pricing software products: pragmatic marketing webinar
TRANSCRIPT
Pricing Software Products
Delight Your Customers While You Turn a Profit
Jim Semick, ProductPlan
About the Presenter
Jim Semick
• Founder of ProductPlan, roadmap software for
product & marketing teams
• On founding team of AppFolio (B2B SaaS)
• Validated and helped launch GoToMeeting and
GoToMyPC (acquired by Citrix)
• Frequent speaker on product management
@jimsemick
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Agenda
Why it’s a new world for pricing models
Why “customer value” is integral to successful pricing
Key considerations: early validation and lifetime value
Case study examples
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Poll
In your organization, who determines pricing? • Product Management• Marketing• Sales / Finance• Other
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More opportunities than ever to differentiate through pricing
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Traditional Software Pricing
Limited pricing model options
Perpetual license fees, enterprise server licenses…etc.
Maintenance agreements
Upgrade fees
Disconnected from the value proposition
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Software Pricing: A New World
Dozens of new models
Subscription-based
Service often included
Always updated
A part of the value proposition7
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So Many Pricing FlavorsPer-userUser+Free (G2M, ProductPlan)
Storage (Dropbox)
Features / packages Project (Basecamp)
Per item/contact (AppFolio)
Freemium (LinkedIn)
Data / Processor time (AWS)
Per-node/server (Hadoop)
Per visitor/traffic (AdRoll)
Open Source (Red Hat)
Advertising (Facebook)
Broker (AirBnB)
…and many more
Discovering the Best Model
In-depth interviews with buyers
Validate with decision-maker
Ask open-ended questions
Understand the job to be done
Understand pains and gains
Understand purchase process
The goal…
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Align Pricing With Customer Value
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Quantitative Value
Cost SavingsTime SavingsIncreased RevenueMeet Business Objectives
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Qualitative Value
Reduced frustrationLifestyle benefitsReduced risk (sleep better)Looking good (social benefit)
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Estimate Lifetime Value Early
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LTV > 3* CAC Customer Acquisition Cost
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Pricing is a Part of the Product
When is the Right Time to Set Pricing for New Products?
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Poll
For your last product launch, when was pricing determined?
• Before development• During development (e.g. during Beta)• Immediately before Launch• After Launch
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Typical Pricing Model Decisions
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Move Pricing Validation Earlier
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Case Studies
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Easy to understand vs. competitors
Resonated with customers
Success-based – pay more as business grows
Additional revenue through value+ services
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“All You Can Meet”
Unlimited meetings
No “overage” charges
How did we decide pricing?
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Quantitative ValueCost and time savings (reduced or eliminated travel)
Cost savings (switching from per-minute pricing of existing solutions)
Increase revenue (close more sales deals by conducting better demos)
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Qualitative Value MotivatesLifestyle benefits from conducting meetings remotely
Reduced frustration switching to an easier-to- use solution
Reduced pain from switching to easier-to-budget solution
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Case Study
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Food for Thought
Customers don’t care about your costs
Don’t be tempted by competitors – innovate!
More tools than ever to test pricing
Sales model influences pricing (and vice versa)
Pricing is highly psychological – factor this in
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Jim Semick
Twitter:
@jimsemick
Email:
(email me for slides)
Join the conversation and learn more:
Website: www.productplan.com
Blog: 3 new articles on pricing
Webinars: Tomorrow: “Building Better Roadmaps”
Plus: Product Mgmt Articles, Free Product Trials and More!
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@productplan
More Information
Contacts:• Stacey Weber
@pragmaticmktg
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Thank you for attending!
Download this webinar and sign up for more at
pragmaticmarketing.com/live