We’ve proven that NextDrop is useful. We have 275 paying customers and we’ve generated 2980 INR in revenue last month (some people paid for multiple months, and some paid for multiple cell phones to receive messages). We have an 86% conversion rate from giving people a free trial, to then getting people to pay for the service. To clarify, our customers are middle class families (preliminary surveys indiciate that the NextDrop service- as is- probably won’t work in slum areas due to the fact that the man of the house takes the mobile to work and there is no land line, but we are hoping to come up with some sort of prototype solution next month for slum areas).
All these numbers are great, but as Eric Reis says in his book on lean startups, if you don’t know WHY people like your service (or don’t like your service) you don’t really know anything.
Digging deeper, we figured out that our service is more of a convenience than anything else. Out of the 10 messages people get per month, they probably see/use our message 1-2 times. Would they pay 10 INR for this service? Sure. Would they pay 15? Not sure. 20? Possibly unlikely. Now the hard part is that we set our service at 10 INR in Hubli because that’s what we agreed to with the water utility- so charging more (to test price sensitivity/test our hypothesis) in Hubli isn’t really an option . It may be interesting to go into another city and price it higher (or lower) and see how many people pay for our service and compare numbers. 10 INR is already really low: to give some perspective, it’s equivalent to downloading an app that charges $.99/month. So I personally don’t think pricing it lower will yield incredibly interesting results, but I don’t have hard facts to back that up.
What did we learn? I think our product will be incredibly price sensitive due to the fact its in the “convenience” category as opposed to the “necessity” category. So these are the things we need to still figure out:
- What is the price v penetration/uptake ratio?
- To generate more revenue, will it be easier to a) spend more money on customer acquisition or b) try to move NextDrop from the “convenience” category to the “necessity” category and thereby charge more?
That’s what’s up ahead for us in the customer category. Stay tuned for more updates