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Case Study: Finding the Right Price for a Hot Product

Posted: 20 Dec 2009 11:43 PM PST

Luke Skurman's is a quirky college quides. Nowadays, he face the problem is about how he can make the readers to pay. What if he gave the content free?

The company name is College Powler. At the first time, he wanted to create great content about colleges and universities, so many students fell helped to choose the right college. Finally, he also wanted College Prowler not just success in helping people, but also success in financial. He had succeeded in the first goal about helped the students, but he had not succeeded in the way to be financially succesful. The idea that came to his head, is about change the revenue model.

Skurman founded College Prowler in 2002, after graduating from Carnegie Mellon University. His idea about this project comes since he was a students. "When I was in high school, I was obsessed with finding the perfect college." Skurman says "I used every resource. But I still didn't feel like I knew what the kids were like, or anything about the food and dorms."

So he decided to give the real inside survey and skinny about the prospective collegians. Students authors would distribute surveys to their peers, who would rate their school on a variety or criteria, including academic, teacher, dorms, food, school life, drug scene, etc. In the spring of his senior yearm Skurman wrote a business plan and 37 page prototype for Clark University and follower Ernst N Young Creation Competition. He was chosen as a National Finalist.

After graduation, He had a chance by his former professor to used the office space in biotech incubator, and get $10.000 from 2 angel investors with exchange 2% of the company. By September, College Prawler had produced guides to 9 schools, and began atracting coverages in Publishers Weekly, The New York Times, and The Washington Post, also CNN. After that, a new investor, Glen Meakem, now the co-founder of Meakem Becker Venture Capital in Sewickley,Pennsylvania, put $500.000 into the company in August 2004. The other Good News was the Country's Largest Book Wholesaler, Ingram, agreed to distribute College Prowler guides, which helped get them into major bookstore chains like Barnes and Noble, Borders. Revenue hit $500.000 in 2005. Soon, the company publishing guidebooks for 220 colleges.

But one day, Skurman realized and did the math and concluded that even if he could get 1.000 retail store to carry a rack of 60 books at $14.95 apiece (an all but impossible goal) - College Prawler's revenue potential was still less that 1 million dollar.

So what was the solution?

So Skurman:
- Began selling ads on the books inside covers and on the company websites (Wachovia signed on as an advertiser. The revenue needle was moving, but Skurman was still not satisfied)
- After that, he decided to experiment with a Subscription Model. (Skurman and his friends digitized 50.000 pages of College Prowler's content on more that 250 schools and in March 2007, offered it online for $39.95 per year)

This strategy not succefful as they predict. Because the marketplace was changing, beside of that a new competitor called UNIGO had launched a free student generated site.

Skurman knew that College Prowler had great content. The hard and difficult part was getting people to pay for it. Skurman was thinking about selling the Leads (information about the prospective students to colleges. Skurman thought the company should make Lead Generation a primary income stream. Changing strategy would be risky, the company would face some tough rivals, such as College Board, which sells the name of students who take the SAT to colleges. Meakem who invested $500.000 in College Prowler at the end of 2005, now serves as a chairman, pushed and motivated for the moving and changing the shift. But Skurman was still worried. If lead generation didnt' work and the content was free would the value of his company be diluted?

THE DECISION

- Last October, Skurman changed College Prowler's business model. He began meeting with admission staffs at colleges and universities. College Prowler must pitch the great students, and make sure the students understand about the colleges or universities, so the fit will be great, and they'll be reaching the student early in the process. College Prowler's leads are different, Skurman says, because the company sells only the names of users who opt to receive information about specific colleges. But Skurman has yet to close a deal with a single school. The company, he says, now gets half its revenue from lead generation. The rest comes from ad and book sales.

- On July 16, all of College Prowler's online information was made available for free. Page views, Skurman says, jumped 60 percent the first week and are increasing every day. The average amount of time users spend on the site has doubled. By opening up the site, Skurman hopes to fulfill his second goal: helping as many families as possible choose the right college. His third goal -- financial success -- may be more difficult. "It's going to take time to prove to colleges that we're finding great applicants who they haven't already found and that we're doing it at a competitive price," he says. "We're still figuring it out."

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