Managing Pricing
heavybit.com
heavybit.com
Right now we're working out some kinks with V1, but we're hard at work for the next version. Suggestions welcome. :)
So, I think you should shift it down the screen, below the bio, and keep the effect you currently have where it moves with me as I read the transcript.
"What matters is not so much the distance between the cost to produce something and the price to sell it. Focus on, the difference between the price and the perceived value to the end user. The perceived value has to be greater than the price! Don't build a business around cost + margin, build businesses around perceived value."
Focus on the incentive to buy, not the incentive to sell for your business.
http://yurylifshits.com/post/52854299110/8-pricing-strategie...
The podcast also covered collecting billing info in episode 179³ and briefly discussed handling credit card expirations in episode 184⁴.
¹ http://500.co/2013/07/18/the-data-behind-purchasing-behavior...
² http://www.startupsfortherestofus.com/episodes/episode-153-s...
³ http://www.startupsfortherestofus.com/episodes/episode-179-w...
⁴ http://www.startupsfortherestofus.com/episodes/episode-184
I still do not know how to price my service, do I price per seat, per year based on a random number, per $FROBIT used, or a one time sale?
I know I should price based on value, and my price should be less than the perceived value to my user. But I learnt that in my 10th grade business class.
However, that said it was a very well done presentation, and once someone has a working pricing structure then these tools will be useful improve business outcomes.
I have a service which identifies which accounts will pay for accounts receivable. IE: collections agencies. Numbers show it can move the needle double to triple digits depending on the account mix.
Right now, I'm planning on a per seat monthly subscription. Customers know how much they'll be charged each month, and I think it lets me focus on the value rather than community unit costs.
EDIT: Just a note, unfortunately, this is a very high touch environment. The upshot being that once a customer chooses you, they never leave. Even if they're being outright abused. (I have stories!)
I believe it was Patrick who recommended that on Twitter the other week.
If you're really getting X0% to Y00% in per-collector productivity then I say start by asking for for $100 per seat per month, if you're wedded to per-seat pricing. You can price anchor it around "less than a single collector-day" and that leaves plenty on the table for your clients. I'd then start walking the price up (if it is worth $100 a collector it is probably worth $150/$200/$250) until you start losing lots of sales on the pricing question.
If you've got very heterogenous clients number of people on the phones might not capture value as well. You might consider doing N tiers (maybe or maybe not publicly disclosed). I'd be thinking something along the lines of $500 for the mom&pop shops, $2.5k for "real businesses" doing debt collection, and $10k++ custom pricing for large/enterprise accounts. You could have multiple segmentation levers between plans, such as e.g. size of the average receivable, total volume of receivables, type of collection, what data sources you pull in to do the calculations ("Pay more get more!"), etc.
The great thing about high-touch sales is that if you hate how your pricing strategy interacts with any one client you just change it for the next one.
If you'd like to discuss this in more detail non-publicly, email me. I have a weird personal interest in this field and am happy to trade informal consulting on SaaS pricing for war stories.
I think those are really helpful for me, but more from a marketing or audience relationship point of view. For me, I am pretty clear that monetization will be indirect (like ad income, that kind of thing) so this is not so much about pricing for me.
But my challenge is that initial intuition piece -- that piece I know of as a concept of "in the blink of an eye" what people think, as their first reaction -- tends to be pretty negative. And I have done a lot of retrenching to back out of that negative relationship as much as I can and I currently have a single person with positive interest and relatively little harassment (compared to what it once was). So, for me and the problems I am contemplating, these seem more like marketing ideas. Which is fine. But I am wondering now how I can apply those concepts to that angle and not pricing per se.
But excellent piece. I forwarded it to a couple of people. Thanks for writing it (ugh -- video is a problem for me and the formatting of the transcript is kind of frustrating, FYI).