Pricing Software Products - Pragmatic...
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Pricing Software Products Delight Your Customers While You Turn a Profit Jim Semick, ProductPlan
Transcript of Pricing Software Products - Pragmatic...
Pricing Software Products
Delight Your Customers While You Turn a Profit
Jim Semick, ProductPlan
About Pragmatic Marketing
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Experts in technology product management and product marketing
Specialize in training
Trained hundreds of thousands of people at thousands of companies since 1993
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 proposition 8
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So Many Pricing Flavors Per-user User + 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 savings Time savings Increased revenue Meet business objectives
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Qualitative Value Reduced frustration Lifestyle benefits Reduced risk (sleep better) Looking good (social benefit)
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Estimate Lifetime Value Early
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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 Value Cost 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 Motivates Lifestyle benefits from conducting meetings remotely
Reduced frustration from switching to an easier-to- use solution
Reduced pain from switching to an 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 protected] (email me for slides)
Join the conversation and learn more: Website: www.productplan.com Blog: New articles on pricing Webinars: Tomorrow: “Building Better Roadmaps” Plus: Product Mgmt Articles, Free Product Trials and More!
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@productplan
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