Do not use cost-based pricing (cost plus markup) in your startup. It is a very bad pricing strategy. Because customers do not buy your products because of how much it costs you to produce them, using the “cost of production” component to drive your pricing is an own-goal. When you price, follow the value-based pricing strategy. There, you focus on your ability to fix the frictions customers have through the products and services you have created.

In elementary physics, friction is a force. To overcome friction, you need another force. In the market, customers’ problems are market frictions. To overcome them, you need to create products and services – the most powerful forces in market systems.

It is the value you create that customers buy, and not how much it costs you to produce the force (i.e. the product or service). Communicate VALUE in the market and thrive. At Tekedia Institute Mini-MBA, we have many pricing courses including these two:

• Effective Product & Service Pricing, Accelerated Revenue, Profit Maximization – Saima Khan, Partner, Strategic Pricing Management Group, Toronto, Canada
• Driving Profitable Growth, Marginal Cost, Scaling – Ndubuisi Ekekwe

Nigeria’s public debt has moved up once again amidst an increasing revenue crisis rocking the country. A statement issued by the Debt Management Office (DMO) on Monday, said that the Total Public Debt Stock has risen by N1.24 trillion in three months when compared to its position as at March 30, 2022, when it stood at N41.60 trillion ($100.07 billion).

The new figures, which cover the Domestic and External Debt Stocks of the federal government, 36 States and the Federal Capital Territory (FCT), stood at N42.84 trillion ($103.31 billion) as at June 30, 2022.

“The Total External Debt Stock was N16.61 trillion ($40.06 billion) as at June 30, 2022, which was about the same level as the figure for March 31, 2022, which stood at N16.61 trillion ($39.96 billion.)

“Over 58% of the External Debt Stock are concessional and semi-concessional loans from multilateral lenders such as the World Bank, International Monetary Fund, Afrexim and African Development Bank and bilateral lenders including Germany, China, Japan, India and France,” the statement said.

While the external debt was relatively what it was as at March 30, 2022, the DMO said the Total Domestic Debt Stock as at June 30, 2022, was N26.23 trillion ($63.24 billion) due to New Borrowings by the federal government to part-finance the deficit in the 2022 Appropriation (Repeal and Enactment) Act, as well as New Borrowings by State Governments and the FCT.

“The Total Public Debt to GDP as at June 30, 2022, was 23.06% compared to the ratio of 23.27% as at March 30, 2022, and remains within Nigeria’s self-imposed limit of 40%. While the federal government continues to implement revenue-generating initiatives in the non-oil sector and block leakages in the oil sector, Debt Service-to-Revenue Ratio remains high,” the DMO said.

Under the National Development Plan 2021-2025, which contains projections that include 30% capital expenditure increment that will be funded with loans, Nigeria’s public debt stock is projected to hit N50.22 trillion by 2023, with domestic debt at N28.75 trillion and external debt at N21.47 trillion.

This means that the weight of debt on Nigeria’s revenue will largely increase. Currently, Nigeria is spending more than 90% of its revenue on debt servicing, a situation creating a huge deficit in the nation’s budget implementation.

Last week, Finance Minister, Mrs Zainab Ahmed, informed the Senate Committee on Finance that the proposed N19.76 trillion budget for 2023 will have a N12.43 trillion deficit. Though the deficit is attributed to fuel subsidy and import waivers, the volume of Nigeria’s debt, which is gulping more revenue than the country is generating, is impacting its ability to fund its budget.

The 2022 fiscal performance report released in July showed that the cost of servicing debt surpassed the federal government’s retained revenue by N310 billion in the first four months of 2022, which means, the government borrowed to pay debt.

All these are squaring up against the backdrop of poor revenue from the oil sector, which is Nigeria’s main source of revenue generation. The oil sector is bedeviled by massive oil theft and pipeline vandalism – all sabotaging the nation’s oil output, which currently stands at 900,000 barrels per day, 500,000 barrels short of its OPEC quota.

Thus, Nigeria public debt is expected to grow bigger than the projected N50.22 trillion by 2023.

They sang it: “egwu ?ma si na chi” [great music comes from the god]. Oliver de Coque sang his version: “egwu ?ma si na ikuku!…mmiri” [ great music comes from the breeze…and rivers]. Oliver wrote some of his finest songs at the riverside. As he watched the mild water currents, the inspirations came and words were put down.

But I tell you something: great products and services come from DESIGN. At 7pm WAT today,  Tekedia Mini-MBA will focus on design. Our faculty, Aderinola Oloruntoye of software giant, SAP, will connect design and innovation.

We continue to welcome new learners here