Setting a business model can be a controversial topic in many companies, and few decisions can have a bigger impact on the shape of your business. Figuring out what to charge for, and how to charge for it, can feel like a daunting task. And once you think you know how to charge, figuring out where to set prices is another important decision.
One aspect that makes business model decisions so daunting is the breadth of factors that influence them. Competitive pressures, company objectives, channel design, and technical or go to market parameters have to be taken into account. And as you set the business model, your own management team has to understand how to evaluate the business on a regular basis.
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There is a good way forward. A business model can be designed in a way that's thoughtful and practical. Our experience is that a it needs to align to the perspective of the customer (and if appropriate, the channel partner). Models that achieve that goal are easier to explain, and that makes sales and marketing more efficient. Without a clear sense of the customer's perspective, it's very challenging to balance other factors that can influence the model.
If your business model is already established or known, the goal may be to understand what flexibility you have, and what might raise sales, change perceptions, alter channel behavior, or increase margins. In those cases, the role of price in changing behavior might be more important.
Whether you're doing business model design for a new product, or working within an existing ecosystem, we can help. Contact us to find out how.