.
Diverse Opinions
– The “Crowd” is a heterogeneous lot of people coming from different
backgrounds and demographics. They all come together as they have 1 common
interest – engaging with entrepreneurs around their business ideas. This
ensures that suggestions and opinions received by entrepreneurs on the platform
are diverse and focus on different areas of the business.
Unbiased Feedback
– Since the entrepreneur has no previous attachment with the people engaging
with his/her business idea, the feedback received can be safely assumed as
unbiased.
Implied Agreement
– Any opinions which are reiterated time and again can serve as implied
agreements by the “Crowd”. Since these implied agreements are opinions of a
number of people, the entrepreneur can use the same in further design and
development of the product.
Statistically
Significant – Even statistically, data collected from a bigger sample of
people has more significance when compared with data collected from fewer
persons. This data collected can be analysed by clubbing into categories and
trends can be identified which again can be used in product development.
Cheaper – Finally
Crowdsourcing feedback and ideas consumes lesser time and lower cost when
compared with other means to do so.
So if you are a budding entrepreneur and have a business
idea, put it on Crowdholding and let the Power of the Crowd assist you in
realizing your dream.
Startup Idea - Marketplace for Unconventional Advertising
The Problem – Limited
advertising options and increasing advertising budgets have led to steep rises
in advertising rates of these options. This has affected the return advertisers
can get on their advertising spend, at times making it unreasonable for them to
do so.
The Solution/Startup Idea
– A marketplace connecting sources of unconventional advertising with potential
advertisers. This includes adverts in places like gyms, hotels, salons,
educational campuses, residential areas etc.
Rationale – A host
of unconventional advertising sources exist which are largely untapped. Tapping
these would tend to bring down the advertising costs of advertisers, help them
target better and also generate additional revenue of vendors of these new
advertisement options.
Target Market –
Customers – Advertisers (especially local businesses, SMEs
etc.); New vendors of advertisements (local options like gyms, schools, hotels,
salons, spas etc. and online options like blogs, personal websites).
Geography – Global (launch can be in a particular
city/country)
Current Competition
– This unconventional advertising market is still untapped.
Competitive Advantage –
The market is largely untapped. A first mover advantage can prove to be a
significant competitive advantage. Also the volume and quality of the data will
create barriers to entry in the future.
‘The Brexit Effect’ in Business
A human tendency we often tend to ignore in business is what
I call the “Brexit effect”. This is when some people find fault with a product/service
and spread their discontent to their near and dear ones. This tends to spread
quickly and eventually becomes a movement. This may be a difficult task as
negative feelings spread much faster than positive ones. The mood in this group
of people becomes one of “we want change”, without assessing clearly the
alternate they may be changing to. This effect can prove to be a big risk for
any established business and must be addressed before it gains significant traction.
This
effect may sound unreasonable and trivial. However, I feel this is the effect
which has had serious implications on public decisions in the recent past (some
events which we all know about ;) and is a problem established
businesses are always grappling with.
The 3 Ways to Source Anything
All business processes have multiple components. These
components involve products and services which can either be produced by the
business itself (i.e. in-house production), sourced from a few specialized entities
(i.e. outsourcing) or can be sourced from a large number of outsiders (i.e.
crowd-sourcing). The advantages and disadvantages of each are given below:
In-house Production
-
It generally tends to be cheaper as the margin
on those products/services are kept inhouse. Also the business has better
control over the process and quality and hence is less dependent on outside
entities.
-
The downside is that this option has higher fixed
costs and the required skills may be missing in the production. Also this
option is operationally challenging.
Outsourcing
-
The biggest advantage of this option is lower
fixed costs. This ensures that the business is in a better position to handle
business cycles. Also outsourcing to specialized entities tends to ensures
better quality of products and services.
-
The downside is that the business becomes
dependent on outsiders. As a result, gaps in information flow and communication can emerge.
Crowd-Sourcing
-
This option is highly scalable and provides the
business with large and cheap operational capacity.
-
The biggest drawback in this option is that quality
control is a big challenge.
All
3 options can be used by any business. The business must assess its priorities
and make a decision accordingly.
The Price of a Haircut
A haircut is a necessity (for most) and is a repeat activity
which we get done periodically. I have moved to Tilburg and have found the
price of a haircut to be quite high here. I paid EUR 29 which is a big amount
for a student like myself. This got me thinking how a haircut should be priced
and what factors determine the price.
Pricing of a haircut can be fixed in 2 ways:
Fixed Pricing: This
is what most barbers follow. The price is fixed for a haircut and differences
exist based on the gender of the customer. This pricing strategy has its pros
and cons.
- It guarantees a fixed revenue to the barber
irrespective of the hair characteristics of the customer.
- The problem is that some hair is longer and
denser and hence more difficult and time taking to cut. Hence the ones with
such hair are subsidized by the customers with shorter hair.
- Also there is no choice for the customer. It is
a take it or leave it strategy for the customer.
Variable Pricing:
Here prices are set based on a time based rate. A price per minute can be set
and based on the time taken to cut hair of a customer, the final price can be
determined. A minimum final price can be set to ensure that atleast a minimum
revenue is generated on every haircut.
- The benefit of this strategy is that all
customers pay based on the same rate and no cross subsidization takes place, as
in the above case.
- Also this pricing considers the value of the
haircut to the customer in setting the final price. If a customer has longer
hair or wants a more styled haircut which will take a longer time, he/she has
to pay more.
- The drawback of this strategy is that it based
on trust and there can be a trust issue between the barber and the customer. A
customer may feel that the barber is deliberately taking longer than required
for the haircut.
- Also understanding the customer’s requirements before
the actual haircut takes time. This time needs to be somehow taken into account
into the pricing. This will be tricky.
To summarise, a haircut pricing is also an interesting and
important strategy for a barber and should be decided so as to create good
value both for the barber and the customer.
Other than the pricing strategy, the level of pricing also matters. It depends
on the following factors:
Brand: Big
branded chain of barbers command a premium.
Facilities: The
more facilities offered by a barber can justify a premium pricing for the
outlet. Facilities can include a good waiting area, hygiene, latest equipment
etc.
Positioning: A
focused positioning or targeting a niche can also justify a premium price for a
barber. An example is my barber here in Tilburg. This is a place called De MeesterBarbier which is a men’s only barber. All facilities and designs inside are
structured to please their target market, i.e. men. There are men’s magazines,
musical equipment, drinks etc. which create a great customer experience and
hence they can charge the high price for the haircut.
How to Come Up With a New Product Idea?
Key Metrics in E-Invoicing
Key Metric – Network
Effects
E-invoicing is conversion of manual invoices into electronic
ones. Sending and receiving electronic invoices is great as it saves time and effort
for businesses.
Sending and receiving invoices in the same format, automatic
tracking of receivables and payables, reconciliation, alerts on bad debts etc.
are some of the benefits for users. Hence, for a user to fully enjoy the
benefits, stakeholders in the supply chain should also avail the e-invoicing
option and hence network effects has
a strong role to play.
Secondary Metric – Cost Savings
As
mentioned above as well, electronic invoicing helps businesses save time,
effort and cost and also tends reduce the risk of any errors in the invoicing
process. However, there is an investment which a user must make in terms of
time and effort to switch to the e-invoicing option. The long term cost and time savings will be the major
factor which will push the user to do so.
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