Author: Justin Wilcox

There were few things in my startup experience as uncomfortable as asking a potential customer how much they’d pay for an idea I’d become emotionally vested in.  That discomfort inspired a number of excuses for not asking:

• They’ll think I only care about money/that I’m greedy.
• It doesn’t matter what they say, it won’t be accurate anyway (customers don’t know what they’ll pay).
• What if they say “nothing”?

So instead I would ask questions like:

• What do you think about…?
• Would you use…?
• I’d love to get your feedback on…?

While those questions provide interesting responses, there’s something special about, “How much would you pay for…?” – it uniquely triggers the “what would it take to open my wallet/write you a check” area of the brain that no other question does.  I’ve found no other question to be as enlightening as this one.

So, after recognizing the value of the question, here’s how a typical conversation goes about Bounce.

Me: It’s an app that makes it easy to be on time.  It knows exactly how long it’ll take to get to your next calendar appointment, taking into account the current traffic conditions, and notifies just before it’s time to leave.

Customer: Oh, cool!  I’d could use that.

Me: Sweet!  How much would you pay for it?

Customer: Oh, hmm.  I dunno, $0.99?

Me:  Would you pay $0.99/month for it?

Customer: Nah, I don’t like paying monthly for things.

Me: Makes sense.  If you could choose in the app to pay $.99/month or $6.99 forever, would you pay $6.99?

Customer: Hmm.  Yeah, if it worked.  But I’d want to try it first.

Me: What if you had a month free and if after that, if it worked as you expected, would you pay $6.99?

Customer: Yeah.

This conversation has happened a dozen times and taught me a number of things:

• Anchor pricing works
• That half the people I talk to hate the idea of paying monthly for something
• The other half of the people I talk to think about $0.99/month the same way they think about $0.99 forever – it’s just not enough to worry about

While I’m not totally convinced folks will pay $6.99 for the app, I am convinced they’ll pay something.  To figure out how much, we’ll be running our Kickstarter test.

Contrast the conversation above with one about another app I built:

Me: It helps long distance couples stay connected…by letting the guy remotely control his girl’s “personal massager” from anywhere in the world.

Customer: Ha!  That’s awesome, I’m actually in a long distance relationships now.

Me: Oh, yeah? How much would you pay for it?

Customer: Me? Ah, nothing.  We don’t do that kind of thing.

Almost everyone recognized the “value” of the app, but almost no one I talked to would actually pay for it.

Conclusion: growing a pair, distancing myself emotionally from my idea, and asking, “How much would you pay for…?” has dramatically improved the quality of information I have about products before I start building them.

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What’s the difference between asking a customer, “Would you pay for a product that…” and “Would you like a copy of your receipt?”

Everything.

I’m a fan of customer development.  Asking a customer, “Would you pay for this?” before we waste time building, can be a huge win.  But is “would you pay” the best we can do?

What if we asked, “Will you pay for this?  Now. Before we start coding.”

What if we only solved problems that customers demanded we solved as they were shoving money in our faces?

• Security. No more guessing/praying whether companies would be successful.  They would be, and would have the cash to prove it.
• Money. Fundraising?!  Spending months of your life giving away a piece of your company? Pass.
• Happiness. The hard part would be done, all that’s left is the good stuff – building things to solve problems.

Lucky us, there’s a way to make this happen.

Today, Kickstarter is used mostly by artists or folks with physical goods that need to be mass-produced.  But what if we used Kickstater for the Customer Development of our startups? What if we ran a Kickstarter campaign and asked our customers,

Do you want  _______ so badly, you’ll pay for it to be built?

If the answer is yes, fantastic! We’re solving a problem people care enough about that they’ll pay to solve. The project gets funded, and we start development.

If the answer is no, fantastic!  We don’t waste our time solving a problem customers won’t pay to solve.

This is the first experiment of Customer Development Labs:

Can Kickstarter determine if an iPhone app is worth building?

More about how we’ll run the experiment soon, but for now – what’s been your favorite Kickstarter campaign so far? A couple of ours:

• This guy sells “the why” like nobody I’ve ever seen
• Kickstarter can get you into YC
• Duh (Pebble).  Our muse.

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You’ve got an idea, and now you’ve been told to “get out of the building,” but that kind of advice just leaves you with more questions:

• How do I find my target audience?
• How do I ask enterprises if they’ll pay for my product?
• Do landing pages and ad clicks really tell me how much people will pay for a product?

That’s what this blog is all about.

We’re going to follow companies as they “get out of the building.” We’ll see how they discover their target audience, ask if that audience will pay for their product, and watch them react to the response.

By observing the step-by-step customer development process of multiple companies, you’ll be able to study concrete examples from real-time case studies. At the end, this will look like a roadmap that traces the journey from our nascent ideas to our final destination (which is wildly lucrative success, duh), but right now it will be like a road trip through destinations you’ve heard about but never seen.

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