projecteverest

Experiment adopted

[JAN 19] [TIMOR] Price Testing [1/2]: Rocket Stove and Briquette Maker (Solution)

This range of Price Testing experiments are intrinsically connected with the Cost Analysis experiment (linked below). They should be read and understood as two parts of the same overarching feasibility experiment for each solution.
https://projecteverest.crowdicity.com/post/789450

Stoves and the briquette maker have been combined as they are both a once off purchase and hence the testing is identical except for the price points and success metrics being different dependent on their cost.

Lean Phase: Solution

Assumption: That our customers are willing to pay a price for Stoves/Briquette Makers that is above the failure points set out by the cost analysis experiment.

Time Period:
2 Weeks in country, repeated with new prototypes as necessary.

Metrics:
There are two key metrics being measured.
What each customer’s perceived value is for each solution (what do they think is a fair price).
Asking if customers think that $X is a fair price, and if they would pay that much for this solution. This should be a yes/no clear cut answer.

See the experiment build for more detail on this process and the price ranges.

A minimum of 30 data points for each solution type before conclusions can be drawn from the data. Ideally a box and whisker plot of prices given by customers can be made, and then a graph of price points vs percentage of positive responses (would buy) for both stoves and briquette makers can be made.


CRITERIA:
Green Light - Proceed (What is the next move given successful validation?)
Move forward with medium scale manufacturing of stoves/briq makers and begin usability and engagement testing. This may be one, both, or neither of the solutions.

Success point: There is sufficiently high conversion at a price that is above 40% gross margin. See cost analysis experiment for more detail on success metrics.
30% of potential customers identify a price point within ±$5 of each other.

Orange Light Optimise - Understanding why such a variation in price occurs. Do we need to target more specific customer segments with different value propositions and different levels of affluence. What is holding our customers back from paying more for this solution.

Failure Point - Tied in with cost analysis to determine feasibility of Stoves in Timor. Failure should be declared once alternative pitches, presentation and designs for Stoves have been investigated. When we can clearly state why people aren’t willing to pay our minimum viable price for stoves based on margins then stoves are considered failed.

Red Light - Assess other solutions for feasibility. See cost analysis experiment for more details.

  

Experiment build:

Standard empathy approach to start talking to people about fuel/cooking and any issues surrounded with that. This is like a basic offer test and ideally there are positive responses to these questions. Flowing from the offer test intro, presenting one or multiple of the solutions to the potential customer. Explaining what they do, how they work etc. Once the customer understands the product well and has had a chance to ask any questions they have, ask “how much would you pay for this product?”

To avoid the scenario of “how much does it cost?”,
if the customer does not really have much interest or understanding of stoves, refer to the price testing calendar and test at the designated price without first asking for the customer to come up with a figure, as this will often result in low-ball prices if they do not have a good understanding of benchmarks for stoves.

This is very simple and the questions can be as straightforward as:
“Would you pay $30 for this stove”
“Do you think $50 is a fair price for this briquette maker?”

The proposed calendar linked below is subject to change, depending on how many tests are able to be conducted on one day out etc etc. The calendar is just a template to ensure a spread of prices tested. https://docs.google.com/spreadsheets/d/1QIu5w...b87z-ha_AyMwXM/

The prices tested should be based on rough costings for Stoves in Timor. This will most likely be >$25 as a minimum to ensure some kind of margin.
With the briquette maker there may be a large dependence on usability and customer understanding around the solution. There is also extensive development required on our behalf with the solution, so it is not as ready as stoves are. This is not such an issue with this experiment however it needs to be understood that selling the maker may need to be a larger scale community purchase or to real early adopters. This will make price testing more difficult.

edited on 15th January 2019, 08:01 by Harry Telford

Thomas de Heus 3 weeks ago

I think testing of the stoves should be straightforward considering all the work already done in Fiji.

