Now we are going one step further, and we are asking our customers to price the product for us. What’s more we are going to document the process in 2 blog pieces and publicise it to the world.

• this one, to share why and how we are doing this
• a second, to share the analysis and the results

It is unusual for a company to be so transparent over its pricing but we do so for good reasons.

1. Our goal is to create a generation of graduate entrepreneurs to drive the economy forward. We do this primarily through the software we sell to Universities, but also the support and resources we supply alongside. This is one of those resources.
2. Practice what we preach. We preach customer driven market research, problem discovery, development, testing and now pricing. We can’t be afraid to shy away from our philosophy and we should share this with our community.
3. Builds trust. Having a transparent and fair pricing process and structure is important to us in a market governed by trust and credibility.

A more accurate pricing model is a faster driver of growth….

At the Business of Software Conference in Boston, MA, I was lucky enough to hear from Patrick Campbell from Price Intelligently. Patrick had some amazing insight into SaaS businesses across the world and his talk highlighted the importance of pricing and even gave me a methodology to approach pricing ‘as a science.’

In a survey of 25,679 blog posts on growth, Price Intelligently discovered that fewer than 10% were focused on monetisation compared to around 80% that discussed acquisition. However by improving retention and monetisation by 1% has 2x to 4x the impact of improving acquisition by the same amount. Not sure what I mean? Here’s the graph from his talk.

These businesses are acquisition obsessed, when monetisation could lead to faster growth.

Patrick’s data was interesting for growing companies, but it also made me think about companies that are still in the start-up stage, still building the company, still testing and iterating and finding product-market fit. What thought have they put into their pricing strategy? My hunch – probably little to none.

How are we conducting our pricing survey?

The obvious concern of a customer-led pricing strategy is that customers will suggest a price for a product which is significantly below it’s value. Although there is some evidence ‘Pay-what-you-want’ schemes, can increase sellers revenues (see “Pay what you want: a new participative pricing mechanism” by JY Kim; M Natter; M Spann (January 2009 ) we are not allowing customers to pay what they want, but rather using customer feedback to inform our decision making process. By following the Price Intelligently methodology, we believe we can find a more accurate pricing model and price points.

Price Intelligently Methodology

1. Relative Preference Analysis – Statistical methodology to measure preferences for features, intention, and value propositions.
2. Price Sensitivity Analysis – Proven model for gauging customer’s willingness to pay and price sensitivity.
3. Experimental Design – Properly Segmenting and breaking down the data

Having already conducted a rather primitive ‘relative preference analysis’ we will be focusing on point 2 of the Price Intelligently methodology.

We are asking these 4 questions (adapted for our purpose):

At what (per user) price point does SANDPIT become too expensive that you’d never consider purchasing it?

 Price – £         /user

At what (per user) price point does SANDPIT start to become expensive, but you’d still consider purchasing it?

 Price – £          /user

At what (per user) price point does SANDPIT look like a really good deal?

 Price – £          /user

At what (per user) price point does SANDPIT look too cheap that you question the quality of it? 

 Price – £          /user

We are putting these questions to our customers, prospects, and even the leads that have rejected our proposition in the past. Finally I want to open it up to you, our reader.

Are you a lecturer in a University that is interested in bringing a practical learning experience on Entrepreneurship into your module?

Have your say on our pricing.

Go to sandpit.cc for more information on the proposition and then send your responses to the questions above to henry@crowdfundcampus.com

Watch the video below.

Enjoy!

http://https://www.youtube.com/watch?v=ZJWSClD8s40

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Her First Workshop

Yannan came to her first workshop on campaign creation (which we run every Wednesday on Skype for those interested by the way – book here – https://crowdfundcampus.com/workshops) with an idea for a Tea Rooms in the lovely town of Royal Leamington Spa. For those that don’t know Leamington Spa, it is already teeming with tea and coffee shops. But Yannan’s idea was unique in one way – her products. Opening a tea shop was going to require a large amount of preparation and commitment, and from a crowdfunding point of view, she was going to have to pre-sell an awful lot of tea, coffee and desserts in order to raise the funds necessary to cover premises, fitting, rent, rate, bills and wages to name just a few things to get started. More importantly, how did she know people would buy her unique teas and desserts?

