Requests for Advice 

Candidly, as there are so few software pricing consultants with my scope of real-world experience ... I get to have a lot of conversations about the issues, challenges and regrets that tech founders, executives and investors face.

Because there are so many factors, variables, conditions and scenarios to consider when making better-informed monetization and pricing strategy decisions ... it is common for these conversations to close with the following question.

QUESTION
What is your #1 piece of advice for how a Software and SaaS business should think about pricing?
 
ANSWER
Give your pricing a chance.

Setup Your Pricing   
The best way to "give your pricing a chance" ... is to continuously test and fine-tune new ways to better setup your pricing, with improved value messaging at every touchpoint.
 
It is common for leaders to conclude or suspect that pricing is the cause for low (or decreasing) conversions, wins or renewals.  They may even reference verbatims from prospects, customers or sales staff as proof that pricing is too high or that a discount is necessary.
 
Remember 
It's not the price they don't like, but what they understand they are (or are not) getting for that price.

Key Questions
Here are the most important questions to be asking and answering often:

Q1:  How well are you setting up your pricing?
 
Q2:  If someone asked, how would you explain your pricing?
 
Q3:  Are you making a compelling and credible value case for why your pricing makes sense?
 
Q4:  Are you giving your value advantages the best chance to differentiate you from alternatives?
 
Q5:  If you and your team do not believe in your pricing, why would your prospects and customers?
 
Value Clarity = Pricing Confidence
As you increase value clarity, you simultaneously increase pricing confidence in the minds of ….

• yourself
• your sales team
• your entire organization
• your prospects
• your customers

 
The better you MAKE A CASE FOR YOUR VALUE, the better you make a case for your pricing.
 
The most common reason … prospects do not choose you -or- customers leave you … is they do not believe you are worth it.
 
Top Priority Recommendation 
One of the best (most effective) ways to understand, demonstrate and communicate value … is to contrast LIFE WITHOUT -vs- LIFE WITH your solution.
 
The single most important and productive investment of your time is to get the right people in the same room and on the same page regarding how you make a meaningful and measurable difference in the lives of your customers. 

Simply start with two columns on a whiteboard;
    (a) Life Without - Status Quo
    (b) Life With - Your Solution 

Be honest and realistic with how you actually help them save money, make money, save time, increase quality, avoid risk, achieve compliance, etc.

Do This Next 
Use the above LWO-LW and map it to: Bain's, "The 30 Elements of Value" (B2C), "The B2B Elements of Value" or Christensen's, "Jobs To Be Done". 

• I created a simple tool to help you get started [ today ] making meaningful progress.
  • Download the B2B version here
  • Download the B2C version here

Reminders

• Your pricing determines both your revenue and your profits.  Get paid what you are worth.
• Ultimately (and literally) ... you are worth ... the prices you accept. 
• It is easy to book a Strategy Session here.​

LWO-LW Example
Below is a quick example of how Logikcull presents a well-designed Value Visual of Life Without (Old Way) and Life With (New Way) the capabilities Logikcull enables for its customers. ​

Here are a few more examples ... 

Here is one more example ... 

Efficiently Frame Value + Qualify Customers

I have been watching Alteryx's approach to including pricing on their website for years (pre and post IPO). 

Below are some quick notes (I will add some additional, historic screenshots soon) .... 

• the price points displayed frame the value story and conversation
  • you know going into the conversation where your budget needs be
  • this is not a low-price solution 
  • feel free to have high expectations
  • this is a 1-year agreement ... not a month-to-month purchase 
• the displayed pricing efficiently compels website visitors to self-qualify themselves as a potential Alteryx customer
  • higher than you expected? ... well continue your search elsewhere
  • within your budget or worth the effort to increase your budget? ... continue to learn more
• Why Alteryx Page notes 
  • it exists .... do you have a "Why ___" page?
  • it explicitly calls out why they are "different" 
  • succinct and intentional copy 
• Bonus
  • take a look at the chat option prompts 
  • do you think each option is routed differently? 

Click through the following visuals.
​

Below are nine (9) quick reminders to encourage you to refresh your curiosity, interest and intent to the topics of "profit" and "pricing".  
​
What if, during your next leadership or board meeting, you flipped your P&L and started with the following to better validate your "business model" and "business strategy".

Your Pricing Determines Your Profits

1.  Return on Market Share
​Careful how you approach gaining market share. You can drastically dilute the profit potential of your market.

2.  Return on Ideas
Ideas that are not monetized (profitably) are called hobbies or charity. Some invest a lot of time and money into finding this out.

3.  Evasive and Earned 
Profit is both fragile and slippery. Profit is not loyal and will not be taken for granted.

4.  Profit Requirements 
You cannot calculate PROFIT without a PRICE.

5.  The Metric of Metrics
PROFITABILITY measures every business decision you make.

6.  Source of Sustainable Success
PROFITABLE companies (or profitable investors) are the only means for UNPROFITABLE companies to have a chance to be considered successful.

7.  Profit Levers
Only Four (4) Options to Improve Profits ...         
  1) Reduce Fixed Costs
  2) Reduce Variable Costs
  3) Increase Sales
  4) Increase Prices 

8.  Exit Levers
Unprofitable businesses, subsidized by investors, do not last unless they become profitable or acquirers believe you can contribute to their profitability. ** With many large corps not being able to generate profits on acquisitions that looked so promising, be careful if that is your exit strategy.

