1.
Why a pricing company gives away free software
BoS 2016
@PriceIntel

2.
http://www.priceintelligently.com/bos
Patrick@priceintelligently.com
@PriceIntel

3.
Building product is getting harder, not
easier…and it’s going to increase in
difficulty.
@PriceIntel

4.
The age of throwing shit against the wall and
seeing what sticks is over.
@PriceIntel

5.
Who in the world are you?
@PriceIntel

6.
Happy customers big and small
ProfitWell
SaaS pricing
software and tech
enabled services
Free financial metrics
for subscription
businesses
@PriceIntel

7.
We’ve seen inside more software companies
than anyone else on the planet.
@PriceIntel

8.
The market is becoming saturated.
@PriceIntel

9.
Our world is more competitive, making
switching costs easier.
@PriceIntel

10.
Competition is growing
N = 289 SaaS companies, +/- 3.44% MoE at 95% level
0
2
4
6
8
10
12
5 Years Ago 3 Years Ago 1 Year Ago Today
#ofCompetitors How many competitors did you have during the following periods?
@PriceIntel

11.
Competition is here
0%
10%
20%
30%
40%
50%
0 to 2 3 to 5 6 to 10 11+
%ofRespondents
How many competitors do you current have?
(Companies around for less than 1 year)
N = 547 software companies
@PriceIntel

12.
The relative value of features is declining,
making a race to the bottom for feature based
pricing.
@PriceIntel

13.
“Differentiation” isn’t what is used to be…
N = Varies by line, but minimum of 10,000 customer respondents per line
0%
25%
50%
75%
100%
125%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
WTPas%ofWTP4YearsAgo
Willingness to pay over time relative to WTP 4 years ago
Core Features Single Sign On Integrations Analytics
@PriceIntel

14.
CAC is increasing over time.
@PriceIntel

15.
Acquiring a customer is getting pricier
N = Varies by line, but minimum of 453 companies per data point
-25%
0%
25%
50%
75%
4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today
CACas%ofCAC4YearsAgo
Blended CAC relative to four years ago
B2B B2C
@PriceIntel

16.
“Good”, “Customer driven” product is
becoming exceptionally more important
@PriceIntel

17.
We’re really ill equipped for the transition.
@PriceIntel

18.
We don’t really know our buyers
@PriceIntel

19.
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

20.
We don’t know our buyers that well
0%
25%
50%
75%
100%
Thought about them Central document Quantified buyer personas
%ofRespondents
Which single category best describes your buyer personas?
N = 1,647 software companies
@PriceIntel

21.
We don’t do a lot of cust dev conversations
0%
25%
50%
75%
100%
Less than 10 11 to 25 26 to 50 51+
%ofRespondents
# of cust dev conversations
How many cust dev conversations are you having per month?
N = 1,647 software companies
@PriceIntel

22.
We don’t send any cust dev surveys
0%
25%
50%
75%
100%
0 1 2 3+
%ofRespondents
# of cust dev surveys
How many cust dev surveys are you sending each month?
N = 1,647 software companies
@PriceIntel

23.
We aren’t truly testing that much
0%
25%
50%
75%
100%
0 1 to 3 4 to 10 11+
%ofRespondents
# of tests/experiments
How many tests or experiments are you running each month?
N = 1,647 software companies
@PriceIntel

24.
We’re obsessed with acquisition.
@PriceIntel

25.
Looked at 25,679 blog posts.
@PriceIntel

26.
We love talking about acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalarticles
Category of growth articles written from 2014 to 2106
N = 25,679 blog posts written between 2014 to 2016
@PriceIntel

27.
Looked at 6,324 B2B companies
@PriceIntel

28.
We love building for acquisition
0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalcompanies
Category of B2B SaaS companies
N = 6,324 companies currently active
@PriceIntel

29.
These are just the acquisition companies
@PriceIntel

30.
Asked Founders/Executives
@PriceIntel

31.
What’s most important?
0%
25%
50%
75%
100%
More logos Making more money per
customer
Keeping customers around
longer
%oftotalcompanies
C-Level/Founder Growth Preferences
N = 1,432 SaaS companies, +/- 2.19% MoE at 95% level
@PriceIntel

32.
What’s most important?
N = 1,218 SaaS companies, +/- 2.61% MoE at 95% level
0%
25%
50%
75%
100%
Acquisition Monetization Retention
%oftotalcompanies
C-Level/Founder Spend Their Time
@PriceIntel

33.
If we improve each lever by the same amount,
which lever causes the most growth?
@PriceIntel

34.
Impact of improving each
growth lever
3.32%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel

35.
Impact of improving each
growth lever
3.32%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel

36.
Impact of improving each
growth lever
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improving each lever by 1%
N = 578 SaaS companies, +/- 2.89% MoE at 95% level
@PriceIntel