So Yannan went away from her first workshop with me, a little… flustered. In a little under an hour, she received a barrage of information about how to create a campaign but more importantly a number of questions to consider about how she was going be ‘crowdfund ready’ i.e. how much was the premises going to cost? how long was she going to commit to this? Did she have other funding sources she wanted to match fund? When would she be able to deliver her rewards? Etc ….

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What next?

I’ll be honest, at this point, I didn’t expect her to come back. We launch about 1 in 5 of the campaigns that start the creation process on our platform. It’s part of the reason we have such a high success rate (70%) because we give these students and graduates a healthy dose of reality and questioning before we click the launch button. It is a part of the ‘value add’ to our University partners.

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Fast Forward 2 months

On March 14th Yannan’s name pops up on my calendar, she’s booked in her second workshop on campaign marketing, but the campaign now had a different name… ‘Teamisu’.

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In the Interim

So rather than delve straight into the workshop, I needed to find out what has happened in the last 2 months. Yannan had done 3 things vital to any entrepreneur at this stage of her business.

1) Focus

Rather than take on a whole tea shop with an array of teas, coffees and desserts, she had decided to focus on one product – her concoction of tea and tiramisu ….’Teamisu’. It comes in 4 flavours and is still #FundingOnCampus. Pre-order here: https://crowdfundcampus.com/campaigns/teamisu

2) Found first customer/partner

Yannan approached ‘Warwick Retail’ who I think have the monopoly of retail and culinary outlets on Warwick campus. They had asked her whether she could prove demand and set her a challenge; prove that students want to buy these products and they would consider stocking them. It’s amazing that Warwick Retail are open to such propositions and a tribute to the University’s approach to Enterprise. Universities have massive potential to be ‘playgrounds’ for new ideas (sometimes they just need to loosen up a little bit).

3) Prepared a market test

Yannan arranged to have a market stall on the Piazza at the University of Warwick on the 27th April, and this is where the crowdfunding campaign comes back into play. Having ran a crepe stall at markets and festivals for a year, I know its much easier to keep a queue, than start one. But by pre-selling desserts through Crowdfund Campus for collection on the day, Yannan is starting her queue. The combination of successful crowdfunding campaign and successful market stall (I am sure it will be) can give her the confidence that the market wants her products, and she can take that evidence back to pitch to Warwick Retail. Genius.

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Back to the campaign

So now Yannan’s campaign looked very different. What started out as a Tea Room in Leamington, was now a market test of ‘Teamisu’ on campus. She de-risked her proposition for her and future wholesale customers, she conducted a market test that proves her customers want her product and more importantly, that they are willing to pay a price for her product that contains a profit margin. And it is this type of test that uses crowdfunding to prove desirability, feasibility and viability of a new product, that I am constantly talking about, and is our driving ethos behind Crowdfund Campus. It is not about how much money you raise, it’s about conducting a replicable test that could be scaled to become a business.

At the time of writing, her campaign is overfunding with 9 days to go, 115 Teamisu’s have been pre-ordered from 34 backers, and I still need to place my order.

I guess now the only remaining proof is in the pudding

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Thanks as well to Yannan

In the day to day challenges and frustrations of running a business, you can easily forget why you started it. But I’m so happy Yannan persevered, and I have this story to tell. Thank you Yannan for inspiring me, and reminding me why I started Crowdfund Campus.

I’ll be seeing you on the 27th for some ‘Teamisu’.

But why?

You have a project in mind, you create the campaign, you attract a crowd of backers and the payment processor (usually Stripe, Paypal or GoCardless) transfers the funds. So what service are these platforms providing for their fee? Is this too much to pay for a ‘place’ online for this to happen? And what are your other options if you want to raise funds through pre-selling?

Let me start by dispelling some myths about Reward crowdfunding:

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Myth 1

The platform supplies the crowd

One of the biggest misconceptions about crowdfunding is that, simply by putting your genius idea up on the internet, legions of bored netizens waiting on the crowdfunding site will fund you. This is not how crowdfunding works. You have to prepare your own crowd for funding and bring that crowd to the platform. There are an abundance of failed campaigns that never took off on these sites because these campaigns relied on the hosting platform to do the work for them, instead of going out themselves and asking for funds from their networks.

