In his recent essay titled, Do Things That Don’t Scale, Paul Graham (who needs no introduction) urges startups to do things that don’t scale. In the context of customer targeting he writes,
Sometimes the right unscalable trick is to focus on a deliberately narrow market.
Take this specific advice and think of it in the context of monetization although that is not what Paul Graham had in mind or would approve.
In any market there exists a distribution of prices customers are willing to pay for a product. It ranges from $0 to some reasonably high positive number. If you set your price at $x then anyone who is willing to pay $x or more will buy your product and the rest wont. If you set the price to $0 you let the whole market in. That is indeed scale.
What if the deliberately narrow market you define is the segment that has a compelling problem to address and is willing to pay for an offering that fills that need? Sure it won’t scale because you need to
- Find the segment and precisely define its needs
- Find the economic value add to that segment from a solution that fills the need
- Find a way to target the customers in the segment as they do not stand up and identify themselves
- Understand how these customers make buying decisions and adapt your methods to make it easy for them to hire your product
- Explain to them why your product is the best option over other alternatives
- Prove to them the value from your product
- Finally do the most unscalable thing – ask them to pay for the value you created
Does charging for the value you create comes to mind when you think of things that don’t scale?
After all in the words of another startup founder,
“It’s not a product until you define a set of customers whose needs you meet and who want to pay you.”
One thought on “Do This Thing That Doesn’t Scale – Charge For Your Product”
Nice Post! I think you are right, in that it is crucial to determine whether consumers will actually pay for your product or service in addition to showing interest.
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