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? 

-Christoph