So often we are afraid to go all in. Whether it’s in a relationship, in business or in an investment, the fear of failure keeps us from fully committing. What a mistake.
I’ve had to learn to love failure. I have to consciously tell my brain, “You’re going to fail. And it’s going to be OK.”
Take the leap. Make the commitment. Dare to take a stand.
If we’re not failing, we are staying too safe. And you won’t grow unless you are constantly making yourself uncomfortable.
On today’s episode of The School of Greatness, I dive deep into the idea of going all in when the time is right with one of the most successful investors in the world: Matt Higgins.
Higgins is a proven operator, investor and business builder with a knack for helping founders at pivotal growth moments achieve breakout success. He serves as CEO of RSE Ventures, a private firm that incubates and invests in companies across sports and entertainment, food and lifestyle, media and marketing, and technology.
Higgins co-founded RSE with Miami Dolphins owner Stephen M. Ross, the most prominent private developer in the U.S. and a serial entrepreneur. Together Higgins and Ross have helped build enterprises from scratch, including the largest privately owned soccer tournament in the world (International Champions Cup) and leading brand strategy and communications agency Derris.
Higgins didn’t graduate from high school. He came from a humble beginning but never let that hold him back from getting where he is today.
He says that when you do things your own way and you start with a blank page, it’s going to be a lonely journey. You have to trust yourself and be careful about the advice that you take.
So, get ready to learn what makes Higgins a great investor and why certain businesses are winners on Episode 727.
Here are five things to consider when you set the price for your product.
6 min read
Opinions expressed by Entrepreneur contributors are their own.
Pricing your product is one of the most important decisions you’ll make when launching a business — yet it’s also one of the most neglected. All too often entrepreneurs spend hundreds of hours designing their products, and not enough on the nuts and bolts of the economics involved.
It may seem like a straightforward process, but the business impact is critical. Price affects everything in your business from profit margin to cash flow to hiring, so it’s vital to put in some serious thought. It may sound easier to slap on a number and fix it later, but shooting out of the gate with improper pricing can lead to poor margins, future challenges and even failure.
There’s no simple formula for getting it right, so be sure to review some proven pricing strategies to see what’s out there. Here are five things to consider when you set the price for your product.
1. Understand the value of your product.
The best way to learn the perceived value of your product is to do some market analysis, aka speak directly with customers via focus groups or online surveys. There are two different paths to take — and you’ll want to try both. The first is an aided question, something like: “What would you think if we charged X amount?” The second is an unaided question like: “What would you be willing to pay for this?” You can reconcile the two sets of answers to get closer to a target price.
Over time your customers will also speak with their wallets. Apple is a great example of this — its newest iPhone models incorporate popular features at a lower entry price point than the previous generation, yet the top-of-the-line models are more expensive than last year. Apple clearly believes, based on its data, that its customers will pay more for those innovations.
2. Research the competition.
Value isn’t the whole package. You also have to know what your competition is doing. After all, how much they charge can also impact your prices. So look at your competitors; what do they charge and how are their products different? Their prices can provide a baseline for how much you charge your customers. You might set your prices lower to try to attract some of their customers, or if you consider yourself a luxury brand, you might set your prices higher to signal elevated quality and status.
As you evaluate competitors, don’t forget to look at close substitutes. For example, if your company is Uber, Lyft is your competition, but the bus plays in as a close substitute — one that shouldn’t be overlooked when considering your price point.
Before you price your product, you need to know how much you spend to create it. That means calculating every cost that goes into manufacturing or acquiring each item. If you purchase products and resell them, add up the costs of buying and shipping the items. If you make the products yourself, include creation costs like materials, development, manufacturing and overhead.
Once you know how much you spend on products, you have your break-even cost, or the minimum amount you must sell the products for to earn back the money you’ve invested in them.
