Case Study: Growth Mentor - Pricing
A deep dive into a successful business and what makes it so.
Most average entrepreneurs work on their product first, then their pricing. That's a mistake.
Similarly, paid pilots often lack thoughtful, well-researched pricing.
Too often, I've tested to see if people are willing to pay. This resulted in conclusive proof that they could enter a credit card and allow a few payments.
I proved that my prospective customers knew how to use a credit card.
Not quite useless. But almost. And rarely linked back to value delivery.
The case study we're analyzing started with the founder paying for the same advice that his product would eventually provide. So even in his origin story, he began with payment.
But where do you go from here? As you may have figured out, this product is generally a multisided business model, which makes building the business model more difficult because there are two (or more) of everything.
In some multisided models, there are more actors. Here, we have a growth mentor (advisor) and a person being advised. However, if a Growth Mentor offered something to an enterprise rather than an individual, there would be three key actors—the mentor, the advisee, and the corporate entity.
Large marketplace multisided models like Airbnb, Uber, or your local classified advertisement (yes, that's a two-sided marketplace) charge a commission percentage on the transaction. This is known by several names: transaction fee, take rate, or rake, which refers to the percentage or flat fee imposed on each transaction.
However, such a take/rake rate requires a considerable number of transactions to be profitable.
Calculate how many advisory calls you would need per day, at $250 per consult and a 10% rake, to pay yourself a salary. I'll wait. Is it realistic?
What did Growth Mentor's founder and CEO do?
