Jim was frustrated after talking with Mike J., the investor. Mike had asked about customer acquisition costs and Jim’s strategy. Jim didn’t know what Mike wanted. He didn’t know his customer acquisition costs and went to figure them out.
Jim had focused on running the business: happy customers, increasing sales and creating products to sell. Looking at the monthly bills he saw shipping costs were bigger than the number in his head. Amazon had customers expecting free shipping. Could he charge for shipping and not kill sales? What about charging for faster shipping and adding an incentive to pick that option? With advertising and shipping, he was losing money on every new customer that bought a product. If I have to pay customers to buy my product, I’m never going to be profitable. Was this what Mike J. was talking about?
After going over the numbers, he decided to test charging for shipping.
Jim’s Decision — Raise prices by adding shipping charges Choice removed (wait)
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