Beware of Transaction Costs, Especially with B2B Customers

killer app

I been mentoring several entrepreneurs lately who are in the B2B, enterprise marketplace. They seem blissfully unaware of the issue of transaction costs for enterprise customers.

Very simply put, transaction costs are the non-cash costs of acquiring a new product or service.

 

I came across this powerful concept years ago in the classic business book Unleashing the Killer App: Digital Strategies for Market Dominance by Larry Downes and Chunka Mui.

I highly recommend you read the whole book, but here are the two key pages that elucidate and define the various types of transaction costs you need to take into account in your pricing and sales of your product.

transaction costs 1

transaction costs 2

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

1 thought on “Beware of Transaction Costs, Especially with B2B Customers”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s