

Managing Pricing - pvh
http://www.heavybit.com/library/video/2013-07-16-michael-dearing

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brokentone
Unrelated... this video player and transcript integration is really, really
nice. Did HeavyBit build some or all of it? I see the player is video.js

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timtdnguyen
Tim here - Thanks brokentone! Glad you like it. We built a lot of it ourselves
with some great tools. The player is video.js and we use popcorn.js to sync
the transcripts, outline and player timecode. The video is transcribed and
timecoded with Zencaptions and the transcoding is done via Zencoder. Let me
know if you've got any other questions. Happy to help. Or better yet, shoot me
an email: tim[at]heavybit.com.

Right now we're working out some kinks with V1, but we're hard at work for the
next version. Suggestions welcome. :)

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lambtron
Great work! Always wondered what the vibe masters were up to ;)

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nakodari
Kudos to HeavyBit for including the transcript. As a hearing impaired
individual, it really helps. I hope it becomes a standard across the industry
to include transcripts (or subtitles) with every video.

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nodesocket
So many great points and takeaways, but I think the following is key:

"What matters is not so much the distance between the cost to produce
something and the price to sell it. Focus on, the difference between the price
and the perceived value to the end user. The perceived value has to be greater
than the price! Don't build a business around cost + margin, build businesses
around perceived value."

Focus on the incentive to buy, not the incentive to sell for your business.

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pvh
Pricing is super hard - I love this framing of the problem but there are so
many other good references. I'm also a big fan of Neil Davidson's very brief
book "Don't just roll the dice": [http://neildavidson.com/download/dont-just-
roll-the-dice/](http://neildavidson.com/download/dont-just-roll-the-dice/)

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yurylifshits
Notes from another pricing workshop by Michael Dearing

[http://yurylifshits.com/post/52854299110/8-pricing-
strategie...](http://yurylifshits.com/post/52854299110/8-pricing-strategies-
for-startups)

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j_s
Rob Walling of Startups for the Rest of Us discussed the first of a two-part
article on SaaS pricing¹ by Richard White of UserVoice in episode 153².

The podcast also covered collecting billing info in episode 179³ and briefly
discussed handling credit card expirations in episode 184⁴.

¹ [http://500.co/2013/07/18/the-data-behind-purchasing-
behavior...](http://500.co/2013/07/18/the-data-behind-purchasing-behavior-at-
uservoice-pricing-for-conversion-part-i/)

²
[http://www.startupsfortherestofus.com/episodes/episode-153-s...](http://www.startupsfortherestofus.com/episodes/episode-153-saas-
pricing-tactics)

³
[http://www.startupsfortherestofus.com/episodes/episode-179-w...](http://www.startupsfortherestofus.com/episodes/episode-179-when-
to-ask-your-customers-for-credit-cards)

⁴
[http://www.startupsfortherestofus.com/episodes/episode-184](http://www.startupsfortherestofus.com/episodes/episode-184)

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spitfire
I'm in the process of figuring out a pricing model for a SaaS service right
now and I watched this video in full. There's lots of interesting stuff in
this, but in the end I am left no better off. _For someone who is actually
building a pricing structure now, it has nearly no actual value._

I still do not know how to price my service, do I price per seat, per year
based on a random number, per $FROBIT used, or a one time sale?

I know I should price based on value, and my price should be less than the
perceived value to my user. But I learnt that in my 10th grade business class.

However, that said it was a very well done presentation, and once someone has
a working pricing structure then these tools will be useful improve business
outcomes.

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patio11
Hum a few bars about what your SaaS does for whom and I will happily napkin
out a pricing structure for you. If you have no clue, for B2B SaaS sold on a
low-touch model with the assumption you're not shooting for the VC->IPO track,
just copy paste $49/$99/$249 into the bog-standard Three Column SaaS Pricing
Page and offer 1 month free with an annual pre-pay.

~~~
spitfire
Hi Patrick, wasn't expecting you to respond. But here it goes.

I have a service which identifies which accounts will pay for accounts
receivable. IE: collections agencies. Numbers show it can move the needle
double to triple digits depending on the account mix.

Right now, I'm planning on a per seat monthly subscription. Customers know how
much they'll be charged each month, and I think it lets me focus on the value
rather than community unit costs.

EDIT: Just a note, unfortunately, this is a very high touch environment. The
upshot being that once a customer chooses you, they _never_ leave. Even if
they're being outright abused. (I have stories!)