The briquette press is an interesting solution that has never occured to me before. When price testing it, is it just the press itself? I say that because making briquette material to be compressed is quite difficult, and selling the press as a once off solution seems like something that will not be adopted if it is difficult to get an output from. No matter how easy the press is to use, if it takes a day to make the material (carbonising (3+ hours), adding starch, mixing) and then multiple days to dry once compressed, the actual product being sold is just adding a lot of time and work to a person's day - they may as well just keep purchasing wood and disposing of their plant waste however they are currently doing so. Not to mention pressing briquettes on a small scale (one by one) is very time inefficient.

I really like the alternative thinking but have doubts about how effective it is as a solution to the problem you have defined, and how much social benefit it actually offers. I would love to be proven wrong, but these are just my initial thoughts!

Reply 1

David Gailey 1 week ago

Hi Thomas,

Thanks for your comments.

At this stage the briquette press is being considered as an option to sell to a village rather than individuals. That way the time required to make briquettes becomes more efficient as they are made in larger batches, and the work is divided among the community. Consider the amount of time or money otherwise needed for a community to collect/buy the fuel they need.

Additionally, the idea has been floated to sell the press to people who would in turn sell the briquettes they make. This idea of course requires someone familiar with briquettes but we feel it’s worth investigating.

David Gailey

Reply 1

James Balzer 1 week ago

Hi David and Alex,

I'm keen to keep following Timor Fuel's concept into the future.

It makes a lot of sense to sell the briquette's to villages in terms of a production efficiency perspective. However, this means that you'll have less customers to sell to, which will reduce the potential amount of profit that you can make on selling the briquette's in the long term. Likewise, LTV is rather low on a one off product, meaning that you'll need a big customer segment in order to make up for the lack of LTV.

Likewise, you would need to find a suitable producer and distributor of the briquettes that ensures that the quality of the briquette is consistently good, and that distribution is scalable and reliable. You may already be testing this, but it's worth considering.

Also, how are you intending on getting people to pay for the stoves and briquettes in a scalable and sustainable manner? As somebody who's been working with the FarmEd Commercialisation team, I understand that the prevalence of mobile money across Timor is notably low. Do you have a contingency measure in terms of methods of payments?

I look forward to hearing your reply.

James

Reply 0

David Gailey 1 week ago

Hi James,

Thank you for your interest and comments.
To clarify, when I stated that we were considering selling to a village collectively, I was referring to the briquette press, which is a machine that can be used to make briquettes. The briquettes themselves, if we were to make them, would be sold to individuals.

Certainly, selling the press may reduce the likelihood of subsequent sales of briquettes themselves, but we don’t necessarily feel this would reduce the LTV dramatically as a briquette press would sell for a much higher amount than individual briquettes. Further, the potential value that a press offers in its ability to make briquettes would be built into the sales price of the press.

At this stage the advantages and disadvantages of each solution are still being weighed up and most importantly, the supply chain and costings of each need to be determined. At this time, our focus is on determining this rather than making a final decision on which decision to pursue. We simply need more information before we address that decision.

With regards to a supplier/ manufacturer of briquettes, this is another question that we are investigating. Indeed, we are investigating a partnership with an institution in Timor that has a briquette making machine but does not really utilise it. At this stage, we are making our own briquettes with little effort needed.

Finally, with regards to your thoughts on the availability of cash, we agree that this may pose a problem. While we have considered it somewhat, it is not our main focus at this time. We feel that particular issue can be dealt with, but we will address it more substantially later.

Thanks for your advice and thoughts James. I look forward to updating you as things progress.

David Gailey

Reply 0

Thomas de Heus 1 week ago

How do the village produce the briquette mixture to be pressed? The press is only one step in the process, and can't be sold as a 'DIY Briquettes' kit. The actual carbonisation process is the most dangerous and easy to get wrong part of making briquettes, and I feel like the press on its own would end up being unused if villages do not have an easy way to make (or purchase?) the mixture in the first place.

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Harry Telford 2 weeks ago

Status label added: Experiment adopted

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