4. Build a basic price model.
Before you set a price, it’s wise to put some basic numbers behind it so you can see how various factors contribute to your bottom line. A basic pricing model looks like this:
(Price – cost) x quantity = profit
So let’s say you want to sell custom hats. Your hats cost $10 to make, and you’re not sure whether to sell them for $15 or $20. Plug in the numbers for each option:
($15 – $10) X Quantity (20) = 100
($20 – $10) X Quantity (10) = 100
Looking at those two options, you’d have to sell twice as many of the $15 hats to achieve the same profit as the $20 hats. In other words, decreasing prices just 25 percent (from $20 to $15) means you’d need a 100 percent increase — or a doubling — of the number of hats you sell. That’s a big difference, even with our small sample quantities. Do you think you can sell that many? Is the effort involved worth it? Yes, you can charge a lower price to gain users, but then you trade profit and still have to attract more buyers.
Finally, once you have a price range, use your intuition and move to “behavior numbers” like $99 or $10 to finalize pricing. That means pay attention to round numbers and not underestimating the left-digit effect: Consumers, who read from left to right, pay more attention to the first digit they see. When you see the first digit is a 1, then the overall price of the item seems much less than if the first digit were a 2, even if the price is only one penny or one dollar apart. The overall effect of rounding up to an even amount makes the item seem more expensive.
Economics and the power of price
Product pricing can make or break your small business. If you set prices higher than what customers are willing to spend, you’ll lose sales. But, if you set prices too low, you won’t earn at as much as you could. The right price point will fall somewhere in the middle to generate the most revenue — but finding the right balance is tough. It’s important not to price yourself into a corner. Flexibility is critical; otherwise you might find yourself at a competitive disadvantage and unable to react quickly. Putting it all together is an art form, but once you’ve done it well, you’ll have a masterpiece for your small business.
Without a roadmap, your chances of failure increase.
5 min read
Opinions expressed by Entrepreneur contributors are their own.
One of the biggest mistakes entrepreneurs who want to build a tech startup make is that they don’t create a roadmap or prototype. Without a prototype, you can end up going down an unclear and expensive path when you’re developing your mobile app or product. That’s why prototyping is a crucial part of creating an app.
Here’s how it can benefit you and how to get it done:
1. Gain clarity.
Without a defined concept, you can easily set your app up for failure, and it’s hard to define your concept sans a roadmap and a visual aid, such as a prototype. Your roadmap helps you to define and sharpen the idea of your concept by mapping out the customer’s journey.
Base this information on market research by analyzing your competition and determining what features attract your target audience to your competitor’s apps. Your app should address your users’ needs and provide more value than what your competition offers so that you have a unique value proposition.
With this information, you can produce a high-fidelity prototype of your mobile app that is interactive so that stakeholders can have a clear vision of what the interfaces, interactions and other elements of your app would be like once the final app is made.
2. Quickly validate your idea in the market.
If you want to entice stakeholders to invest in your app, you need to validate your concept in the market. A prototype helps you achieve this goal since it can help you test market demand. You can opt to create a prototype using a prototyping tool or have an outsourced team build one for you to your specifications.
Choose app metrics, such as app usage and engagement, to determine market demand so you can save time and money from further developing an app that may not work.
3. Save on cost.
App development isn’t cheap. It could be $5,000 to $50,000 or run into the hundreds of thousands, even millions, depending on the customization and maintenance required. Building an app without developing a prototype first drives up your costs over time. Maintenance costs can take up 15-20 percent of the cost of app development.
A prototype helps you reduce the expenses of app maintenance due to inefficiencies since you’ll be able to identify bugs and vulnerabilities before the final development of the app. You’ll also save on rebuilding costs if your developers later find that the app is not meeting compliance requirements.
4. Develop consistent UX.
If you want to get users hooked on your app, you have to provide an experience that helps facilitate what your app is offering your users. Mobile marketing analytics research company Localytics noted in a study that only 21 percent of people who download apps only use the app once. So, it’s important to focus on taking steps to retain users and understand their behaviors.
With a prototype, you have the power to observe user interaction with your app. You can study user behaviors early on in the development process and make adjustments to your app to improve their experiences. For example, you can change the font of a button’s text if you notice that users click the button more often. This helps to improve their experience and encourage engagement with your app.
5. Drive stakeholder acceptance with a proven concept.
When you’re trying to convince important stakeholders, such as venture capitalists, angel investors or even crowdfunding audiences, to invest in your mobile app, it’s challenging to get them to buy-in to your concept without a visual, working prototype.
