This document provides advice on how to convert underpants into profits by selling them to users or monetizing them through various business models. It discusses options like direct-to-consumer sales, subscriptions, freemium models, and using advertising. It also covers important considerations for pricing, user acquisition costs, cash flow, and finding the right pricing strategy. The overall goal is to figure out the best unit economics and business levers to generate income from underpants.

1. How To
Convert Underpants
Into Profits
by Alex Calic

2. Who Am I?
• Chief Revenue Officer @ The Media Trust
• 10+ years in tech (internet/software)
– adtech, social, video, ecommerce, mobile
• Previously @:
– Clearspring: Bus Dev, Sales, Finance
– InPhonic: Corp Dev, Bus Dev, Product
– Coremetrics: Bus Dev
– InTouchPOS: Strategy
• Wharton MBA

3. South Park Season 2: http://www.southparkstudios.com/clips/151040/the-underpants-business

4. Option #1
Selling To Your Users

5. Selling To Your Users
Transaction Subscription
Consumer
Enterprise

6. Option #2
Selling To Your Users

7. Selling Your Users
• Attention
• Data (email, behavior, personal information)

8. Best of Both Worlds
• Monthly subscription fees
• In-program advertising

9. Figure Out Thanks!
Your Unitized TEST
Economics

10. Income Statement Basics
PER USER
Revenues
- Cost of Sales
Gross Margin
- Marketing Expense
Operating Margin

11. Business Levers

12. Matching Revenues to Cost
• Fixed vs. variable cost structure
Seat License Project Based Pay Per Use
Cost
Time

13. Some Thoughts on Freemium
Reallocating
cost of sales &
marketing expenses
Paying
Users
Total users x avg. cost per user per period Total Cost Supported
% of total users that pay = By Each Paying User

14. User Acquisition Costs
• Inbound (free) Free and cheaper
– Organic acquisition cost
– Referral channels can drive
– Search (free/paid) down revenue
• Outbound (paid) requirements and
enhance the user
– Email
acquisition loop.
– Display
– Sponsorship

15. Cash Flow Considerations
• Sales cycle
– Consumer vs. enterprise (short vs. long)
• Payment cycle
– Upfront vs. arrears (fixed vs. usage pricing)
• Churn
– Monthly billing vs. contracts (variable vs. fixed costs)

16. Advertising Model
• First leveraging standards (ad units/ sellers)
• Native advertising requires scale
– 10MM active users as a starting point
– 100MM for audience targeting
• What you’re up against

17. TEST

18. Ways to Find the Right Pricing
• Competitors
• Comparable business models/industries
• A/B testing
• Step-up pricing
• Just ask!
• Most importantly: KISS

19. Thanks For Having Me!
• alex@themediatrust.com TEST
• @alexcalic
• www.alexcalic.com