The judgment is very meaningful. There are a series of issues behind it. Determining profit is not only a profit model, but also how to accurately price it. The classic marketing 4P theory is used for analysis (4P: Product, Price, Channel Place, Promotion). Pricing is the only link in the process to obtain revenue.
The above chart studies the 19 Chinese unicorn companies with IPOs and their market value changes in 2018. The data results show that only 4 companies achieved a market value increase of more than 20% during the year.
Further in-depth research and analysis can reveal that there are various reasons behind the decline in the market value of Chinese unicorn companies. Depending on the characteristics of different enterprises and industries, there may be different reasons, such as: low technology content, lack of high-tech and high-end manufacturing; incomplete industrial chain supporting resources, slowing industry development; obvious regional growth differences, and second-tier cities Break through and first-tier cities hold fast.
But the commonality is exactly the same: Business operations are difficult to say and precise, and the ability to sustain blood production is not strong -unable to continuously understand consumers and the development needs of the times, and unable to design products or services close to consumers This puts tremendous pressure on the profit outlook.
Disassembly profitability
Profit: revenue capability + cost control
Revenue capability: user size + monetization method
The commercial realization ability is the only way to support the improvement of the unicorn’s profitability and market value management. This involves the core part of the market strategy-how to price.
If we split the company’s profit into revenue capability and cost control, meanwhile, it will disassemble revenue capability into “user scale” and “monetization method”. Then you can see some challenges:
On the user scale:
China’s current demographic dividend is peaking, and traffic purchases have become increasingly expensive-most unicorn companies are under pressure from rising costs.
Thus, “user operation” has become the core and top priority to be considered in the next stage. Only by improving the user’s operational capabilities will it be possible for the company to increase the conversion rate and gain more users, especially those who are willing to pay.
On the monetization side:
Unicorn companies have their own unique business logic or business models. As long as the business logic is established, unicorns have meaning. On the other hand, it is not easy to re-innovate on business models. thing.
We believe that one of the most urgently needed capabilities for unicorn companies is “monetization ability.” Most companies did not specifically consider the core element of price in a forward-looking environment in the context of “chasing the market” and “hiding their horses.” In the later period, this missing element is precisely the factor that has the most significant impact on the company’s profitability.
![How do unicorns cash out? Speaking from Qing Yu Nian]()
So, for unicorn companies or startups, how should they improve the company’s overall profitability and market value through pricing; how should it build its own liquidity?
10 monetization tips from Silicon Valley Unicorns
We believe that in the new era of the consumer Internet, companies should change their minds and focus more on consumers themselves, rather than blindly pursuing the ultimate in product performance and functionality. And if you want to truly focus on consumers and improve the company’s monetization ability on the premise of meeting consumer needs, you need to optimize from three aspects: product design, price system, and charging model . After collating the cooperation experience with a number of unicorn companies, we have summarized 10 suggestions to improve the unicorn’s monetization ability and share with you.
Product Design
1) Who are the users who really want to pay? ——Establish a thinking model that focuses on customer needs
Traditional product design thinking is design-oriented, that is, to determine product functions and attributes from a design perspective, and then reach consumers through different channels. In the current fast-changing market environment, such product design thinking is likely to lead to products that do not really meet market demand and end up dismal in the end. This situation will not only happen to traditional companies, but also in some unicorn companies or emerging companies that have gone public.Got the same problem.
Google launched Google Glasses for C-end in 2012. Due to higher pricing and possible violations of personal privacy, sales were sluggish and shut down in 2015. But in fact, the glasses have functions such as voice-activated photography and instant information processing, which are very attractive to engineers, doctors, and other B-side customers. After thinking about user needs, Google also realized this problem, and in May this year launched the Google Glass Enterprise Edition for B-side customers. Therefore, only by establishing product design thinking centered on customer needs, can we avoid the embarrassing situation that the finished product does not meet customer needs.
2) Why are users willing to pay? ——Product design combining “product, market and willingness to pay”
After establishing product design thinking centered on customer needs, we need to apply this thinking method to product design. That is, before the product is designed, conduct a full demand investigation and analysis to determine the use scenario and corresponding required functions of the product in its market segment, and understand the willingness of end users to pay in different scenarios.
