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Spending a lot of time thinking about pricing lately
Sharing questions to ask when coming up with pricing models for enterprise products:
Sharing questions to ask when coming up with pricing models for enterprise products:
1/ What budget are we coming out of (marketing, engineering, etc.)?
This will direct us to the right buyer profile
This will direct us to the right buyer profile
2/ Which personas need to sign off on the purchase?
Are individual users the only ones we need to convince to buy or is it a larger enterprise sale where we’ll need VP-level buy-in, security, and procurement?
Are individual users the only ones we need to convince to buy or is it a larger enterprise sale where we’ll need VP-level buy-in, security, and procurement?
3/ Is this net new spend or replacement spend?
This will help us understand if budget has to be created for us or if it already exists; if it's new, we will likely need to build the ROI story to justify the budget
This will help us understand if budget has to be created for us or if it already exists; if it's new, we will likely need to build the ROI story to justify the budget
4/ What is the ROI for the customer?
I strongly believe all enterprise software can be put into a cost/benefit framework
I strongly believe all enterprise software can be put into a cost/benefit framework
5/ What unit are we using to price (by seat, by event, by usage, by service, etc.)?
How does that compare to how competitors price and whose pricing model will be more attractive to customers?
How does that compare to how competitors price and whose pricing model will be more attractive to customers?
6/ What features will customers pay for?
Doing discovery on this early can help you understand your true market size
Doing discovery on this early can help you understand your true market size
7/ Will margins be maintained as customers increase usage?
If our product will ingest more customer data as usage goes up, our cost of storing and managing that data could significantly reduce their gross margin
If our product will ingest more customer data as usage goes up, our cost of storing and managing that data could significantly reduce their gross margin
8/ As customers use us more, does their ROI go up or down?
If the ROI goes up, have we structured pricing so that we can charge more?
If the ROI goes down, pricing should be tweaked to prevent churn.
If the ROI goes up, have we structured pricing so that we can charge more?
If the ROI goes down, pricing should be tweaked to prevent churn.
9/ Are we charging for implementation and support work?
If it takes significant time and resources to implement and maintain customers, charge for that work
If it takes significant time and resources to implement and maintain customers, charge for that work
