Dan Martell - 5 Key Reasons You Might Not Want To Show Pricing On Your Website

00:00:00.000 Hi there, I'm Dan Martell, technology entrepreneur,

00:00:02.040 investor, and creator of SaaS Academy.

00:00:03.900 In this video, I'm gonna share five key reasons you might not

00:00:07.840 want to show pricing on your website and be sure to stay

00:00:11.420 to the end where I'm gonna share with you some strategies on

00:00:14.720 how to fix your pricing as well as the expansion revenue

00:00:17.620 maximizer framework that you can download and implement the four

00:00:21.480 core pillars of increasing lifetime value for your customers.

00:00:30.000 Maybe you are frustrated because you have people using your product today that is a big company

00:00:41.000 paying you peanuts or you have folks in a trial that are part of a Fortune 2000 company

00:00:45.800 and you haven't even talked to them yet.

00:00:47.540 You know if you did that you'd actually be able to accelerate the sales process.

00:00:51.200 What I want to share with you and I've learned from a lot of incredible folks like Jason Lemkin

00:00:55.140 at Saster and the folks at HubSpot and many others in the

00:00:58.540 SaaS pricing world why in the early days specifically it might

00:01:02.840 make sense to not show your pricing so that you have more

00:01:06.120 flexibility, more opportunities to learn and then finally design

00:01:10.560 your packages to something that's repeatable,

00:01:12.260 scalable once that's figured out.

00:01:14.020 Now, I learned this by accident when I was building my company

00:01:16.960 Spheric Technologies.

00:01:17.860 I was 24 when I started.

00:01:19.140 I was selling to Fortune 500 companies and I think like most

00:01:22.460 entrepreneurs we don't understand how to price on value.

00:01:24.900 We don't understand how sales cycle at enterprise level works.

00:01:28.400 We don't understand cash flow or receivables or the difference

00:01:32.040 between getting a check in the mail versus a wire transfer

00:01:34.500 as a payment, et cetera, et cetera.

00:01:36.480 So it was through that process I built a multi-million dollar

00:01:39.280 company at a young age that I understood the value of A,

00:01:43.380 I didn't even call myself the CEO as the director of e-business.

00:01:46.420 That gave me the ability to negotiate and not having my

00:01:49.160 pricing public meant that depending on the volume of

00:01:52.960 customers we were dealing with at that time,

00:01:54.820 I could put the price up.

00:01:56.560 Or if I knew the company had certain needs,

00:01:59.140 it was going to require some custom development,

00:02:00.760 I could change the structure of the deal.

00:02:03.280 Or, I mean, even in a situation with Procter & Gamble,

00:02:06.240 I was able to negotiate where they built,

00:02:08.400 they invested for us to build a bunch of custom integrations

00:02:11.680 that we retained as IP.

00:02:13.840 So in the early days specifically,

00:02:15.840 it might make a lot of sense to not have that on your website.

00:02:19.220 I'm going to teach you the five key reasons why.

00:02:22.160 One, deals will get more complex as you grow.

00:02:25.840 As you start off, you probably went through this,

00:02:28.140 where you undervalue the product that you've built

00:02:31.300 and over time as your customer typically starts,

00:02:34.180 you know, mid-market or small biz, you move upmarket,

00:02:37.600 the complexity of the sales cycle, of the conversation,

00:02:40.640 the amount of people required to close a deal is crazy

00:02:44.520 and you don't know that in the early days

00:02:46.520 so the last thing you wanna do is have somebody come

00:02:48.380 your website and peg you to some public pricing structure that

00:02:52.460 you didn't get a chance to really truly evaluate how does

00:02:55.600 this scale to 60,000 employees.

00:02:58.200 I have a coaching client right now.

00:02:59.800 They're a freemium solution and all of a sudden a Fortune 500

00:03:02.900 company came into their sales pipeline and they want to deploy

00:03:05.760 to a POC, a proof of concept.

00:03:07.280 So on the surface it looks like a similar type deployment but if

00:03:10.520 that goes good then they want to negotiate the 60,000 other

00:03:14.500 employees in their company using this product.

00:03:16.720 So all of a sudden, there's a level of customer service,

00:03:19.420 et cetera, that from a sales complexity point of view goes

00:03:23.300 through the roof that's never factored in in regards to the

00:03:26.960 gross margins of that sales process that needs to be

00:03:30.300 considered as you have those bigger accounts that come your

00:03:33.140 way.

00:03:33.840 Two, discounting becomes difficult.

00:03:36.800 At the higher level of the enterprise and I'm not a big fan

00:03:40.140 of discounting but to get the deal you might have to do it.

00:03:42.640 The champion, if you just think about this, the champion that's

00:03:45.380 helping you push the deal through the organization,

00:03:47.620 it's going to want a discount.

00:03:48.640 They want to tell other people that they were able to get

00:03:51.920 something that other organizations like them might not

00:03:54.520 have gotten in regards to pricing.

00:03:56.200 So that's one but then it goes to procurement.

