Week 8: What about the ca$h?
Yet another week in satisFactory has gone by fast. We have moved away from the swiping mechanism that we presented last week, and towards a list representation of events. We believe that after all this serves our app’s purpose better, but we will have to validate this design as well. Our tech guys did an amazing job at building this beautiful prototype (prototyping tool: Flinto). It is just a part of the final app, but it is a part that looks almost complete. Now we can see it, feel it, test it. Having something concrete is useful for iterating on our vision and is an excellent motivator.
As you browse the events yourself, you can click on one to see more specific information about it, like description and how many people in your team like it. After you’ve expressed your interest towards a few events, you decide on which event(s) to go to by voting in the app. And when the clock rings 5 PM, you go!
Business and Revenue Models
We did the first iterations of our business model pretty early on. That was before we had formed our strategy and objectives. Now that we have (discussed in the previous blog), we know where we’re going and we believe we have a more refined, solid business model now. Let us discuss it briefly:
Perhaps the biggest change to the previous versions was the realization that we have two customer groups: the end users and service providers, whose events end users browse and go to. We market our product differently to these groups. For service providers, we offer visibility and a new channel for ticket purchases and place reservations.
We don’t charge end users but service providers. One revenue stream is the service providers’ commissions. We believe it will be our biggest and most important source of money. This arrangement alone doesn’t cost service providers virtually anything; it is pretty much a win-win situation, where they pay us commissions for purchases made in our app, that may not have happened at all without it. Another revenue stream are from paid visibility. We give an option to service providers to pay us for extra visibility in the app. A third revenue stream is a possible premium user fee from end users at some point in the future (if we add extra functionality to our app). But that is definitely for the future, not a relevant revenue stream at the moment, and was only worth mentioning as a possibility. Revenue and value exchange is further visualized in the diagram below:
So how will we keep it up? Well, our main activities include development and maintaining of the app, as well as sales & marketing. Main channels for this are mainly digital: end users get the app either from an App store or use the website version. However, we will also contact potential service providers directly. Marketing is crucial for acquiring customers and the user base forour success, and will make up most of the costs. For this we need some initial capital, and could use some funding.
Conclusion
In our business model report (see below) we did some basic financial calculations, and ended up with a modest net present value of around 16000€ from three years of operations, assuming we have an initial invesment of 10000€ for marketing. The net present value is not highly lucrative, but this is only a reasonable estimate of an average scenario and only includes revenues from the Helsinki area. If the concept is a success in the Helsinki area it allows us to further increase the operations area leading to the really good profits. The success certainty in the software business is highly volatile, though. The range of scenarios is very wide. In the worst case, we lose the initial 10 000€ investment. In the best case, revenues can be many times of what we’ve estimated.
We still believe that this (event discovery and deciding in work groups) is a problem worth solving. It is a problem that we have validated (including discussion with a software company Fast Monkeys) and this problem is experienced by many of us — not only in work, but also just in groups of friends. We believe our business model idea is pretty solid, and what we offer is clear. Even with minimal profits and an unknown chance of success, we’re up to it.
We based these conclusions on a more extensive (and texty) strategy and business model report that can be found behind the following link: https://drive.google.com/open?id=0B3uDp7TGVvi-YUZNLW5FZHhzQm8
Next steps
- Building user stories for the software
- Collecting primary data from the companies about the usability from the points-of-view of both end users and service providers
- Developing the next prototype which is likely going to be part of the actual product software
Like always, have a wonderful wörk day ❤
Max Samarin, satisFactory
