July 15, 2024
Keep your business model simple | TechCrunch

The perils of premature complexity are huge administrative overhead and technical debt

I’m getting pretty frustrated with startups making things way more complex than they need to be. You wouldn’t believe how often I see pitch decks from companies that have more pricing tiers and business models than their customers would. It’s a terrible idea for several reasons, but in the context of a pitch deck, premature complexity is a huge red flag to investors.

It appears that the allure of complex pricing models and business strategies often proves too tempting to resist. Indeed, who wouldn’t be enticed by the prospect of variable pricing, tiered packages, or the alluringly intricate matrix of options that promise to maximize revenue from every conceivable customer segment? It’s a business school student’s dream.

But with every new idea and pricing tier comes exponential complexity. Customer service, accounting, product development and even the sales process and landing pages all become way more complicated than they need to be.

There is a time and place for complexity, and for early-stage startups, that time is usually not “now.” A growing company that’s introducing complex pricing too early might find itself bogged down in administrative overhead, struggling with sales friction, and potentially deterring potential customers with a convoluted pricing structure.

Source link