How can Paga balance increasing transaction fees for revenue growth against potential user churn?

Introduction

Balancing transaction fees for revenue growth against potential user churn is a critical challenge for Paga. This trade-off involves increasing fees to boost revenue while risking user dissatisfaction and potential loss of customers. I'll analyze this situation, considering both short-term financial gains and long-term user retention strategies.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm assuming Paga is a digital payment platform. Could you confirm this and provide more details about its primary services and target market?

Why it matters: Helps tailor the solution to Paga's specific business model Expected answer: Confirmation of business model and key services Impact on approach: Would influence which user segments to focus on and potential alternatives to fee increases

• Business Context: Based on the proposed fee increase, I'm thinking revenue growth is a top priority. How does this align with our current financial targets and competitive positioning?

Why it matters: Helps prioritize revenue growth against other business objectives Expected answer: Specific revenue targets and market position details Impact on approach: Would determine the aggressiveness of fee increases and potential compensatory measures

• User Impact: I'm assuming we have different user segments. Can you share insights on which segments are most price-sensitive and their contribution to overall transaction volume?

Why it matters: Allows for targeted approach to fee increases Expected answer: Breakdown of user segments and their price sensitivity Impact on approach: Would help in designing a tiered fee structure or targeted incentives

• Technical: Considering potential changes, how flexible is our current pricing infrastructure? Can we easily implement variable fee structures or dynamic pricing?

Why it matters: Determines the feasibility of complex pricing strategies Expected answer: Overview of technical capabilities and limitations Impact on approach: Would influence the complexity of proposed solutions

• Timeline: Given the focus on revenue growth, what's our timeline for implementing and seeing results from these changes?

Why it matters: Helps balance short-term gains with long-term sustainability Expected answer: Specific timeline and revenue milestones Impact on approach: Would affect the pace of implementation and the scope of initial changes