The SaaS & Web App Pricing Roundtable hosted by Techcelerate and moderated by Sixteen Ventures was a great success; especially given that it was pulled together at the last minute. The representatives of eDocr, Xero, PrudentCloud, MalinkoApp, & CapsuleCRM (to name a few) were not part of a typical meetup, though. Using Tandberg's (now a part of Cisco) state of the art telepresence, attendees from UK, Dallas, Texas, and San Francisco, California gathered together virtually, yet it felt like we were in the same room. Many thanks to Tandberg for offering their services and for their fantastic hospitality.
I started out the Roundtable with the slides below. I wanted to level set with the message that "Pricing is Marketing." Over the course of the two-hour event, the following topics came up:
Pricing Metrics - Per user, per seat, something else? Value-based or commodity-based (like storage)? Punish customers for increased use? Customers "gaming" the system.
Market Segmentation - Vertical-specifiic or segment-specific messaging and pricing, the lack thereof for some and the fact that doing this saved one company
Distribution via Trusted Advisors - Is the channel dead in SaaS or for Web Apps? Not with this group who do not utilize traditional technology-focused VARs but rather completely non-technical intermediaries such as accounting firms or fleet management companies to gain access to their end-customers. These are intermediaries that traditionally would not have touched a "software" product.
Pricing a solution with a completely new value proposition - How do you come up with pricing for a product that is brand new competing in a space that is just a few years old. This was a very interesting discussion
Free Trial & Freemium Conversions - The consensus was for B2B apps there should be at least a free trial, but how long? And what is a good conversion rate? What about Freemium?
Distribution - While the "Trusted Advisor" discussion was all about Channel Partners, App Stores was another topic that was discussed. With most app stores taking ~30% of your revenue, and potentially reaching an audience with different buying habits, business problems, etc. than your core or traditional audience, how do you change your pricing for that channel? Can you do in-app purchases to drive lifetime value in a channel that might provide less revenue up front?
The most interesting thing was, after two hours of talking about pricing, I brought up the fact that we never once busted out the spreadsheet to crunch numbers. Why? Because Pricing is Marketing. You need to know that up front and invoke the holy trinity of pricing: How They'll Buy, What They'll Pay, and How They'll Pay. Once you understand all of that, now you can start to figure out your pricing strategy. Too many pricing discussions focus on formulas or bottom-up, cost-plus pricing. This is the wrong way. You have to know what your market wants before you get too deep in that spreadsheet. Go talk to your customers!
Overall, it was a fantastic event with everyone walking away having learned something new. I was very pleased to be a part of it.
Couldn't make it to the roundtable but you'd still like help with your Pricing & Distribution strategy? Take advantage of our Pricing Page Tune-Up™ & Overhaul services or schedule a Quick Start session with Sixteen Ventures today.
Author: Lincoln Murphy (@lincolnmurphy on Twitter)