Patrick Campbell: Value Based Pricing – Talk Recap – FemtoConf 2018

The FemtoConf 2018 Notes and recaps can be found on the central hub page.

Website: profitwell.com 
Twitter: @Patticus

  • How growth is changing: What we think works doesn’t actually work. This has dire consequences for your business. 
  • We are living on another planet: 
    • 10 years ago you could build a database with a shiny UI and you were good
    • Today you face fierce competition
  • Number of competitors when you started: 
    • 5 years ago: about 3
    • 1 year ago: roughly 10
  • Sales & Marketing channels are plentiful
    • Number of sales & marketing channels utilized
      • 15 years old: 2.31
      • 1 year old: 13.22
    • competition is getting harder and harder
  • Time taken to fully onboard product in an organization: 
    • 10 years ago: 56.7 hours
    • 1 year ago: 
  • Customer acquisition cost (CAC) has increased significantly by about 70% over the past 5 years
  • relative value of features is declining
    • willingness to pay has declined over time
    • Customers do not care about your features (average NPS is actually down from 33 to 10.2) 
  • What once worked is no longer working for building a business
    • Our playbook was acquire, acquire, acquire
    • Pricing (and retention) is an afterthought
  • Acquisition is now table stakes
  • Impact of improving:
    • Monetization >> Retention >> Acquisition
  • We are building the wrong product, because we don’t talk to our customers enough

How do we fix this?

  • Stop building. Stop buying ads. Stop guessing and checking. 
  • For the love of God: Talk to your customer!
  • How do we do that? 
    • There are three types of data you’re really looking to measure: 
      • Demographic data (purely for segmentation – i.e. size of team, revenue, software they are using)
      • Relative Preference Data
      • Willingness to Pay Data
    • Surveys
      • a non-compensated survey should be at most 5 questions long
      • compensated surveys maximum of 15 minutes
    • Start with a draft of your buyer personas
    • What’s our experimental design look like? 
      • Relative preference: What do people value? 
        • Don’t let them rank features on a scale of 1 to 10
        • Force them to decide on the most/least important feature
  • How much are people willing to pay? 
    • At what (monthly) price point does PRODUCT become too expensive that you’d never consider purchasing it? 
    • At what (monthly) price point does PRODUCT start to become too expensive, but you’d still consider purchasing it?
    • At what (monthly) price point is PRODUCT a really good deal?
    • At what (monthly) price point does PRODUCT become so cheap that you question the quality of it? 

Share Button
About Christoph

Christoph lives in Munich, Germany and is bootstrapping his own SaaS application as a part-time entrepreneur.

He likes to write on this blog about anything of relevance to single-founder bootstrapped software startups.

Trackbacks

  1. […] Patrick Campbell: Value based pricing […]

  2. […] Value Based Pricing — Patrick’s talk recap from FemtoConf 2018 […]

Speak Your Mind

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.