After completing the above work, determine whether it is possible to produce or develop products that meet user needs and willingness to pay, and then decide whether to proceed to the next stage of work. Many engineers or product managers have high pursuit of product parameters and functions, so they hope to make a product with as many functions as possible when designing the product. “More and more” means higher costs, and it means a higher price to be profitable. But the actual demand of most consumers may be just a few of these features, so they are not willing to pay too much for a product with too many features.
In order to avoid this situation, it is necessary to carry out a more market-oriented product design in combination with product function, market demand and consumer willingness to pay. Taking Uber’s dynamic pricing as an example, Surge Pricing is a pricing strategy used when demand for taxis is excessive. Uber named it “Dynamic Price Increase”: When vehicles on the Uber platform cannot meet peak demand, the platform raises the rate to ensure that users use the car. More drivers will join the increase in supply in time due to the increase in income. .
3) When will the second growth curve be added? ——First penetrate the market with a focused strategy, and then achieve diversification or ecologicalization
When a company designs a product with a customer-oriented mindset, it needs to consider the priority of launching a product. At this time, the more sensible choice is to focus on a certain product and invest resources in tackling it. After the product is widely recognized by the market and customers, then perform a diversified or ecological expansion, and find new growth points and Potential synergies.
Uber launched the Uber Eats takeaway service only after the traffic of the taxi business was large enough. Airbnb also launched the Airbnb Experiences local life content service after accumulating a considerable number of users.
The cornerstone business is the introduction of new business with synergy effects , which is a proven new business development model. Following this model and launching new products and new businesses, it can effectively help unicorns increase their revenue. And profit.
Price system
4) What is an effective price system strategy? ——Determine a pricing strategy centered on its own customer base and adhere to it
Only a pricing strategy suitable for the company’s own product image, user characteristics and price positioning can adapt to the continuous development of the company. Designing a pricing strategy that is right for you also needs to start with consumers and yourself.
For example, Apple provides users with high-quality products and higher value, and its pricing strategy is to explore the user’s maximum willingness to pay, so as to achieve the goal of maximizing profit ; strong> The competitive price is marked on the main product to achieve the purpose of attracting customers, and choose to set a higher profit target on long-tail products to achieve profit; and Microsoft’s pricing The strategy is somewhere in between …
Obviously for each company, there must be a set of pricing models that are most suitable for its own situation. The development and application of such pricing models-insisting on implementing this strategy and maintaining the price image, can ensure the company’s profitability and sustainable development. If the price strategy setting is not forward-looking and the price strategy is continuously adjusted, the company needs to face issues such as customer loss and impaired business stability. The negative case is Moviepass, a movie subscription service provider in the United States. The company adjusted its product and price system four times between 2016 and 2018. The loss of end users caused the operation to be unsustainable.
5) How to set the price system? —— “One trick fresh” can not be eaten all over the world, it is necessary to provide appropriate products and prices according to customer groups
According to the different needs of market users, providing different products and corresponding prices is an effective way for enterprises to increase revenue and profits. A single product can meet limited consumer needs, and launching products with multiple features and price differences can reach a wider market.
For example, the current iPhone has formed a stable product system-iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max respectively correspond to IPh of last year.There are three reasons why the payment of “Yu Nian” caused such a big storm:
The price is high and exceeds the key price threshold
According to the current payment model without “acceleration package”, if you have to keep watching the first 6 episodes, the monthly fee will be 4 weeks for the acceleration package * 6 episodes * 3 yuan = 72 yuan. Qiyi monthly subscription member 15 yuan / month (Android / computer), this price seems very high. The price of its more favorable “acceleration package” of 50 yuan is already a key price point that exceeds “1/2 of 100 yuan”. We can infer that this may be a key price threshold for TV series payment, and that the price is higher than this threshold. It may increase the proportion of consumers who “believe that the price is too high”, resulting in a large number of negative evaluations.
There is a large gap in consumer willingness to pay
“Chen Qingling” only starts advanced on-demand when it is about to be played until the finale. Most of the users who continue to follow the drama until the finale are more sticky users. The expectations of the finale also make them have a higher Willingness to pay. However, “Qing Yu Nian” launched the advanced on-demand service shortly after the broadcast. At this time, the proportion of loyal users is not so high, and the corresponding average willingness to pay is relatively low. At this time, the introduction of advanced on-demand mode is more likely to cause users to rebound.
