Is it better for iKhokha to offer lower transaction fees to boost merchant adoption or maintain higher fees to improve profitability?

Introduction

The trade-off between offering lower transaction fees to boost merchant adoption or maintaining higher fees to improve profitability is a critical decision for iKhokha. This scenario involves balancing short-term growth with long-term sustainability. I'll analyze this trade-off by examining the business context, user impact, technical considerations, and potential outcomes.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking iKhokha's current market position might influence this decision. Could you share our current market share and how it compares to competitors?

Why it matters: Helps determine if growth or profitability should be prioritized Expected answer: Moderate market share with room for growth Impact on approach: Would lean towards lower fees if market share is low

• User Impact: Based on our merchant base, I'm assuming we have a mix of small and large businesses. What's the current distribution of transaction volumes across our merchant segments?

Why it matters: Different segments may respond differently to fee changes Expected answer: Long-tail distribution with many small merchants and fewer large ones Impact on approach: Might consider tiered pricing based on volume

• Technical Feasibility: Considering potential changes to our fee structure, I'm curious about our billing system's flexibility. How easily can we implement and test different fee structures?

Why it matters: Affects the complexity and timeline of implementing changes Expected answer: Moderately flexible system with some limitations Impact on approach: Might influence the granularity of fee adjustments we can test

• Resource Allocation: Given the potential impact on revenue, I'm wondering about our financial buffer. What's our runway and how much can we afford to experiment with lower fees?

Why it matters: Determines how aggressive we can be with fee reductions Expected answer: Comfortable runway but cautious about significant revenue impacts Impact on approach: Would suggest a gradual approach to fee reductions

• Timeline Considerations: Thinking about competitive pressures, how urgent is this decision? Are there any upcoming market events or competitor moves we need to consider?

Why it matters: Influences the pace and scale of our experimentation Expected answer: Moderate urgency with some competitive pressure Impact on approach: Would balance thorough testing with the need for timely action