Part 2 of 15 in Rules for Game-Changing Entrepreneurs← Part 1Part 3 →
This chapter explains why entrepreneurs should look for products and services whose costs fall over time. It helps founders, investors, angels, and mentors identify opportunities where lower prices can create explosive demand.
- Falling costs can increase demand through price elasticity.
- Reliance Jio made mobile data cheap, enabling digital services at population scale.
- Zerodha used low fees and volume growth to attract new retail investors.
- Physics Wallah delivered recorded teaching digitally at a fraction of coaching-class prices.
- Entrepreneurs should ask how to lower delivery costs while increasing product value.
The Rule
Find products or services whose costs fall every year. Falling costs unlock explosive demand through price elasticity. The entrepreneurs who drive or ride that decline capture the value.
Indian Evidence
Reliance Jio did not invent mobile internet. It made data so cheap that usage exploded. Before 2016 a gigabyte often cost ₹200+. After Jio it fell below ₹10. That single change made UPI, video, vernacular content, and digital commerce viable at population scale.
Zerodha attacked brokerage costs. By driving fees toward zero on a low-marginal-cost technology platform, it captured the majority of new retail investors. Volume growth more than offset lower per-trade revenue.
Physics Wallah applied the same logic to test preparation. High-quality teaching recorded once and delivered digitally at a fraction of coaching-class prices reached millions. The marginal cost of one more student was near zero.
What Is Getting Cheaper Now
- AI inference and access to capable models
- Digital payments and identity via India Stack
- Content creation and localization
- Routine customer support and back-office work
Using AI
Model price elasticity and multi-year unit economics in hours. Prompt: “Act as a pricing strategist for Indian startups. For an AI tutoring product for Class 10 CBSE students in Tier-2 cities, estimate demand at ₹99, ₹299 and ₹599 per month. Factor in free YouTube alternatives and falling AI costs (40% annual decline). Recommend an initial price and show three-year margin evolution.”
Continuously ask: how do we make delivery cheaper while making the product more valuable? Angels and mentors on startupmentors.in should apply the same filter to every pitch.
Frequently asked questions
Why do falling costs create explosive demand?
Lower prices can increase demand through price elasticity. Entrepreneurs who drive or benefit from that cost decline can capture the value.
How did Reliance Jio make mobile internet more widely used?
Jio reduced the cost of a gigabyte from often more than ₹200 before 2016 to below ₹10, causing usage to explode.
How did Zerodha grow despite lower brokerage fees?
Zerodha drove fees toward zero on a low-marginal-cost technology platform, and volume growth more than offset lower revenue per trade.
What should startup founders ask about their products?
They should continuously ask how to make delivery cheaper while making the product more valuable.