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

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

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? 

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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.


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