Dual platform simultaneous execution changes user perception
The advanced on-demand of “Chen Qingling” only appeared on the Tencent video platform, while the advanced on-demand of “Qing Yu Nian” was launched by Tencent and iQiyi at the same time. A platform-independent behavior “turned to the belief that” this model will be applied to many episodes in the future. ” The changes in user perception in this regard have firstly increased the user ’s estimate of drama-tracing expenses, and secondly have destroyed future VIP rights and interests in the user ’s mind, causing user resistance.
Combining our suggestions on product design and pricing of unicorns, we believe that video platforms can focus on the following two points in the future development and avoid similar situations in the future affecting user satisfaction and platform reputation.
Understand the core needs of users and do a good job of communicating value
A lot of voices recently mentioned that video websites should raise prices, and compared the member prices of Chinese and American video websites with per capita income to demonstrate whether the fees of domestic video websites should be increased. But obviously this is from a cost perspective, not a user perspective. What video websites really need is to think about how to meet the needs of the most users to get more revenue. For example, in this case, the launch of “Explosive Drama Accelerated Members” with a higher monthly fee to satisfy users who are more willing to pay a certain price for early-seeing rights may be more than halfway through the episode when it is broadcast. Extra charges are easier for consumers to accept.
Based on product price design based on consumer willingness to pay
With video sites having to find more sources of income,
We believe that in the new era of the consumer Internet, companies should change their minds and focus more on consumers themselves, rather than blindly pursuing the ultimate in product performance and functionality. And if you want to truly focus on consumers and improve the company’s monetization ability on the premise of meeting consumer needs, you need to optimize from three aspects: product design, price system, and charging model . After collating the cooperation experience with a number of unicorn companies, we have summarized 10 suggestions to improve the unicorn’s monetization ability and share with you.
Product Design
1) Who are the users who really want to pay? ——Establish a thinking model that focuses on customer needs
Traditional product design thinking is design-oriented, that is, to determine product functions and attributes from a design perspective, and then reach consumers through different channels. In the current fast-changing market environment, such product design thinking is likely to lead to products that do not really meet market demand and end up dismal in the end. This situation will not only happen to traditional companies, but also in some unicorn companies or emerging companies that have gone public.Got the same problem.
Google launched Google Glasses for C-end in 2012. Due to higher pricing and possible violations of personal privacy, sales were sluggish and shut down in 2015. But in fact, the glasses have functions such as voice-activated photography and instant information processing, which are very attractive to engineers, doctors, and other B-side customers. After thinking about user needs, Google also realized this problem, and in May this year launched the Google Glass Enterprise Edition for B-side customers. Therefore, only by establishing product design thinking centered on customer needs, can we avoid the embarrassing situation that the finished product does not meet customer needs.
2) Why are users willing to pay? ——Product design combining “product, market and willingness to pay”
After establishing product design thinking centered on customer needs, we need to apply this thinking method to product design. That is, before the product is designed, conduct a full demand investigation and analysis to determine the use scenario and corresponding required functions of the product in its market segment, and understand the willingness of end users to pay in different scenarios.
After completing the above work, determine whether it is possible to produce or develop products that meet user needs and willingness to pay, and then decide whether to proceed to the next stage of work. Many engineers or product managers have high pursuit of product parameters and functions, so they hope to make a product with as many functions as possible when designing the product. “More and more” means higher costs, and it means a higher price to be profitable. But the actual demand of most consumers may be just a few of these features, so they are not willing to pay too much for a product with too many features.
In order to avoid this situation, it is necessary to carry out a more market-oriented product design in combination with product function, market demand and consumer willingness to pay. Taking Uber’s dynamic pricing as an example, Surge Pricing is a pricing strategy used when demand for taxis is excessive. Uber named it “Dynamic Price Increase”: When vehicles on the Uber platform cannot meet peak demand, the platform raises the rate to ensure that users use the car. More drivers will join the increase in supply in time due to the increase in income. .
3) When will the second growth curve be added? ——First penetrate the market with a focused strategy, and then achieve diversification or ecologicalization
When a company designs a product with a customer-oriented mindset, it needs to consider the priority of launching a product. At this time, the more sensible choice is to focus on a certain product and invest resources in tackling it. After the product is widely recognized by the market and customers, then perform a diversified or ecological expansion, and find new growth points and Potential synergies.
Uber launched the Uber Eats takeaway service only after the traffic of the taxi business was large enough. Airbnb also launched the Airbnb Experiences local life content service after accumulating a considerable number of users.
