projecteverest

Experiment Results

[JAN 19] [FUEL TIMOR] Experiment Results: Dili Families Price Testing

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.
That our customers are willing to pay a price for briquettes that is above the failure points set out in the cost analysis experiment.

Results:
The success metrics for the stove was largely dependent on the data we got from manufacturer regarding the cost to make each stove. The quotes we have range from around USD 40 per stove to USD 85 per stove depending on quantity ordered and and the individual manufacturer. However, our price testing data ranges from USD 40 up to USD 100. The majority of our tests obtained a value of USD 75.

As we believe that we could obtain the 40% margin required, and there is a reasonable amount of consistency in our price tests, we believe that we have a green light result.

The success metrics for briquettes were largely dependent on the performance of briquettes and the firewood usage by individual households. Given that we have recently decided to use the Bamboo Briquettes and we have only run limited tests on them at this stage, and further the composition of said briquettes is likely to change, it is hard to put a price on briquettes relative to wood. However, given we can purchase briquettes at USD 0.2c per kg and firewood typically costs USD 0.25c per kg, and further knowing that briquettes do perform better than firewood, we have confidence that we can achieve a sufficient margin.

As for the briquette press, this option was deemed to not be a viable option at this stage in the business. The required learning surrounding the use of the press for locals, as well as the difficulty of manually making a briquette led us to this decision.

Validated Learning:
Our results matched our hypothesis in that it confirmed that there is sufficient demand, and that enough people are willing to pay for a solution which achieves and acceptable margin for us.

However, in Timor there is a very big ‘yes’ culture which casts some doubt on the accuracy of our price tests. Further, we did not have a prototype available to use which made it difficult for us to get customers to accurately value it and commit to a price. Despite those things which cast some doubt, we have reasonable confidence in our results. This can be properly confirmed by running a future sales based experiment.

Next Move:  
Our next move is to conduct price testing of different customer archetypes. So far we have focussed our tests on houses in the Dili suburbs. We wish to test different demographics including location, wealth and traditions. The next target archetypes are farmers in Hera and Dare. This test will follow the same method as the previous price testing experiments (Stoves: https://projecteverest.crowdicity.com/post/802970 and Briquettes: https://projecteverest.crowdicity.com/post/802980)

Further goals for the stove are to finalise manufacturing costs with a supplier and to get a prototype. From there, provided we are happy with the prototype, we will proceed with an initial batch of stoves from which we can make sales, and gauge customer engagement with the stoves (links to be posted later)

For briquettes, the next move is to create an experiment to test the experience of users with the product. (link to be posted later)

edited on 29th January 2019, 04:01 by Wade Tink

Wade Tink 3 weeks ago

Did your price testing involve currency testing? It appears in the results that you asked customers what they would be willing to pay rather than actually gaining payment for the product?
Is that correct? If so, why didn't you transact?

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David Gailey 3 weeks ago

Hi Tink,

With the price testing we aimed to find out the maximum price that potential customers would value the stove at and pay for it. Currency testing had been conducted by the December team with quite promising results. However, they only required people to be willing to pay a small amount e.g. 1 USD.

From this we gathered people were sufficiently interested to be willing to pay for a solution but we had questions over whether they would be willing to pay enough for the stoves to be profitable.

During January we were also determining the cost of manufacturing stoves and did not feel that until the end of project that we could give an accurate price for the stove. Further, as we did not have any stoves ready to sell and did not think that there was a sufficient chance of having stoves made in time if we found a reasonable quote, we did not want to waste time making pre-sales that we most likely would not be able to deliver on at this stage.

Additionally, towards the end of the month we tried an ‘empty windows’ approach in which we would ask for a deposit to see if a potential customer was serious enough to put some money down, but then at the last moment not take the money. However, we found people would not consider putting money down without getting to see and test the stove. For many of the people we talked to 75 USD was a very large amount of money and they wanted assurances before they committed money to it. As we were not able to provide those assurances at that stage, none of the empty window approaches succeeded.

However, we are confident that February is in a position to address those problems as they have a manufacturer able to make stoves at a low price and should be able to get some prototypes quickly.

Cheers,
David

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Rose Gooding 3 weeks ago

Status label added: Experiment Results

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