I met Ajo Fod, Founder of Quantprice, at the Lean Startup Conference in 2015. His LinkedIn profile says it best: “Ajo Fod helps companies that make decisions based on large quantities of data.” Because Martin.ai aspires to provide startups with data they can use to make better decisions, I thought his startup story was a great one to share.
QuantPrice improves e-commerce margins by over 30% by enabling marketers to manage their offers in real-time, based on factors that are automatically learned from past consumer behavior.
What prompted you to come up with QuantPrice?
I realized that companies were losing a lot of money to non-scientific pricing. Price is a signal about the value perceived by buyers, so letting price float (like currency exchange rates) is really valuable to buyers and sellers alike.
The fact that companies can’t measure their optimal pricing is a serious inefficiency. With my background in financial security pricing, I didn’t see why this should be the state: especially in cases where there is plenty of data to enable the discovery of the “optimal” price.
Did you do any interviews with potential customers to see if this was something they recognized a need for? How did those conversations go?
People usually love the idea.
There is a trade-off between time spent in building vs. research, because, once you’ve built something that is usable, it offers access to valuable information. So, interviews should be limited to gain information about what a minimum viable product is, and then data can be used to iterate and improve on it.
We’ve already proven this technique with a couple of product based companies where modifying their pricing has improved their profits by over 30%.
There is some fear of backlash (of fluctuating pricing) but that’s been unfounded based on the data so far.
How early in the new product process do you think people should start to tease out price?
The only requirement for measuring price by market activity is the volume of independent buying decisions. You need about 200 to get statistics to turn up reasonable values.
Price testing should be a continuous process. One of our clients found that merely changing the messaging on her site increased the price people were willing to pay by about 20%!
What was the biggest mistake YOU made in starting QuantPrice, and what advice do you have for new entrepreneurs?
I’m still breaking records on mistakes! The best advice I’ve for entrepreneurs is to know their business better than anyone else-or have access to people who do.
Entrepreneurship is a game where the probability of success is really low, so there are very few things that are “right” at any given moment.
Originally published at Martin.ai in December, 2015