How To Charge Premium For Your Service As a Startup?

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This is the second stage of three that I’ve talked about here.

Stage 2: Build and evaluate your innovative business model

Many startups start their business competing in price, quality or features, which is a common mistake. This stage where many startups fail to build and understand. Most of them go with a traditional business model where they enter a very competitive markets (a.k.a. Red Ocean market) where they should be in a Blue Ocean market. If a startup can discover a unique value proposition that solves a specific problem to a specific niche using a smart channel, they are now in a Blue Ocean market because they are not competing with another business. The creation of business model is a continuous activity, businesses should evaluating their business model on a consistent basis where they keep innovating by creating new values to existing clients or attracting new prospects. The way to charge premium is to create an innovative business model, where you are the specialist in solving that specific problem.

Every business has a model whether they are aware of it or not. if I asked: ” What is your business model?” Each business will have different way of explaining what is their business model. There is no standard way of explaining a business model before the ” business model canvas” from “business model generation” book. This stage is about creating an innovative business model using business model canvas.

Creating a business model is not enough, startups should be able to evaluate their business model in a very flexible and agile way. The lean startup methodology can be used to evaluate a business model, where the minimum viable product (MVP) is the first business model that an entrepreneur built. That MVP goes through the evaluation and collecting feedback stages. Then based on the feedback the business model will be adjusted and recreated.

 

Stage 1 is here.

Stage 3 is here.

This is the second stage of three that I’ve talked about here.

Stage 2: Build and evaluate your innovative business model

Many startups start their business competing in price, quality or features, which is a common mistake. This stage where many startups fail to build and understand. Most of them go with a traditional business model where they enter a very competitive markets (a.k.a. Red Ocean market) where they should be in a Blue Ocean market. If a startup can discover a unique value proposition that solves a specific problem to a specific niche using a smart channel, they are now in a Blue Ocean market because they are not competing with another business. The creation of business model is a continuous activity, businesses should evaluating their business model on a consistent basis where they keep innovating by creating new values to existing clients or attracting new prospects. The way to charge premium is to create an innovative business model, where you are the specialist in solving that specific problem.

Every business has a model whether they are aware of it or not. if I asked: ” What is your business model?” Each business will have different way of explaining what is their business model. There is no standard way of explaining a business model before the ” business model canvas” from “business model generation” book. This stage is about creating an innovative business model using business model canvas.

Creating a business model is not enough, startups should be able to evaluate their business model in a very flexible and agile way. The lean startup methodology can be used to evaluate a business model, where the minimum viable product (MVP) is the first business model that an entrepreneur built. That MVP goes through the evaluation and collecting feedback stages. Then based on the feedback the business model will be adjusted and recreated.

 

Stage 1 is here.

Stage 3 is here.

About the author

Mohammed Alrokayan

The founder of Rizq Institute (a Rizq Group Pty Ltd company). We train entrepreneurs worldwide on how to convert their ideas into successful businesses via entrepreneurship and personal development. Serial entrepreneur since 2003, founded and worked with several startups worldwide.

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