Why entrepreneurs should play more games: discover new ways to make money.
June 3, 2014 Editor 0
Business model of most consumer products & services
Many industries make the mistake of limiting how much a client can pay for their products. In the music industry, albums are still sold at a fixed price. As a result, even the most loyal fans can only pay €15 for an album. The gaming industry has already evolved. A couple of years ago, they sold games in boxes at a fixed price and gamers paid a once-only, flat €50 fee for the full game. They realized that this is old-school pricing. They moved on and so should you.
The gaming industry’s success strategy
Today, many titles are offered via a free-to-play model. A variety of complementary in-app purchases offer extra add-ons or features to enrich the gaming experience. There is one rule: a client should be able to spend all his money if he wants to. For some mobile games, only a few people (sometimes fewer than 1%) will bring in nearly all of the revenue! This pricing strategy is becoming so successful (for the publishers) that new problems start to emerge. But that is a different story.
Do you block your clients from spending an infinite amount of money?
Many SME owners and entrepreneurs should take a closer look at the gaming industry and evaluate how they are limiting clients to spend more money. Take the (Belgian) restaurant business for example. In my experience, maybe 50% of restaurant owners only accept cash. Knowing that the average Belgian walks around with €30 in their pocket, you know you can’t earn €100 from that visitor – at best maybe €25 if he wants to keep €5 back for cigarettes later that evening. You get the picture. A stupid strategy.
By design, the business model of restaurants is broken. Even when paying with a credit card, I personally can’t eat more than a few dishes and drink a couple of glasses of wine. Honestly, I’m amazed at how few restaurants experiment with alternative ways of selling me more products. If I buy one piece of delicious apple cake in the afternoon, why not offer me the full cake in a box to take home to my family later that day? Or sell me recipes of your marvelous cocktails and promise to deliver all the ingredients to my home for my party a week later. What about interior advice and referral fees to get an introduction to your contractor? And so on. You could come up with dozens of (crazy) alternative revenue streams that aren’t limited to the amount of food my body can handle within a two-hour timeframe.
Just keep in mind – regardless of the industry you’re in – that there are numerous ways to rethink or challenge your business model by looking at similar concepts in other markets. We see that the analogy thinking brainstorms in our training program are often the most effective tools for finding new business ideas. What market should you learn from?
So true, restaurants in Belgium limit themselves based on tradition. In a Belgian restaurant you can’t:
1. Take out food (which is possible in ANY restaurant in US). Seats in a restaurants are limited, but take-out requests can be served endlessly. It requires a more efficient kitchen and less waiting times, something Belgian restaurants – for some bizarre reasons – didn’t figure out yet.
2. Get a doggy bag (note: never use that term in US, nobody does) to take your left overs home. This is especially handy when you dine with your partner who does not finish her plate I tried that in Belgium during my last visit. I insisted and the restaurant was really offended. They almost refused.
3. Tip. Belgian restaurants don’t do the whole tipping thing. Which is great – because I hate it – but which limits them receiving more money for extra service. Delivering extra service is easy and cheap. Checking in once in a while, bringing something extra,… Americans easily fall for that and open their wallet a little wider.
4. Get water for free. Which seems a loss of revenue at first sight, but which reduces the cost of a restaurant visit which means you will go more often. Here in US (at least in Seattle) – I’ve just calculated it yesterday – it’s more expensive to cook your own food than to go to a restaurant because of this. You can get great Thai, Korean,… food for $10. Try to get anything other than a sandwich in Belgium for that money…
5. Get overpriced drinks. Wine and beer are fairly cheap in Belgium and thus accessible to the masses. In US (at least in Seattle) both wine a beer are extremely expensive, starting at $10 for a glass of wine. This reminds me of the price strategies with SAAS companies, offer something cheap, offer something medium priced and offer something extremely expensive (for those who don’t care about money at all). Do Belgian restaurants have an option on their menu that you can waste your money on?
6. Get fast service. American restaurants serve their food fast. No, not only the fast food chains For some reason Belgian restaurants are super slow and thus have less earning potential. I think it has something to do with the number of people in the kitchen. Because employment in Belgium is expensive, the number of people in the kitchen is probably limited in comparison with American kitchens.
Now, I’m not saying that dining in America is better (anticipating on negative responses, here) but it’s definitely more commercial while in Belgium it’s more traditional (aka they stick to their principles).
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