Monetization Strategy

Question 1

How can you aplify value?

Answer 1

There are 5 ways:

• Usage - encouraging usage - e.g. Google Photos offers free space for resized photos, but allows to buy quota for original size
• Network - allowing network build - e.g. LinkedIn
• Functionality - extended functionality - e.g. Stripe is doing more than just payments, it offers reporting, analytics, fraud detection
• Integrations - remove the addoption barier, especially if the users have previous experience with one of the other tools
• FInancials - improving costs or revenue - e.g. LinkedIs not only used for professional networking, but also for prospecting and lead generation

Question 2

What is the Unit Economics Model scorecard?

Answer 2

It’s a quantitative mean of evaluating the efficiency of customer acquisition and revenue on monetisation.

Question 3

What do we need to know in order to define the Unit Economics Model scorecard?

Answer 3

• the product
• personas and market
• acquisition channels (e.g. direct, referral etc.)
• monetisation (e.g. subscription, license etc.)

Question 4

What do we want to determine with Unit Economics Model scorecard?

Answer 4

• revenue produced by 1 client
• cost of acquiring 1 client
• time to the CAC amortization for 1 client
• how competitive is the business
• whats the impact over growth from investing the profit

Question 5

What’s the design structure of Unit Economics Model?

Answer 5

Mutually Exclusive Collectively Exhaustive breakdown of Operating Profit:

• Operating Profit is determined by Gross Profit and Operating Expense
• GP = Revenue - CoGS
• OP = CAC + Support Cost (for paid users)
• Revenue = # of customers * Average Sales Price
• CoGS = # of customers * CoGs per client
• CAC = marketing costs + support costs (for free users)
• Other elements are: customer retention rate, cost of capital, Customer Lifetime Duration