4 Things Our Start-up Got Totally Wrong

While building a killer app for the hospitality industry, Monscierge hit more than a few classic start-up hurdles. Here's how it survived. I love lessons learned. Unfortunately learning a lesson means making a mistake or doing something wrong, so that's why I also love people who are willing to share the mistakes that result in wisdom. So here's a guest post from Marcus Robinson, Chief Experience Officer of Monscierge, an interactive software company specializing in hospitality solutions for hotel, convention, travel, and healthcare industries.

Here are four things Robinson says Monscierge got wrong--and one that continues to pay off:

1. We made it about us.

We built something for hospitality that really works. It isn't just a marketing mock-up, it actually performs on the back-end while also rivaling any major design firm's application on the front-end. But, guess what? No matter how well we perform compared to other companies, no hotel will ever say, "Valued guests: Download our mobile app. It's called Monscierge

After burning up inspiring YouTube scenes of Ben Affleck in The Boiler Room, we realized we just want to play in the game, to sit at the grown-up's table, and are happy to be a (paid) cog in the machine. Branding our products for each hotel played a crucial role in achieving momentum.

2. We hired "star" industry leaders.

Three out of four start-ups will fail. Those that stay in the game realize that it's about more than a good product. Inserting an industry veteran in a team that has carefully crafted an idea from conception could potentially block your yellow brick road of progress. Don't ignore the inner voice inside saying, "That doesn't sound right, but this industry cowboy must know what he's talking about."

Look around and assess. If there are three washed-up start-ups to your left and you're still going strong then you don't need a shining knight to ride in and save the day. Besides, regardless of their number of years in the industry, the average corporate nine-to-fiver may not realize the energy it takes to weather the start-up storm.

3. We decided just because we could, that meant we should.

We lost our focus and we paid for it. We set out to create hospitality and travel apps that were both well designed and had a badass framework. After releasing some of our products, clients and vertical markets both began offering to pay us to develop various one-off pieces. Those may have been no-brainers to create, but they also took away from our (small) team's original goal of fleshing out the rest of our core products and left us playing catch-up to the rest of the market. Stay laser-focused--don't let compliments and a little up-front cash veer you off course from the bigger payday.

4. We assumed we knew our customer's problems.

Engineering a B2B product based on thorough research alone can halt your start-up before it, well, before it starts up. How many times have you come across a product and thought, "Now, if it could just do this it would be perfect. I'd totally spend the money to buy it!" We spent countless hours going back to the beginning, starting with our team working behind the scenes at a few test hotels. Feel your customers' pain, or risk being just another app.

One Thing That Keeps Paying Off

Partof the start-up hype seen over the past few years might not be all marketing-speak. Let's be straight: You can't work at a start-up and not be entrenched in some sort of a weird yet dynamic group. One of the absolute best moves as a start-up was filming a two-minute video about our culture, not our software. Humanizing your product and showing the dedication and passion that got you in the elite 25 percent of companies still in the game will push you over the line.

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Pricing: You're Probably Doing It Wrong

Do you run a service business? Your obsession with time may be messing with your pricing and seriously limiting how much you make, argues a new ebook from FreshBooks. Whether you’re a dog walker or a designer, your approach to pricing is probably pretty similar, at least if you’re relatively new to the game. Most likely you take a look at your costs, figure out what you need to cover them and then add a bit on top for what seems like a reasonable profit and present the final product of these calculations to prospective clients as a daily or hourly rate.

It’s a tried and true method, but it’s probably costing you a bucketload of money and creating schedule feast or famine -- periods where you stress through the lean times and run like a lunatic in the busy ones -- according to a new ebook titled Breaking the Time Barrier from online accounting company FreshBooks.

The book, which is a quick read, follows the trials and tribulations of a fictional website designer named Steve who’s struggling to make a healthy living as a freelancer. He enlists the help of a more experienced and successful designer named Karen, who acts as a sort of pricing Yoda, guiding Steve to discover his potential as a high earner and acting as an oracle to dispense FreshBooks' wisdom. What’s her central insight?

Quit all that obsessing about time and focus on value instead. Your clients, Karen insists, don’t really care how long it take you to do something; they care about the value it creates for them. Focusing on clock watching isn’t just limiting your income, it’s also downright selfish.

"I look at pricing from [my clients’] point of view,” she tells young padawan Steve in the book. "They don’t hire me to design a website for the sake of designing a website. They hire me to design a website that’s going to help them grow their business. I find when I look at it like that--from their perspective--it’s clear I’m not  selling time. Instead, I’m selling a solution that is going to make an impact for my client and achieve some business objective."

By having an in-depth conversation with prospects about what they’re trying to achieve and really listening to their goals, you can set value-based prices that are higher for you and also deliver more for the client, ideally, offering clients a menu of options to help them reach their objectives.

Getting hard numbers for your clients’ goals is best, Karen tells Steve. If you can get a prospect to tell you they’re looking to gain an additional $100,000 in revenue based on your work, you’re more likely to get them to agree to pay you $20,000 for it. If you thought about the project in terms of hours, perhaps you’d charge a tenth of that, she warns.

Increase your income by a factor of ten is, of course, awesome for you, but its not bad for the client either -- they may be paying more but they’re much more likely to get greater value for their dollars. "Selling hours actually creates a conflict of interest," according to Karen. "It puts you and the client on opposite sides of the table. If you’re selling hours, it’s in your best interest to take longer, to bill more hours. But your client is interested in getting solutions that work as promptly as possible," she argues. "Clients don’t care about our costs. They care about the value we create for them, so that’s what we should be asking them to pay for."

Of course, this approach doesn’t work for everyone, pricing guru Karen concedes. “When I started out I charged  an hourly rate and I think hourly rates make sense for someone just starting out, someone with little experience and limited skill,” FreshBooks has her tell Steve. "But over time... you begin to outgrow the cost-plus pricing model of charging by the hour. So if you stay with that pricing model, you’ll find it very limiting," she adds.

But that’s not the only potential stumbling block to value-based pricing. How do you handle clients that push back against the idea of paying for value? What do you do if your skills aren’t broad enough to meet the client’s fundamental objectives? How can you change your image from a gun for hire to a collaborative partner in solving a client’s problems? And how do you price small jobs and routine maintenance?

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