How to find out what the market is willing to bear
Entrepreneur turned Investor, Founder of K9 Ventures, Team & Starting Up Expert
You can test customer acquisition costs before you have a product.
You do not need a particular methodology; just sit down and brainstorm a way to run experiments.
Experiment with pricing. See what the market is willing to bear.
Lesson: Founder Framework with Manu Kumar
Step #8 Test It: How to find out what the market is willing to bear
Essentially go out and test stuff. It's a more of the customer development way of doing it. For example, if you wanted to test your customer acquisition cost, you could create a whole set of landing pages and buy AdWords for those landing pages just to see how much it costs to get somebody to a certain page, and you can do that well before you actually even build a product.
That really is dependent on what type of product you are doing. That example works if you are doing something online, but it may not work if you are trying to sell hardware for example. It might have a very different model.
I don't have a methodology for it. It's more of tell me what you are doing and let's brainstorm a way by which you can actually go and test something. How you can actually go test how somebody would pay for it.
I will give you an example. In one of my companies, we have a product, where at this point, all we care about is just getting people on the platform, and so we would effectively give it away for free. But the founder and I had a discussion recently about you know what, we are going to go and say that we are going to charge $10,000 for this. Just to see what happens and if they balk, then we will say you know what, we are still in beta, so we are going to give it to you for free. You at least need to go and test what the market is willing to bear.