9.  Source of All Profits 
ALL the revenue and profits created ... past, present or future ... by every business or person ... is the result of pricing decisions.

Do not be merely curious or interested in profits ... achieving, growing and sustaining profits requires you be relentlessly intentional.   

Follow-through ... you won't regret it.

How will they know about you?

If you're not aware of Revenue Due Diligence (see below) ... in particular #5, "How will they know about you?" ... you may pause and consider if cold-emails on a Saturday is worth a try.

  -- How enthusiastic are you about the difference you make in lives of your customers?
  -- Does your product or solution actually deliver outcomes they care about? 


But it's Saturday ... that's right and it may be the very best day for some people to discover you.

What if you started testing and fine-tuning a deliberate Saturday Awareness effort .... would it produce 1, 10, 100 or 1,000 new opportunities that would never happen on a weekday?

I get it, you still wonder if ... for every new opportunity created, you also create 10 pissed-off people, who now will never consider your company. 

But wait, if your product or solution really makes a difference ... maybe you can avoid people getting pissed-off for not knowing you even exist.


Truth is ... there are only 365 days each year for people to discover you ... and 14% (52) are Saturdays ... 28% (104) are weekends.

Q:  How will they know about you?

Q:  How many could have discovered you on a Saturday?

Q:  Are you only enthusiastic about the outcomes you can deliver customers who discover you on a weekday?

Q:  How much revenue growth can be unlocked on a Saturday?


Enjoy the rest of your weekend,

Chris Hopf


PricingWire helps software and technology innovators achieve their revenue goals faster and with more confidence.  Learn more here.

Without a Profit Model, do you have a Business Model?

In the image above, we clearly see the significant difference between the volume of Google searches for "business model" ... compared to other likely and related terms.
[ United States -- Past 12 mos. -- "model" ] 

When one thinks about it, such is reflective of how infrequent we hear conversations on the specific topic of profit or profitability (bottom-line).  If the topic of profit does comes up, it is often short-lived as such conversations shift to related topics ... but rarely do they loop-back and sync all participants on how what was discussed impacts profits. 

When someone performs a search due to curiosity, interest or intent related to "business model", should we imply they, by default, are equally curious, interested or intend to better understand "business models" within the context of profit as well?

But most are likely aware that such is more often not the case.

If one's curiosity, interest or intent in "business" is of such proportionately more importance, you would think the topic of "profit" would be closer to the same.

Even though the term "business" is more broad and could be assumed to include curiosity, interest or intent regarding pricing, revenue and sales ... and further, "of  course we mean profitable pricing, profitable revenue and profitable sales" ... we all know based on experience that profit is rarely part of the conversation.

Maybe, the search trends are more reflective of the number of people who are merely curious about "business models" than those interested in understanding that a successful and sustainable business is only possible through profits ... and perhaps even fewer search with intent to grow or sustain profits.

What if we used "strategy" in our search terms instead of "model" ... let's see.

In this next image above, I was pleased to see "pricing strategy" gain relative to "business strategy" ... but we also know that more time and attention is invested in "sales strategy" and "marketing strategy" than is invested in "pricing strategy" or "profit strategy" (more on why that is can be found here). 
[ United States -- Past 12 mos. -- "strategyl" ] 

Let's take a look at some more broad, but common, terms used in searches and everyday business conversations ... 

Overall, whether looking at the United States or Worldwide above .... there is a gradual downward-trend since 2004. 

Again, to be sure, these are very broad terms that are used in many different contexts.  But also note that "profit" and "pricing" trail far behind. 

Below is a simple attempt to encourage you to shift your curiosity, interest and intent to the topics of "profit" and "pricing".  

What if, during your next leadership or board meeting, you flipped your P&L and started with the following to better validate your "business model" and "business strategy".
​
1.  Return on Market Share
​Careful how you approach gaining market share. You can drastically dilute the profit potential of your market.

2.  Return on Ideas
Ideas that are not monetized (profitably) are called hobbies or charity. Some invest a lot of time and money into finding this out.

3.  Evasive and Earned 
Profit is both fragile and slippery. Profit is not loyal and will not be taken for granted.

4.  Profit Requirements 
You cannot calculate PROFIT without a PRICE.

5.  The Metric of Metrics
PROFITABILITY measures every business decision you make.

6.  Source of Sustainable Success
PROFITABLE companies (or profitable investors) are the only means for UNPROFITABLE companies to have a chance to be considered successful.

7.  Profit Levers
Only Four (4) Options to Improve Profits ...         
  1) Reduce Fixed Costs
  2) Reduce Variable Costs
  3) Increase Sales
  4) Increase Prices 

8.  Exit Levers
Unprofitable businesses, subsidized by investors, do not last unless they become profitable or acquirers believe you can contribute to their profitability. ** With many large corps not being able to generate profits on acquisitions that looked so promising, be careful if that is your exit strategy.

9.  Source of All Profits 
ALL the revenue and profits created ... past, present or future ... by every business or person ... is the result of pricing decisions.

Do not be merely curious or interested in profits ... growing and sustaining profits requires you be intentional.   

Follow-through ... you won't regret it.