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[WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"

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Patrick Campbell (Co-Founder & CEO, Price Intelligently)

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[WMD2016] Price Intelligently >> Patrick Campbell "What you need to know to have the best pricing and positioning"

  1. 1. Utilizing your pricing for growth
 WMD 2016 @PriceIntel
  2. 2. http://www.priceintelligently.com/wmd patrick@priceintelligently.com @PriceIntel
  3. 3. We live in a world where acquisition, as we know it, is dead. @PriceIntel
  4. 4. Who are you? @PriceIntel
  5. 5. Happy customers big and small ProfitWell SaaS pricing software and tech enabled services Free financial metrics for subscription businesses @PriceIntel
  6. 6. We’ve seen inside more software companies than anyone else on the planet. @PriceIntel
  7. 7. The market is becoming saturated and unit economics just aren’t what they used to be… @PriceIntel
  8. 8. The relative value of features is declining. All software is going to $0. @PriceIntel
  9. 9. “Differentiation” isn’t what is used to be… N = Varies by line, but minimum of 10,000 customer respondents per line Willingness to pay over time relative to WTP 4 years ago WTPas%ofWTP4YearsAgo 0% 30% 60% 90% 120% 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today Core Features Single Sign On Integrations Analytics @PriceIntel
  10. 10. CAC is increasing over time. @PriceIntel
  11. 11. Acquiring a customer is getting pricier N = Varies by line, but minimum of 453 companies per data point Blended CAC relative to four years ago CACas%ofCAC4YearsAgo -15% 0% 15% 30% 45% 60% 4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today B2B B2C @PriceIntel
  12. 12. We make matters worse by focusing on the wrong fundamentals @PriceIntel
  13. 13. Asked Founders/Executives @PriceIntel
  14. 14. What we find important C-Level/Founder Growth Preferences %oftotalcompanies 0% 25% 50% 75% 100% More logos Making more money per customer Keeping customers around longer N = 1,432 SaaS companies @PriceIntel
  15. 15. There are clear winners and losers in this environment. @PriceIntel
  16. 16. Death correlates to acquisition focused teams Of those companies who died, what was the makeup of their growth %ofRespondents 0% 25% 50% 75% 100% Less than $2.5M ARR $2.51M to $5M ARR $5.01M+ ARR Primarily Acquisition Growth Balanced Growth N = Minimum of 30 companies per category who died over the past 4 years @PriceIntel
  17. 17. Balanced growth velocity is much larger How do growth rates compare to our two growth groups? %ofRespondents 0% 60% 2012 2013 2014 2015 Primarily Acquisition Growth Balanced Growth N = Minimum of 512 companies per segment pulled from the middle 2/3 of companies in terms of growth rate. This, along with a dampening model was used to control for outlier spikes in growth rate. @PriceIntel
  18. 18. The root cause here stems from a lack of buyer centricity. @PriceIntel
  19. 19. We don’t really know our buyers @PriceIntel
  20. 20. Buyer Personas Table Stakes Tony • Valued features: • SFDC Integration • Chrome extension • Least valued features • Analytics • API access • WTP = ~$10/month • CAC = ~$22 • LTV: $160 Advanced Arnie
 • Valued features: • Analytics • API Access • Least valued features • Chrome extension • Premium support • WTP = ~$25/month • CAC = ~$56 • LTV: $325 @PriceIntel
  21. 21. We don’t know our buyers that well Which single category best describes your buyer personas? %ofRespondents 0% 25% 50% 75% 100% Thought about them Central document Quantified buyer personas N = 1,647 SaaS companies @PriceIntel
  22. 22. We don’t do a lot of cust dev conversations How many cust dev conversations are you having per month? %ofRespondents 0% 25% 50% 75% 100% # of cust dev conversations Less than 10 11 to 25 26 to 50 51+ N = 1,647 SaaS companies @PriceIntel
  23. 23. We aren’t truly testing that much How many tests or experiments are you running each month? %ofRespondents 0% 25% 50% 75% 100% # of tests/experiments 0 1 to 3 4 to 10 11+ N = 1,647 SaaS companies @PriceIntel
  24. 24. This should be scary. @PriceIntel
  25. 25. Everything aligns to the customer Point of Conversion Drive Customer #1 Offer Product #1 Offer Product #2 Drive Customer #2 Drive Customer #3 Offer Product #3 Justify price #1 Justify price #2 Justify price #3 @PriceIntel
  26. 26. How do we fix this? @PriceIntel
  27. 27. Quantify your buyer personas @PriceIntel
  28. 28. Let’s walk through an example… @PriceIntel
  29. 29. ProfitWell @PriceIntel
  30. 30. “Oh you’re like….” @PriceIntel
  31. 31. “Oh you’re like….” 37 Other Competitors (we know about) @PriceIntel
  32. 32. Go to the customer! @PriceIntel
  33. 33. For the love of God. Talk to your customer. @PriceIntel
  34. 34. Great. How do we do that? @PriceIntel
  35. 35. 1 2 3 Your Process at a High Level Buyer Personas and Design 1 Data Collection And Segmentation 2 Data Consolidation And Analysis 3 @PriceIntel