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Myth 2

You need a platform to crowdfund

The second falsehood surrounding this form of crowdfunding is the idea that you need a platform to host your campaign. Reward crowdfunding isn’t regulated in the same way as equity and P2P lending, both requiring expensive and time consuming HMRC authorisation. You can get your own ‘Out-the-box’ solution with something like Ignition Deck. That, by the way, is how we started.

It was a clunky, difficult thing to get working, and the support was awful, but it worked. Until these products improve as the market matures, I’d say you’re better off using an existing platform rather than having that hassle, especially if there is no tech expertise in the business. But the key question is why is there a market for ‘Out the Box’ software?

This is good evidence of Myth 1. You supply the crowd therefore it doesn’t really matter where your campaign is hosted. You could do as Brewdog did for Equity crowdfunding, Rhino Rugby bonds did with lending and the MYO gesture wrist band have done with reward crowdfunding; you could crowdfund on your own site.

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Myth 3

The percentage fee structure represents value added

The percentage fee structure works when someone is giving you access to a network. Take for instance, equity crowdfunding. An equity platform will have a crowd of investors perpetually on the look out for opportunities. The platform acts as the gatekeeper to that group. If you want to pitch to them, and you are successful, they’ll take a cut.

It works because it is their network, they are giving you access, and they will also be giving the investors a screening service, making sure they don’t see any projects that are wasting their time. In essence, they’re adding value to both campaign creators and investors, so the percentage fee model makes sense for equity crowdfunding.

With reward crowdfunding, however, you are being given access to no such network. In reality, you are bringing your network and your customers to the platform. The platform usually isn’t screening projects either, so they aren’t providing a service for the contributors. Where is the added value?

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Essentially this blog sets out to make one point. You are responsible for preparing and building your own crowd for crowdfunding.

It is for that reason, at Crowdfund Campus, we don’t believe in success fees/campaign fees and why we are pioneering with a different business model. One where the campaign creator keeps everything they earn (after payment processing fees).

Our model means we can spend more time with our campaign creators, giving them the skills and knowledge to run a successful crowdfunding campaign and build their own crowd. That is how we add value and that’s why 70% of campaigns have successfully hit their targets on our platform. If you are connected to one of our member institutions then start your campaign today and book your FREE online crowdfunding workshops at http://crowdfundcampus.com/workshops

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Don’t lose out to success fees on other platforms and get #FundedOnCampus

Follow the blog at https://crowdfundcampus.com/blog for great crowdfunding insight.

We’d love to hear from you, ask us anything via facebook or Twitter or e-mail us at support@crowdfundcampus.com

The University of Warwick has launched a crowdfunding campaign in order to create a Student Enterprise Fund. This marks the first time a University has raised funds in this way for this purpose and is a tribute to a University itself acting in an entrepreneurial manner.

Enterprise has been a notoriously difficult area for Universities to handle. Whilst they value and want to promote the enterprising activities of students, and indeed see it as a vital part of a student’s personal development, Universities are slow, lumbering, bureaucratic beasts that struggle to show or even understand the pace of action required to develop a product or service and take it to market. They insist on putting committees in place to manage committees who oversee partnerships between groups who develop strategy to present to the managing committee, and round the cycle spins. (All have bizarre acronyms which no-one really knows what they stand for)

Some Universities have whole student enterprise departments, employing between 10 and 20 staff, others leave enterprising activity to one lonely but dedicated Enterprise Officer, and inevitably they find more doors blocking their path than are open. These departments rest on the principle of inspiring enterprising action through events and the use of external companies.

Students on the other hand, come in October and leave in June (roughly, depending on the specific University calendar). They have studies, extra curricular actives and many seize the opportunity to turn their spare time to something entrepreneurial. But their short University life-span does not easily match University politics. They need fast answers, and dedicated programmes to develop their enterprising skills.

At the University of Warwick, much of the Enterprising activity has come from the students themselves. In 2007 a group students approached the Students Union to start the Warwick Entrepreneurs Society. They came up with Dragon’s Den like competitions, and took inspiration from the Apprentice to run challenges around campus. Some of these early members have gone on to found multi-million pound businesses and non-profits like NACUE (secured £3.5 million in government funding) and Buffer (raised £3.8 million dollars), and some provide experiences to students that still exist to this day like TheUniExpress. Each year, students pass through the society, generate ideas, and try and implement them. In 2014 two students set up an Incubator, which took 10 start-ups from idea generation through to working prototypes and businesses with customers.