The cornerstone business is the introduction of new business with synergy effects , which is a proven new business development model. Following this model and launching new products and new businesses, it can effectively help unicorns increase their revenue. And profit.
Price system
4) What is an effective price system strategy? ——Determine a pricing strategy centered on its own customer base and adhere to it
Only a pricing strategy suitable for the company’s own product image, user characteristics and price positioning can adapt to the continuous development of the company. Designing a pricing strategy that is right for you also needs to start with consumers and yourself.
For example, Apple provides users with high-quality products and higher value, and its pricing strategy is to explore the user’s maximum willingness to pay, so as to achieve the goal of maximizing profit ; strong> The competitive price is marked on the main product to achieve the purpose of attracting customers, and choose to set a higher profit target on long-tail products to achieve profit; and Microsoft’s pricing The strategy is somewhere in between …
Obviously for each company, there must be a set of pricing models that are most suitable for its own situation. The development and application of such pricing models-insisting on implementing this strategy and maintaining the price image, can ensure the company’s profitability and sustainable development. If the price strategy setting is not forward-looking and the price strategy is continuously adjusted, the company needs to face issues such as customer loss and impaired business stability. The negative case is Moviepass, a movie subscription service provider in the United States. The company adjusted its product and price system four times between 2016 and 2018. The loss of end users caused the operation to be unsustainable.
5) How to set the price system? —— “One trick fresh” can not be eaten all over the world, it is necessary to provide appropriate products and prices according to customer groups
According to the different needs of market users, providing different products and corresponding prices is an effective way for enterprises to increase revenue and profits. A single product can meet limited consumer needs, and launching products with multiple features and price differences can reach a wider market.
For example, the current iPhone has formed a stable product system-iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max respectively correspond to IPh of last year.There are three reasons why the payment of “Yu Nian” caused such a big storm:
The price is high and exceeds the key price threshold
According to the current payment model without “acceleration package”, if you have to keep watching the first 6 episodes, the monthly fee will be 4 weeks for the acceleration package * 6 episodes * 3 yuan = 72 yuan. Qiyi monthly subscription member 15 yuan / month (Android / computer), this price seems very high. The price of its more favorable “acceleration package” of 50 yuan is already a key price point that exceeds “1/2 of 100 yuan”. We can infer that this may be a key price threshold for TV series payment, and that the price is higher than this threshold. It may increase the proportion of consumers who “believe that the price is too high”, resulting in a large number of negative evaluations.
There is a large gap in consumer willingness to pay
“Chen Qingling” only starts advanced on-demand when it is about to be played until the finale. Most of the users who continue to follow the drama until the finale are more sticky users. The expectations of the finale also make them have a higher Willingness to pay. However, “Qing Yu Nian” launched the advanced on-demand service shortly after the broadcast. At this time, the proportion of loyal users is not so high, and the corresponding average willingness to pay is relatively low. At this time, the introduction of advanced on-demand mode is more likely to cause users to rebound.
Dual platform simultaneous execution changes user perception
The advanced on-demand of “Chen Qingling” only appeared on the Tencent video platform, while the advanced on-demand of “Qing Yu Nian” was launched by Tencent and iQiyi at the same time. A platform-independent behavior “turned to the belief that” this model will be applied to many episodes in the future. ” The changes in user perception in this regard have firstly increased the user ’s estimate of drama-tracing expenses, and secondly have destroyed future VIP rights and interests in the user ’s mind, causing user resistance.
Combining our suggestions on product design and pricing of unicorns, we believe that video platforms can focus on the following two points in the future development and avoid similar situations in the future affecting user satisfaction and platform reputation.
Understand the core needs of users and do a good job of communicating value
A lot of voices recently mentioned that video websites should raise prices, and compared the member prices of Chinese and American video websites with per capita income to demonstrate whether the fees of domestic video websites should be increased. But obviously this is from a cost perspective, not a user perspective. What video websites really need is to think about how to meet the needs of the most users to get more revenue. For example, in this case, the launch of “Explosive Drama Accelerated Members” with a higher monthly fee to satisfy users who are more willing to pay a certain price for early-seeing rights may be more than halfway through the episode when it is broadcast. Extra charges are easier for consumers to accept.
Based on product price design based on consumer willingness to pay
With video sites having to find more sources of income,