Scaling Lean

Joe’s story is not atypical. Most entrepreneurs price their products like artists. They struggle to place a fair value on their product and fall back on a cost-based pricing approach like Joe did. A more effective approach is thinking in terms of value-based pricing in which you anchor your pricing not against your cost structure but against the po

This book introduces two additional complementary models: a traction model and a customer factory model.

Inventory represents all the money invested in the customer factory toward things it intends to sell. This includes things you expect, like your product, but also unfinished goods (users), finished goods (customers), equipment, and other infrastructure that goes into the manufacturing of these goods (e.g., servers, software, etc.). The term “invent

She knows that the top reason products fail is not a failure to build out the product, but rather a failure to build a repeatable and scalable business model.

Again, precision here is not the goal but an estimate. First estimate to an order of magnitude. Is your solution potentially worth $1/month, $10/month, $100/month, $1,000/month, $10,000/month? Then use your knowledge of your customers’ existing alternatives to get more specific. That is how I estimated my $50/month starting price point. The best ev

3. A Pricing Model And finally, your offer should include an appropriate call to action. Depending on your business model type and the readiness of your solution, this may be an actual money exchange or some sort of derivative currency exchange.

The users of the Red Cross are the people in need that the organization serves. And donors are the customers. Because these models are usually impact driven, the number of people helped represents the derivative asset that donors fund. If the Red Cross stopped serving these people, the donations would dry up accordingly.

While we all need a ballpark destination to justify the journey, it’s not the destination itself but the starting assumptions that inform whether we are even on the right path. While quadrupling your price (like I did) is easy on paper, if you can’t follow that up by getting outside the building and finding ten people who will accept your higher pr

I often pose the same starting challenge to everyone irrespective of their business model type: “Can you find ten people who will use your product?” The rationale for this challenge is that one of them will turn into a happy customer, which is the first singularity moment in a product’s life cycle.

1. A Unique Value Proposition This represents the finished story benefit or promise that you make to your customers to get their attention. If you were building a job-hunting site, for example, rather than rattling off your unique features, focus on what job seekers want: “Get a dream job in sixty days.”