Pricing Software Products Delight Your Customers While You Turn a Profit Jim Semick, ProductPlan
About Pragmatic Marketing Experts in technology product management and product marketing Specialize in training Trained hundreds of thousands of people at thousands of companies since 1993 2
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 3
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 4
Poll In your organization, who determines pricing? Product Management Marketing Sales/Finance Other 5
More opportunities than ever to differentiate through pricing 6
Traditional Software Pricing Limited pricing model options Perpetual license fees, enterprise server licenses, etc. Maintenance agreements Upgrade fees Disconnected from the value proposition 7
Software Pricing: A New World Dozens of new models Subscription-based Service often included Always updated A part of the value proposition 8
So Many Pricing Flavors Per-user Data/Processor time (AWS) User + Free (G2M, ProductPlan) Per-node/server (Hadoop) Storage (Dropbox) Per visitor/traffic (AdRoll) Features/packages Open Source (Red Hat) Project (Basecamp) Advertising (Facebook) Per item/contact (AppFolio) Broker (AirBnB) Freemium (LinkedIn) and many more 9
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 10
Align Pricing with Customer Value 11
Quantitative Value Cost savings Time savings Increased revenue Meet business objectives 12
Qualitative Value Reduced frustration Lifestyle benefits Reduced risk (sleep better) Looking good (social benefit) 13
Estimate Lifetime Value Early 14
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Pricing is a Part of the Product When is the right time to set pricing for new products? 16
Poll For your last product launch, when was pricing determined? Before development During development (e.g. during Beta) Immediately before Launch After Launch 17
Typical Pricing Model Decisions 18
Move Pricing Validation Earlier 19
Case Studies 20
Easy to understand vs. competitors Resonated with customers Success-based pay more as business grows Additional revenue through value+ services 21
All You Can Meet Unlimited meetings No overage charges How did we decide pricing? 22
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) 23
Qualitative Value Motivates Lifestyle benefits from conducting meetings remotely Reduced frustration from switching to an easier-touse solution Reduced pain from switching to an easier-tobudget solution 24
Case Study 25
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 26
Twitter: Email: Jim Semick @jimsemick jim@productplan.com (email me for slides) Join the conversation and learn more: Website: www.productplan.com @productplan Blog: New articles on pricing Webinars: Tomorrow: Building Better Roadmaps Plus: Product Mgmt Articles, Free Product Trials and More! 27
More Information Contacts: Rebecca Kalogeris rkalogeris@pragmaticmarketing.com @pragmaticmkting 28
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