  36. 36. Persona-Product Fit Startup Steve • Valued features: • • • Least valued features • • • WTP = ~$/month • CAC = ~$ • LTV: $ Miderprise Marty
 • Valued features: • • • Least valued features • • • WTP = ~$/month • CAC = ~$ • LTV: $ @PriceIntel
  37. 37. Experimental Design @PriceIntel
  38. 38. What type of info do we want? • Demographic Information – How often do you look at your metrics? Team size? Revenue?... • Feature/Packaging Information – Which metrics? What features? Value props?... • Pricing Information – How much are they willing to pay? What frequency do they want to pay?... @PriceIntel
  39. 39. Relative Preference Analysis Statistical methodology to measure preferences for features, intention, and value propositions Your Customer Development Toolkit Price Sensitivity Analysis Proven model for gauging customer’s willingness to pay and price sensitivity Experimental Design Properly segmenting and breaking down the data. How do we ask the questions? @PriceIntel
  40. 40. What do people value? @PriceIntel
  41. 41. “Please rank the following features on a scale of 1 to 10…” Depth of your metrics Beautiful Design lity from your metrics curacy of your metrics 0 0.25 0.5 0.75 1 @PriceIntel
  42. 42. @PriceIntel
  43. 43. What do your customers 
 value the most? More on: Relative Preference Analysis @PriceIntel
  44. 44. What do your customers 
 value the most? More on: Relative Preference Analysis @PriceIntel
  45. 45. What do your customers 
 value the most? More on: Relative Preference Analysis @PriceIntel
  46. 46. Persona-Product Fit Startup Steve • Valued features: • Price • Design • Least valued features • Actionabiltiy • Depth • WTP = ~$/month • CAC = ~$ • LTV: $ Miderprise Marty
 • Valued features: • Accuracy • Uptime • Least valued features • Price • Design • WTP = ~$/month • CAC = ~$ • LTV: $ @PriceIntel
  47. 47. Relative Preference Analysis Statistical methodology to measure preferences for features, intention, and value propositions Your Customer Development Toolkit Price Sensitivity Analysis Proven model for gauging customer’s willingness to pay and price sensitivity Experimental Design Properly segmenting and breaking down the data. How do we ask the questions? @PriceIntel
  48. 48. How much are they willing to pay? @PriceIntel
  49. 49. • At what (monthly) price point does [PRODUCT] become too expensive that you’d never consider purchasing it? • At what (monthly) price point does [PRODUCT] start to become expensive, but you’d still consider purchasing it? • At what (monthly) price point does [PRODUCT] a really good deal? • At what (monthly) price point does [PRODUCT] too cheap that you question the quality of it? More on: Relative Price Sensitivity Meter How much are your customers willing to pay? @PriceIntel
  50. 50. How much are your customers willing to pay? More on: Relative Price Sensitivity Meter @PriceIntel
  51. 51. WTP for SaaS Metrics WTP for a SaaS Metrics Solution WTP $0 $75 $150 $225 $300 Size of Company (MRR) $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ N = 234 companies @PriceIntel
  52. 52. Persona-Product Fit Startup Steve • Valued features: • Price • Design • Least valued features • Actionabiltiy • Depth • WTP = ~$50/month • CAC = ~$ • LTV: $ Miderprise Marty
 • Valued features: • Accuracy • Uptime • Least valued features • Price • Design • WTP = ~$150-250/month • CAC = ~$ • LTV: $ @PriceIntel
  53. 53. Persona-Product Fit Startup Steve • Valued features: • Price • Design • Least valued features • Actionabiltiy • Depth • WTP = ~$50/month • CAC = ~$500-600 • LTV: $600 Miderprise Marty
 • Valued features: • Accuracy • Uptime • Least valued features • Price • Design • WTP = ~$150-250/month • CAC = ~$3000 • LTV: $1500 @PriceIntel
  54. 54. WTP for Churn Recovery WTP for a Recovering Churn WTP $0 $1,125 $2,250 $3,375 $4,500 Size of Company (MRR) $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ N = 234 companies @PriceIntel
  55. 55. WTP for Rev Rec WTP for a Revenue Recognition WTP $0 $875 $1,750 $2,625 $3,500 Size of Company (MRR) $0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+ N = 234 companies @PriceIntel
  56. 56. A good entry point Low CAC with constant value Creates the Requirement Path to Share of Wallet ProfitWell Financial metrics for the subscription economy 100% accurate SaaS metrics for free integrating 1- click with your billing system Central fulcrum to cust success, sales, finance, marketing e- team, and rest of stakeholders Allows interface to clearly point to problems and reinforce value of paid add-ons @PriceIntel
  57. 57. 12 hours total. @PriceIntel
  58. 58. 12 hours total. $2089. @PriceIntel
  59. 59. You will be left behind if you think you can brute force your growth. @PriceIntel
  60. 60. http://www.priceintelligently.com/wmd patrick@priceintelligently.com @PriceIntel

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