7/30/2019 DCFI Revenue Mandel
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Revenues, Costs & Profit$
By: Matthew Mandell
@mattmandell
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Sections
- What Are Your Costs?- Revenue Strategies
- How I Price my companies- Pricing Strategy- Dan Ariely & The Economist
- Conclusion
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Making Money
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Provide a
Service
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Product & Service
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Easily Comparable Products &
Services areEasily Price Comparable
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Monetize Quickly
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Monetize Quickly
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Is it Viable?
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Sales
- CostsPositive Number = YesNegative Number = No
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How Far are you From Cash?
Product /Service Money
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How Far are you From Cash?
The more complex you make, the harder it is to make money.
Advertising Visitors Money
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What are your costs?
- Ignore Sunk Costs
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What are your costs?
- Think Scrappy- When you have nothing,you can get more done.
- Have a client be your bank.
- Leverage Other peoples Assets
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“Whenever I have money,I spend it on stupid
stuff.”
- Owner $20M / yr Co
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Don’t Waste Money
- A to Z Audit
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Don’t Waste Money
- Don’t spend like you are Big
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Don’t Waste Money
Spend money only on what is necessary,Equity Holders are the last to get paid.
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One vs Many Revenue Models
- Trends will emerge- Follow the Money
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Apps for Money are Bad.
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Whatever is Measured Changes
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Making a Realistic Model
- What to list on the Model?- Differentiation of Purpose- Core to the Business
- Assume the reader knows nothing
- You will be wrong, but that’s ok- Update & Learn early & often
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Financial Models
- Complexity is not necessary- Allow for changes- Set Ranges (-20% 0 +20%)
-This is a tool for your co, be comfortable with it- Set your goals-(lifestyle biz / ego biz / biz w impact)
- Align Ops / Marketing / Financial Models
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Financial Models
- Models are fiction beyond apoint…They are an insight into how
you think.-Picture in 5-10 yrs-Landscape Changes
-Market VIew
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Quick ModelRevenue Price Qty 1 Qty 2 Qty 3
Pizza Sold 30 50 500
Unit Price $10 $10 $10 $10Total Rev $300 $500 $5,000
Variable Costs
Food Cost $2 $60 $100 $1,000
Labor $10 / hr $120 $120 $120
Electric $33 $33 $60 $600
Fixed Costs
Rent $67 $67 $67 $67
Internet /Phones $8 $8 $8 $8
Insurance $14 $14 $14 $14
Total Revenue $300 $500 $5,000
Total Costs $302 $369 $1,809
Profit -$2 $131 $3,191
Margin -1% 27% 64%
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Joel Spolsky’s Pricing Maxims
1. You are undervaluing your product.2. B2B customers will spend more3. Pricing within Bands
1. B2B Spending Authorization:
• Up to $1000• Up to $100k Approval• Over $100k Dept / Project
2. B2C Spending:• Thoughtless Under $10• Cash Under $20• Credit Card Under $75
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Idea Evaluation
• Velocity• How fast are you moving?
• Repeatability• How quickly can you do it again?
• Margins
• How much of each $ do you keep?
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My Biggest Screw Ups
- Not Increasing Prices regularly- Under pricing the offering- Charging based on time
- Misaligning employee comp plans- Growth Hides Failure
- Use Accounting Software Early
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Do Tactical Customers Ever Think Long Term?
- Does a customer who receives
something @ asteep discount,ever want to pay
full price?
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Groupon Economics
Groupon Living SocialCoupon Value $100 $100
CustomerDiscount $50 $50
Deal Rev $25 $15
Merchant Rev $25 $35
Margin Lost 75% 65%
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Dan Ariely – Predictably Irrational
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Dan Ariely – Predictably Irrational
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Dan Ariely – Predictably Irrational
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Dan Ariely – Predictably Irrational
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Dan Ariely – Predictably Irrational
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Conclusion
Good Judgment
comes from Experience.
Experience
comes from Bad Judgment.
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