00:03:58.400 Now you may not realize this but procurement actually gets

00:04:00.760 their bonus based on how much money they save and their

00:04:02.960 ability to negotiate so all of a sudden now you have two

00:04:05.460 stakeholders that need to get a discount and if the pricing is

00:04:08.560 public it doesn't allow you to play with that and tweak it

00:04:11.700 and say normally we would do this but here's what we're

00:04:13.580 gonna do now so, you know, at a high level when it just comes

00:04:16.880 to discounting that might get difficult for you to do and keep

00:04:19.960 your gross margin.

00:04:21.120 Number three, a big deal is sold differently than a small deal.

00:04:24.800 Just think about the difference in somebody spending $800,000

00:04:29.460 versus $100,000.

00:04:31.000 Those are two different decisions, different flows.

00:04:34.700 I mean if it's a $800,000 deal all of a sudden there's, you

00:04:38.400 know, core business functions involved, there's prototypes,

00:04:42.200 There's demos, there's proof of concept.

00:04:44.240 They're totally different.

00:04:45.080 You can get somebody to come in and buy something,

00:04:47.500 sight unseen, configured, free trial, demo, et cetera,

00:04:50.840 but the complexity changes and they're just totally different.

00:04:53.920 So you want to give yourself the freedom to be able to change

00:04:57.080 that structure.

00:04:58.420 Number four, enterprises just want to buy.

00:05:01.680 You may not realize this today but when you start selling to

00:05:04.320 the big companies, they actually care way less about price

00:05:08.000 because they kind of know ballpark,

00:05:09.400 it's going to be X amount of money.

00:05:11.360 They care more about deployment, speed, quality,

00:05:15.360 integrations, the ability of your team to be able to come in

00:05:19.200 and deploy the technology quickly to work with the

00:05:21.800 different stakeholders in the organization.

00:05:23.640 And then what's crazy is that pricing just becomes a feature

00:05:26.880 of the complete deal and the solution.

00:05:29.480 So, you know, at the end of, like, the enterprise just wants

00:05:32.880 to pull out their credit card and pay if all these other

00:05:35.080 things have nothing to do with price that are more featured

00:05:37.980 in their mind work out.

00:05:39.720 So you want to give yourself that flexibility to really just

00:05:42.360 focus on what their needs are and disconnect that from the

00:05:45.020 price.

00:05:46.020 Five, your pricing could make you look cheap.

00:05:48.760 Just think about it, you and your competitors are in the market

00:05:51.600 and a large company and enterprise comes and they're

00:05:54.160 evaluating both solution.

00:05:55.240 On your competitor's site, it says, call me, let's talk,

00:05:58.480 let's configure something, let's create a solution together.

00:06:00.940 And on yours, you have your pricing there and it could be

00:06:04.340 $4.99 per user per month, et cetera.

00:06:07.820 it could actually make you look cheap.

00:06:09.860 You know, at the end of the day,

00:06:11.020 this company kind of knows their value

00:06:12.620 and they're saying, look, we're not gonna tell you

00:06:14.020 it's gonna be a whole lot of money,

00:06:15.260 but have a conversation with us

00:06:16.600 and we'll see if we can serve you, if we can be a fit.

00:06:18.960 The other one, you kind of feel like,

00:06:20.200 hey, anybody can buy this.

00:06:21.300 If you want it, it's right there.

00:06:22.240 It's five bucks a month per user, et cetera.

00:06:24.380 And I just think that in certain scenarios,

00:06:26.080 it could actually hurt you because it makes you look cheap.

00:06:28.780 So quick recaps.

00:06:30.200 One, deals will get more complex as you grow.

00:06:33.680 Two, discounting will become difficult.

00:06:36.640 Three, an 800K deal is sold totally different than a

00:06:40.180 100K deal.

00:06:41.320 Four, enterprises just want to buy.

00:06:44.140 Five, you don't want to make it all about price.

00:06:46.620 If your competitor's not showing their price,

00:06:48.520 it makes you look cheap.

00:06:50.920 As I mentioned at the beginning of the video,

00:06:52.320 I want to share with you an incredible resource called the

00:06:54.520 Expansion Revenue Maximizer.

00:06:56.520 It's linked below, just click that and you can download it.

00:06:58.960 It's essentially the four pillars that you need to focus on

00:07:02.540 to increase the lifetime value of your customer so you can

00:07:04.900 create a thing called net negative churn which means your

00:07:07.360 expansion revenue outpaces your contraction revenue through

00:07:10.500 cancellation and downgrades.

00:07:12.100 I've also linked up two other videos below around pricing

00:07:15.820 that I've done to really help you understand how to avoid the

00:07:18.680 pricing graveyard or the startup graveyard as well as the pricing

00:07:22.460 accesses you can use to increase your value.

00:07:25.680 If you like this video, be sure to click the like button,

00:07:28.400 subscribe to the channel and leave a comment below with your

00:07:31.800 biggest takeaway.

00:07:33.360 Really excited to have you here and I'll see you

00:07:34.960 in the next video.

00:07:40.960 There we go, there we go.

Dan Martell - July 16, 2018

5 Key Reasons You Might Not Want To Show Pricing On Your Website

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