~~~
patio11
I'm not ordinarily a fan of per-seat pricing but I think it makes sense in
this environment, as software adoption will be top-down, the sales process is
high-touch, they can build it into per-employee overhead, etc. I'd caution you
that, as you likely know, employee turnover in this industry is _insane_ and
as a result of that and standard staffing practices the seats in use are going
to fluctuate constantly. This isn't totally dissimilar to CS, so you might
look at what ZenDesk and the ilk do with regards to floating seats, etc.

If you're really getting X0% to Y00% in per-collector productivity then I say
start by asking for for $100 per seat per month, if you're wedded to per-seat
pricing. You can price anchor it around "less than a single collector-day" and
that leaves plenty on the table for your clients. I'd then start walking the
price up (if it is worth $100 a collector it is probably worth $150/$200/$250)
until you start losing lots of sales on the pricing question.

If you've got very heterogenous clients number of people on the phones might
not capture value as well. You might consider doing N tiers (maybe or maybe
not publicly disclosed). I'd be thinking something along the lines of $500 for
the mom&pop shops, $2.5k for "real businesses" doing debt collection, and
$10k++ custom pricing for large/enterprise accounts. You could have multiple
segmentation levers between plans, such as e.g. size of the average
receivable, total volume of receivables, type of collection, what data sources
you pull in to do the calculations ("Pay more get more!"), etc.

The great thing about high-touch sales is that if you hate how your pricing
strategy interacts with any one client you just change it for the next one.

If you'd like to discuss this in more detail non-publicly, email me. I have a
weird personal interest in this field and am happy to trade informal
consulting on SaaS pricing for war stories.

~~~
spitfire
Sent you an email, along with a story about the horrible industry I'm working
on.

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gyardley
As an aside, I've got the Dualit toaster he talks so much about, and it's
worth every penny. Attractively designed, built like a tank, lifetime
warranty, easy to clean, and makes perfect toast.

~~~
dmourati
Kudos for owning up to that. I think he may have been joking about owning it
himself but then again maybe not.

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n00b101
I think the following approach is more appropriate, at least for big business:
[http://www.rti.com/whitepapers/Dirty_Little_Secret.pdf](http://www.rti.com/whitepapers/Dirty_Little_Secret.pdf)

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suzyperplexus
There are also a few quick videos on the Harrison Metal site itself:
[http://www.harrisonmetal.com/pricing_1/](http://www.harrisonmetal.com/pricing_1/)

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Mz
Okay, having managed to read most of it (I think -- my eyesight is crap and
giving me fits today), for me, I think the important pieces are the bits about
psychology -- about intuition and analysis (which I was already familiar with
but not in this business related form) and the piece about loss aversion.

I think those are really helpful for me, but more from a marketing or audience
relationship point of view. For me, I am pretty clear that monetization will
be indirect (like ad income, that kind of thing) so this is not so much about
pricing for me.

But my challenge is that initial intuition piece -- that piece I know of as a
concept of "in the blink of an eye" what people think, as their first reaction
-- tends to be pretty negative. And I have done a lot of retrenching to back
out of that negative relationship as much as I can and I currently have a
single person with positive interest and relatively little harassment
(compared to what it once was). So, for me and the problems I am
contemplating, these seem more like marketing ideas. Which is fine. But I am
wondering now how I can apply those concepts to that angle and not pricing per
se.

But excellent piece. I forwarded it to a couple of people. Thanks for writing
it (ugh -- video is a problem for me and the formatting of the transcript is
kind of frustrating, FYI).

