Dan Martell - July 16, 2018


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


Episode Stats

Length

7 minutes

Words per Minute

197.25246

Word Count

1,522

Sentence Count

66


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Transcript

Transcript generated with Whisper (turbo).
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.