From the very beginning you should start thinking about your business model: what are you customers prepared to pay for and what other ways there are to monetise your business.
This process is largely about trial and error and trying it out different models to find a perfect one which would generate you enough money to sustain and grow your company and what your customers are happy to be paying.
You should always start with asking yourself a question what is the value I create for the customer and what is this value worth? What is the current price my customer is paying for solving this problem? Are my customers price sensitive or not? How do my customers pay for the product or service (online, cash?)
It is always a good idea to set up several revenue streams, so your business is not dependant on just one which considerably lowers the risk of financial trouble.
So what are the options you have?
The main types are as categorised by Business Model Canvas asset sale, usage fee, subscription fees, Lending/renting/Leasing, Licensing, Brokerage Fees, Advertising. He also differentiates between fixed pricing and dynamic pricing.
While developing your business model it is also key to consider your cost structure. What are the most important cost positions inherent in your business model? What are the most expensive parts – is it production of your product? Is it sales? Is it development costs? How much does it cost you to acquire and serve one customer?
Build on this, basically you have two options to choose from you either decide to have High Volume Low Margin Business Model or Low Volume and High Margin. Make sure you are not stuck with Low Volume and Low (or middle) Margin because this means death to your business.
Decide on several revenue streams and after you know your customers perspective and you cost structure start trying it out.
Want to learn more about how to start your business? Join my Udemy course to find out all the essential information you need to know to start your own business and be successful. Click here to find out more