But with an app prototype, these crucial stakeholders get a clickable, interactive app they can use and test. It helps to justify funding since it reduces the risk of uncertainty and helps your audience visualize the potential profit your app can bring.
6. Fine-tune your prototype to improve your concept.
A prototype also gives you the opportunity to explore new ideas and further improve on your concept because it allows you to see problems with the app early in the development process. Creating a prototype gives you the chance to improve on your concept so that your development team can find potential weak spots and errors.
According to a study by MarketingSherpa and MECLABS Institute, 13 percent of users delete mobile apps due to bugs. It’s important to test your app with your target audience to identify errors before you finalize the product. During this stage, it’s important to document user interactions, errors incurred and each instance and version that you updated. This helps you to create a valuable and addictive app for your target audience. For example, you can create and reference a backlog of the different versions of your app and compare the different errors your users experienced as they navigated through the system.
You can also implement features that provide feedback from your audience on the app, such as a survey or poll. Use the direct feedback to further develop the app based on their needs. You can use this information to create a more enhanced experience for your users and improve your chances of having a more successful app at the launch of the final product.
Online platforms for freelance worker provide an unparalleled opportunity to work with millions of people who aren’t necessarily like you.
4 min read
Opinions expressed by Entrepreneur contributors are their own.
It’s easy to be swept up in the negative rhetoric around the gig economy. Too often “on demand” workers are framed by the media purely as a cost-cutting tactic for businesses. Somehow the professional experience and expertise of the humans behind the screen get left out of the conversation.
Think of it this way: Online platforms are a unique space where the world’s best talent can connect both with each other to exchange ideas and share feedback, and with people and organizations actively seeking their specific skills. They create a truly level playing field irrespective of location, gender, age or background.
When you remove the barriers of geography and social background — which is what Silicon Valley’s call for “democratization” ultimately is — the creative possibilities are endless.
Our industry talks tirelessly about improving diversity. We need to celebrate the evolution of platform work as a step in a fairer direction, and see it for what it is: an unparalleled opportunity to work with millions of people who aren’t necessarily like you.
Diversity in ideas adds value.
Not looking more deeply into the benefits of our emerging global workforce does a disservice to the people around the world using online platforms to build their careers. Truly flexible work has never been this accessible, and is a valuable pipeline for people like stay-at-home parents, retirees or creatives who find they do their best work on the road. Valuing flexibility over more traditional benefits shouldn’t be dismissed as a somehow less valid choice; as a society we should encourage people to work in a way that works for them.
In addition, there’s plenty of evidence that a globally distributed talent network can radically improve a company’s output and available skill set. Research from McKinsey shows that ethnically diverse businesses are 35 percent more productive and 9 percent more profitable. However, as any business owner knows, achieving diversity isn’t always as easy as we’d like. The platform economy offers a solution in a ready-made global network of skills and international perspectives.
Access the best people and projects.
Freelancers have been the lifeblood of the creative industries almost since their inception, so the concept of tapping into on-demand talent is nothing new in fields like design, music, film or writing. What online platforms have succeeded in doing is opening up this model to the rest of the world, making it easier for freelancers to find interesting work, and making talented creatives more accessible to clients.
While the platform economy has created a new global wave of creative diversity, there’s still some way to go in getting more people comfortable with the idea that the best person for the job isn’t necessarily in the same time zone or country as them.
The key point that’s missing from so much of the narrative around the gig economy is that companies put significant effort into attracting, nurturing and retaining skilled people. After all, the best talent will always have options — and working within the platform economy is just one of them.
Creative talent is a commodity in demand, and that talent truly is everywhere. No skilled worker should be disadvantaged because of where they were born or where they live. Platforms have broken down borders in the creative industries, and ultimately made them a much fairer place to work.
As a global society, we should celebrate this: Businesses have never had access to such depth and reach of creative talent before. To miss out on the benefits of this diversity simply because we are stuck in well-worn narratives and assumptions is such a waste of potential for a society in desperate need of creative diversification.