There’s a business model that gets more glamorized than others, no doubt because it’s more interesting to read about than the alternatives. It goes something like this:
- Bootstrap an MVP (Minimum Viable Product)
- Try to get funding with MVP
- If no funding, bootstrap the initial product
- If funding is in sight, get as many customers as possible
- Hope that funding, product/market fit, and revenue align before one runs out
- Scale or sell later
Since this model is so interesting to read about, popular tech news is littered with “funding success” stories. We can easily begin assuming that this approach to success is the standard.
I have absolutely nothing against this approach, but it does start to skew our perceptions, making it difficult to know how to create our own pricing and customer acquisition models.
I read this laughably obvious article on why charging something like $5/month is unsustainable. The author isn’t pretending to have discovered anything groundbreaking, but it’s a good example of how we can get used to sub-$10 monthly payments for services that are valuable and expensive to run.
How are other companies charging next to nothing, and why?
It goes back to the model above. When a company gains enough momentum to get to step #4 (get as many customers as possible), the goal is customer acquisition—not creating a sustainable business model.
There’s nothing wrong with that, but if you’re not eyeing funding or being acquired, you’ll usually have to take a different approach. We can call this approach “charging more money”.
All kidding aside, you can’t just make a competitor in a product space, charge more, and wish for the best. I get that. But, bootstrapping a business has its advantages, and it’s possible to get there with patience and clarity.
Here are two different approaches I’m a part of:
The concept behind MusicGrid.me has always been to connect music lovers with new and forgotten music. And there’s always been a community aspect to it, as it’s designed to focus on your social friends, and we actively encourage supporting bands and local record stores (which our target audience—ourselves—pretty much do anyway).
As such, we realized a couple of years ago that we didn’t just need to do work from the customer angle. We needed to work with local record stores to understand the community better. Long story short: in pursuing and building a relationship with them, we were able to take work we were already doing and use it to build an ad platform that saved them money and brought us revenue.
We’re in a sustainable place to pursue further components that give value to record stores, while also being able to take our time developing the consumer side of things. We’ve started earning the trust of important people in our “market” by being, y’know, trustworthy. And this means we’re in a good place to help an entire ecosystem, instead of continuing to iterate on products that are built in a vacuum.
Need more encouragement? Consider how many mobile app developers are running unsustainable businesses while not pursuing the “enterprise”, which pays more (source).
We consider those record stores to be partners. Because partners deserve respect, we spent a nice chunk of money (before we had revenue) formalizing our arrangement with a contract. We took it seriously, because asking for peoples’ time is serious.
Partnering with smart people has paid off more than just about any of our early coverage in high-traffic tech blogs.
With Evermore, we’re taking a similar approach with partnering. Since we’ve chosen pricing that’s actually sustainable for everyone—while still providing enormous value to the right customers—it’s more difficult to PPC our way into more revenue. Instead, we’re partnering with individuals and companies who could benefit by having Evermore to refer people to.
Think of agencies that have an overflow of requests with low budgets, or public speakers who get asked how to build an online presence. We’re choosing to partner with them (and pay them a decent commission) to make it easy for them to refer people to a quality product.
We’ve chosen to focus on these partnerships over simple affiliate marketing for the same reason we won’t price unsustainably low just to acquire customers. It’s unsustainable, and we’d rather bootstrap it with the future in mind. It is slower, but we also don’t have to waste our time with scaling up for people who won’t stick around, or with not knowing how many customers will stay when we inevitably raise prices.
(Side note: get in touch if you want to learn more about being a partner.)
Both of these approaches are probably slower than the sexier, fast-paced customer acquisition model. You will need patience.
In my experience, though, the payoff of less stress, better customers, and more impact is worth the wait.