Distribution & Pricing hypothesis

Goal

Develop a distribution channel strategy (how the product will get to the customer) & pricing model

Checklist

• How will your users initially buy from you?
  • From a salesman directly from the company?
  • From a representative or distributor?
  • Through a partner?
  • In a retail store? Mail order? On the web?
  • Pick a distribution channel
• Draw the distribution channel diagram
  • How much will the channel cost (direct expenses or channel discounts)?
  • Are there any indirect sales channel cost (presales support, channel promotional dollars)?
  • What else is need for customers to use/buy the product? How do they acquire those pieces?
  • What is the net revenue after channel costs?
• If there are products somewhat liek ours...
  • How much do customers spend for them?
  • How much do they pay to do the same thing today?
• What is the economic basis for your pricing?
  • Comparable products that already exist?
  • The sum of the piece parts required to assemble the equivalent functionality?
  • A return on investment analysis of saved time, money & expense (in a New market)
  • Do you want to exchange the existing rules of pricing? Offer new pricing models?
• How many copies / number of products can you sell at once?
  • Per household or company?
  • If the product was free, how many per household or per company?
• How many can you sell?
  • If you charge \$1,-?
  • If you charge \$1 milion?
  • What is the price at which half of the customers say 'yes'?
• If users had your product:
  • How much would they pay?
  • Pick a preliminairy price
  • Pick units for the first 2 years
• Would it be easier to sell your product if it were
  • Sold in modules that individually cost less?
  • Configured as a complete solution?
  • Sold with other products?

Exit deliverables

• Tentative Pricing strategy
• Tentative Distribution channel model
• Tentative Deman creation activitities

Part of: Customer Development Checklist - Customer Discovery Part of book: The Four Steps to the Epiphany See also: Distribution channels