37.
Improving retention and monetization has 2-4x
the impact of focusing on acquisition.
@PriceIntel

38.
What we find important
0%
25%
50%
75%
100%
More logos Making more money per
customer
Keeping customers around
longer
%oftotalcompanies
C-Level/Founder Growth Preferences
N = 1,432 SaaS companies
@PriceIntel

39.
What works for growth
3.32%
12.70%
6.71%
0%
5%
10%
15%
Acquisition Monetization Retention
%impactonthebottomline
Impact of improving each lever by 1%
N = Data from 512 companies
@PriceIntel

40.
This should be scary.
@PriceIntel

41.
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

42.
How do we fix our monetization?
@PriceIntel

43.
Two ways to better monetization
• Quantify your buyer personas
• Implement a customer development process
@PriceIntel

44.
Persona-Product Fit
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

45.
If you don’t know who you’re driving to your
product, how do you know what build?
@PriceIntel

46.
Let’s walk through an example…
@PriceIntel

47.
ProfitWell
@PriceIntel

48.
The Cancel-Shah Product Model
@PriceIntel

49.
“Oh you’re like….”
@PriceIntel

50.
“Oh you’re like….”
37 Other
Competitors
(we know about)
@PriceIntel

51.
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

52.
Go to the customer!
@PriceIntel

53.
For the love of God. Talk to your customer.
@PriceIntel

54.
Great. How do we do that?
@PriceIntel

55.
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

56.
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

57.
Experimental Design
@PriceIntel

58.
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

59.
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

60.
What do people value?
@PriceIntel

61.
“Please rank the following
features on a scale of 1 to 10…”
0 0.2 0.4 0.6 0.8 1
Accuracy of your metrics
Actionability from your metrics
Beautiful Design
Depth of your metrics
@PriceIntel

62.
@PriceIntel

63.
What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel

64.
What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel

65.
What do your customers
value the most?
More on: Relative Preference Analysis
@PriceIntel

66.
Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
@PriceIntel

67.
Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
Data in
Integrations
Metric Types
Data out
Integrations
Action Tools
@PriceIntel

68.
Your Experimental Design
More on: Relative Preference Analysis
Main Category
Support
• Phone
• Live Chat
• Email
• …
Data in
Integrations
Metric Types
Data out
Integrations
Action Tools
All Demographics and Personas
@PriceIntel

69.
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

70.
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

71.
How much are they willing to pay?
@PriceIntel

72.
Basic Plus Premium
$49 $149 $299
I only have one cool
feature.
The same cool feature. Yup, same one.
Oh! You can only get
this here.
Well…and here.
Huzzah! I’m the plan
with absolutely
everything.
@PriceIntel

73.
• 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

74.
How much are your
customers willing to pay?
More on: Relative Price Sensitivity Meter
@PriceIntel

75.
WTP for SaaS Metrics
$0
$50
$100
$150
$200
$250
$300
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
WTP
Size of Company (MRR)
WTP for a SaaS Metrics Solution
N = 234 companies
@PriceIntel

76.
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

77.
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

78.
WTP for Churn Recovery
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
WTP
Size of Company (MRR)
WTP for a Recovering Churn
N = 234 companies
@PriceIntel

79.
WTP for Rev Rec
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$0 - $50k $51k - $100k $101k - $250k $251k - $500k $501k+
WTP
Size of Company (MRR)
WTP for a Revenue Recognition
N = 234 companies
@PriceIntel

80.
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

81.
Our current monetization path
ProfitWell
Financial metrics for the subscription economy
Retain Rec Revenue
Delinquent credit
card recovery
through email, in-
app snippet, and
optimization
Algorithmically
solved 2-3 days of
work amongst
accounting and
finance team
@PriceIntel

82.
12 hours total.
@PriceIntel

83.
12 hours total. $2089.
@PriceIntel

84.
Implement a pricing process
@PriceIntel

85.
Need to evaluate every 3 months and make
changes every 6 months.
@PriceIntel

86.
Changing Your Pricing
Customer/Market Research
Communication
Plan
Week:
1 2 3 4 5 6 7 8 9
Impact
Analysis
Customer Advisory
Panel
Implement
Changes
Step:
@PriceIntel

87.
Your Pricing Committee
Main Decision Maker
(could be a member of the committee, as well)
Main Coordinator Typically in Product or Marketing
Product Leadership Corp Dev/Finance
Sales Leadership Marketing Leadership
@PriceIntel

88.
Monetization matters.
@PriceIntel

89.
Building a company is getting harder;
make it easier on yourself.
@PriceIntel

90.
http://www.priceintelligently.com/bos
Patrick@priceintelligently.com
@PriceIntel