By the end of this Gate, learners will be able to:
- Understand the role of a business model in capturing value and explain how it differs from pricing strategy.
- Identify and compare different business model types (e.g., subscription, one-time charge, freemium, usage-based) using customer, value, competitive, and internal fit criteria.
- Select a business model that best aligns with their product, customer segment, and market dynamics.
- Develop an initial pricing framework based on perceived customer value, pricing psychology, and competitive benchmarks.
- Estimate their Cost of Customer Acquisition (CoCA) by identifying and calculating relevant marketing and sales costs.
- Calculate the Lifetime Value (LTV) of an acquired customer using projected revenue, margin, retention rates, and discounting.
- Evaluate the relationship between LTV and CoCA to assess the financial viability of their venture, aiming for an LTV/CoCA ratio of 3:1 or greater.
- Recognize key levers to improve profitability, such as increasing retention, reducing acquisition costs, or enhancing gross margins.
- Formulate data-informed hypotheses and validation plans to test their business model and pricing in the real world.