Utilizing your pricing for growth WMD 2016

@PriceIntel

http://www.priceintelligently.com/wmd

patrick@priceintelligently.com

@PriceIntel

We live in a world where acquisition, as we know it, is dead.

@PriceIntel

Who are you?

@PriceIntel

Happy customers big and small

ProfitWellSaaS pricing

software and tech enabled services

Free financial metrics for subscription

businesses

@PriceIntel

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

@PriceIntel

The market is becoming saturated and unit economics just aren’t what they used to be…

@PriceIntel

The relative value of features is declining.All software is going to $0.

@PriceIntel

“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

WTP

as

% of

WTP

4 Y

ears

Ago

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

CAC is increasing over time.

@PriceIntel

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

CAC

as %

of

CAC

4 Ye

ars

Ago

-15%

0%

15%

30%

45%

60%

4 Years Ago 3 Years Ago 2 Years Ago 1 Year Ago Today

B2B B2C

@PriceIntel

We make matters worse by focusing on the wrong fundamentals

@PriceIntel

Asked Founders/Executives

@PriceIntel

What we find importantC-Level/Founder Growth Preferences

% o

f tot

al c

ompa

nies

0%

25%

50%

75%

100%

More logos Making more money per customer Keeping customers around longer

N = 1,432 SaaS companies

@PriceIntel

There are clear winners and losers in this environment.

@PriceIntel

Death correlates to acquisition focused teamsOf those companies who died, what was the makeup of their growth

% o

f Res

pond

ents

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

Balanced growth velocity is much largerHow do growth rates compare to our two growth groups?

% o

f Res

pond

ents

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

The root cause here stems from a lack of buyer centricity.

@PriceIntel

We don’t really know our buyers

@PriceIntel

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

We don’t know our buyers that wellWhich single category best describes your buyer personas?

% o

f Res

pond

ents

0%

25%

50%

75%

100%

Thought about them Central document Quantified buyer personasN = 1,647 SaaS companies

@PriceIntel

We don’t do a lot of cust dev conversationsHow many cust dev conversations are you having per month?

% o

f Res

pond

ents

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

We aren’t truly testing that muchHow many tests or experiments are you running each month?

% o

f Res

pond

ents

0%

25%

50%

75%

100%

# of tests/experiments

0 1 to 3 4 to 10 11+

N = 1,647 SaaS companies

@PriceIntel

This should be scary.

@PriceIntel

Everything aligns to the customer

Point of Conversion

Drive Customer #1

Offer Product #1

Offer Product #2

Drive Customer #2Drive Customer #3

Offer Product #3Justify price #1

Justify price #2

Justify price #3

@PriceIntel

How do we fix this?

@PriceIntel

Quantify your buyer personas

@PriceIntel

Let’s walk through an example…

@PriceIntel

ProfitWell

@PriceIntel

“Oh you’re like….”

@PriceIntel

“Oh you’re like….”

37 Other Competitors

(we know about)

@PriceIntel

Go to the customer!

@PriceIntel

For the love of God. Talk to your customer.

@PriceIntel

Great. How do we do that?

@PriceIntel

1

2

3

Your Process at a High Level

Buyer Personasand Design

1

Data CollectionAnd Segmentation

2

Data ConsolidationAnd Analysis

3

@PriceIntel

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

Experimental Design

@PriceIntel

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

Relative Preference AnalysisStatistical 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

What do people value?

@PriceIntel

“Please rank the following features on a scale of 1 to 10…”

Depth of your metrics

Beautiful Design

Actionability from your metrics

Accuracy of your metrics

0 0.25 0.5 0.75 1

@PriceIntel

@PriceIntel

What do your customers value the most?

More on: Relative Preference Analysis

@PriceIntel

What do your customers value the most?

More on: Relative Preference Analysis

@PriceIntel

What do your customers value the most?

More on: Relative Preference Analysis

@PriceIntel

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

Relative Preference AnalysisStatistical 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

How much are they willing to pay?

@PriceIntel

• 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

How much are your customers willing to pay?

More on: Relative Price Sensitivity Meter

@PriceIntel

WTP for SaaS MetricsWTP 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

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

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

WTP for Churn RecoveryWTP 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

WTP for Rev RecWTP 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

A good entry point

Low CAC with constant value

Creates the Requirement

Path to Share of Wallet

ProfitWellFinancial 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

12 hours total.

@PriceIntel

12 hours total. $2089.

@PriceIntel

You will be left behind if you think you can brute force your growth.

@PriceIntel

http://www.priceintelligently.com/wmd

patrick@priceintelligently.com

@PriceIntel