1. Customer Service (Cost: 2 hours/day)
I really hated responding to all the customer emails and helping them through their problems. The FAQ section helped a lot but god forbid they called my personal number.
2. Fraud payments (Cost: 10.9% of Revenue)
I tried to research why these fraud payments were happening and there really wasn't anything to do about them that I could find online.
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Stripe offered a service called 'Radar' that was supposed to reduce the number of failed payments you received, but it didn't do a lot.
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The 'Reason' described for the failed payments was mostly 'Insufficient Funds' which I guess means these people would just use a card with literally no money on it and Stripe would just accept it. Although the overwhelming majority of 'Insufficient funds', the other cases consisted of 26 other reasons such as 'High Risk', 'Stolen Card', 'Expired Card', 'Transaction not allowed', etc.
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My business was doing very little compared to many businesses using Stripe. I can only imagine how much money they lose to this seemingly impossible answer. It's likely that these companies have set up web hooks to cancel the failed payment user's account and request for their payment details to be resubmitted.
I'm not sure if people did this intentionally or not either.
3. Developers (Cost: 12% of revenue + ~$400)
I can read code but can't write it. Which means I need to hire developers to develop my projects for me (very costly but more importantly, very slow).
- I partnered with a freelancer from Pakistan mostly because I didn't have enough money to pay him outright but also because if there was ever a bug to fix or I wanted to improve the service, I would need a developer to do so (I did crash the service one day by accident and I'm very thankful I had him as a partner). Another big factor for partnering was because if he had skin in the game, he'd be more inclined to help and actually see the product succeed. This would speed up the time to development compared to a contract-hired freelancer.
4. Paying out 12% of Revenue to my Partner Monthly (Cost: 5 hours a month)
This was mostly spent on both of us making sure that the accounting was correct. We had no contract or anything and kind of just shook on the deal through Zoom despite being half way across the world and never meeting. However, we both kept our sides of the bargain and still talk regularly.
- Near the end, our accounting process was pretty effective by just have a shared google sheets doc to record payments and expenses + his payout for each month.
5. Marketing (Cost: $1831)
The largest lesson learned was that marketing and customer acquisition is king.
"Average technology and good marketing beat good technology and average marketing every day of the week." — Larry Ellison
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The large spike in sales that you see in the graphic was from 1 tiktok video that I had a guy from my school make for $100. That $100 investment was the best $100 I’d ever spent, I mean no other marketing campaign did even 1/4 as good. The guy was an absolute beast and went above and beyond in the video that amassed nearly 3 million views.
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Tiktok was the best platform to market this product on, but the influencers weren't easy to work with. I mean if they had a company working as their negotiator, forget about it. These 'agencies' are not only stealing money from these influencers, but also limiting the amount of business they get while likely keeping them in the dark about how many ad interests they're receiving. I get it that the influencers just want to make videos, chill, and relax while they let this company just email them when they have a gig and send the a few thousand bucks. But these agencies are scrapping up to 30% off of the top from the influencers when the only real value they add is negotiating a higher price with companies looking to market.
6. Reviews (Cost: a few t-shirts)
My product was a chrome extension and if you've ever downloaded a chrome extension, then you'd know that reviews are essentially the only thing to let users know if your product is good or not.
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Now that I write that, it's like "Duh, reviews are there to show how good your product is". But I felt that I had a far better product than the competitors by price and performance.
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I learned quickly that having an app or extension of some kind is a difficult business because of the reviews. The issue is that 1 good review is worth a large amount of users joining your service while 1 bad review negates about 3 good reviews. Then, the even larger issue is that most people who take the time out of their day to go back to your product page and actually write a review are people angry with the product.
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From the beginning I knew reviews were important, so to gain credibility in the store, I offered guys in my fraternity a free fraternity t-shirt (I had excess from a few of our formals, road trips, and clothing drops). This method worked out pretty well, gaining me my first 10 reviews to be all 5 stars.