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One of the worst kinds of businesses is one that sells something to a price sensitive consumer.
My nightmare business is a software company that creates software for school teachers to help them manage their class schedule.
Why? Because the ultimate customer is a teacher. Teachers don’t make much money, and are often price conscious. They also have to pay for it out of pocket.
A big ticket software purchase for a teacher might be $9.99 per month.
Software of the same complexity, in a different niche, for somebody who uses it to make a lot of money, could cost 100x the price. And usually they just throw it on a corporate credit card. They rarely pay for it themselves. Total price insensitivity.
Example:
Imagine if you instead made a simple software tool that helped hedge fund employees analyze a certain type of trade.
Or a niche tool that helped companies file some annoying government form that would deliver a $25,000 tax benefit.
Nobody wakes up and thinks “I want to start that.” It’s freaking boring. And that’s why it’s a good business. You have a customer who will pay a large amount of money for you to solve their problem because it enables them to make far more, plus you have no competition.
Business on easy mode vs. hard mode.
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