What students don’t realise is that the University has provided them with the environment to make this happen. They brought these students together, provided space, equipment and allowed them to take part in these activities. The University actively looks for ways to support this activity, and sees the society as a vital tool in delivering it’s own Enterprise agenda. The question is how does the University go from a facilitator of entrepreneurial activity to an instigator of it.

Enter the 50 Years of Warwick Enterprise Campaign.

Warwick was built on the foundation of entrepreneurial thinking and fundraising. The founding Vice-Chancellor Lord Butterworth persuaded industry to protest in the 1960s when the University Grants Committee resisted his ideas (the idea of the Vice-Chancellor leading a protest would seem quite unusual these days). According to his obituary, when he was refused funds to create a business school he went raised them himself to establish one anyway. He and Lord Rootes, “were an extraordinary fundraising combination and established a tradition at Warwick that success could not be achieved on government funding alone.” Michael Shattock

There are a large number of alumni who were involved in Enterprising activity at Warwick, whether they were the founders of the Entrepreneurs society, or benefitted from it’s existence over the last 8 years. There are Warwick Business School alumni who over the last 40 years have reached positions high up in corporates due to the entrepreneurial attitudes they developed whilst studying at Warwick. There are alumni from all over the University who have gone on to found lifestyle businesses or businesses they have gone onto sell or are now publicly traded.

The 50 Years campaign is about using the knowledge and experience of these alumni, and matching it with the enterprising students that pass through Warwick every year. It’s a crowdfunding campaign and a crowd sourcing one. With the funds generated and the knowledge accumulated over the last 50 years, Warwick can become an instigator in developing the enterprising activity of it’s students and take it’s traditionally entrepreneurial fundraising attitudes, and apply them once again to make this campaign the first of it’s kind for a University.

Don’t know enough about crowdfunding? Why don’t you read Alex’s piece on ‘what is crowdfunding?’ first

So why should I care about crowdfunding?

• The crowd can get behind an idea

Unlike traditional sources of finance that are primarily looking for a financial reward, crowdfunders are typically contributing towards a campaign because they believe in the purpose of the project. They want to be a part of the campaign and to make the project happen. A great example of this was Solar Roadways. Solar Roadways managed to raise over $2million because the general public thought that this was a brilliant idea that needed to exist in the world. Backers got little more than thank yous, hats and bags.

• Benefit to the economy

Small businesses are the engine of the British economy. According to John Longworth from the Guardian, “Small businesses make up 99% of the 5.2m businesses in the UK, yet rarely receive the public’s attention or praise. Not only do they deliver jobs, growth and prosperity for millions of people across the UK, they have also played a fundamental role in driving our economy out of the recession.” Crowdfunding gives the general public access to these small businesses, and is quickly becoming their preferred funding source.

• Staying away from the banks

As this article in the New Economy states, “Crowdfunding is threatening to supplant the banking industry’s status as the go-to source of finance for small businesses.” In one sense this is not too big an issue for the banks, who probably see these opportunities as too high risk to lend money to anyway, but I expect they are keeping a close eye on the crowdfunding sector. For the time being though, crowdfunding represents a way to raise money from friends, family and the market at large, validating ideas and raising funds on better terms for the enterprise.

• Disintermediation

I have to be a bit careful here, because I could and probably will write a whole article on this topic alone. There are advantages and disadvantages to disintermediation (where intermediaries like banks and fund managers are bypassed as savers decide where to put their own money). “The digital landscape has created new bank managers; the public” writes CapGemini’s Patsy Neville. In this environment of low trust in the banks and high bonuses for bankers who seem to be reaping more rewards for managing money than those for whom they are managing money, is there something to be said for taking a little more responsibility over your own money? To be continued…

Conclusion

In essence, there are quite a few reasons introduced here to explain why you should care about crowdfunding. As an entrepreneur or business owner its an increasingly attractive form of generating sales or raising finance. As a contributor you can make great ideas come to life, take responsibility over your own finances, and for the time being, crowdfunding can provide an alternative to the banks.

Photo credit: David