Premium Pricing for DTC Hardware: Lessons From Terra Kaffe

Sahand Dilmaghani is the founder and CEO of Terra Kaffe.Equipped with a global perspective, Sahand earned his MBA in France, worked as Head of Finance & Corporate Development at Unu (an electric scooter startup in Berlin), and is fluent in Mandarin, Farsi, German, and English.His entrepreneurship started young and never wavered and his enterprising attitude has inspired a wide range of diverse ideas. Throughout it all, he's been obsessed with high-quality coffee, believing that finding it should be simple and sustainable.In founding Terra Kaffe, he was inspired to blend the best of European coffee culture and the pioneering spirit of the US start-up scene. A son of two architects, it was only a matter of time before he found his way back to design.In This Conversation We Discuss:[00:00] Intro[01:24] What Terra Kaffe makes[01:50] Where the idea came from[03:30] From first idea to first prototype[04:35] Hurdles in getting to production[05:50] Trading tooling ownership for US rights[07:25] Bootstrapping vs. having capital in the bank[09:15] Treat spending like an investment committee[10:10] Intelligems[11:40] Cutting the first purchase order in half[12:35] Using a deposit-and-balance pre-order model[14:10] Klaviyo[16:05] Finding pre-launch customers without crowdfunding[17:15] Running street demos across New York City[18:00] Turning customer conversations into ad copy[18:20] Starting paid ads at $25 a day[19:10] Why a $150 price increase made sense[19:40] How raising the price cut CAC to $28[21:08] Why underpricing made customers suspicious[23:40] Showing up premium with no team[24:25] Flowium[25:30] The rollercoaster of the growth phase[26:20] Launching the 02 in a cash crunch[27:35] Launching the Demi at a lower price point[28:20] Offering rentals alongside purchases[29:30] Who renting a machine works best for[30:20] Rental economics vs. Nespresso pods[31:25] Where to find and visit Terra KaffeResources:Subscribe to Honest Ecommerce on YoutubeThe world’s best super automatic espresso machines terrakaffe.com/ Follow Sahand Dilmaghani linkedin.com/in/sahand-dilmaghani/ Book a demo today at intelligems.io/audit Get your free demo klaviyo.com/honest Book a free lifecycle diagnosis call flowium.com/If you’re enjoying the show, we’d love it if you left Honest Ecommerce a review on Apple Podcasts. It makes a huge impact on the success of the podcast, and we love reading every one of your reviews!