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Wes Bush:
So great to have you here. And today we are joined with a special guest. His name is Chris. He is a fantastic expert on pricing.
Wes Bush:
To kind of kick things off in a more casual way, one of the things Chris asks every Uber or a Lyft driver whenever he is coming to a new city is, what was your first job? So in the chat, I just want everyone to just share, what was your very first job? And I want to hear from Chris first. So before you got into this pricing world, what was your first job?
Chris Hopf:
Very good. Yeah. So the question is, what was your first job somebody paid you? A lot of times people will respond, for example, working for their mom or dad, but oftentimes they didn't get paid for doing some of that work. So it's always interesting to hear. My very first job was a paper boy. Yeah.
Chris Hopf:
So I had a paper route, got up early every morning from about the age of 10 to almost 12 and delivered papers in the rain, and in the freezing cold. I remember using people's porch lights to warm up my hands sometimes. So yeah, but that was my very first paying job.
Wes Bush:
That sounds pretty darn cold outside, to do papers in the freezing cold. Yeah, it definitely taught you a lesson, wear thick gloves.
Chris Hopf:
Yeah. Yeah. Yeah, lots of stories, lots of memories. So, yeah.
Wes Bush:
Awesome. And if anyone else wants to share what was their first job? Super curious to hear that. I see Allie, taking orders and flipping burgers at McDonald's. Awesome. Yes. Burger flipping is a serious skill, and I'm happy to say that once you learn it, it is one of those skills that you never lose. Okay. Wow. There's so many coming in. This is awesome.
Chris Hopf:
Selling real estate was a first job. That's interesting.
Wes Bush:
Yeah, that is pretty cool. That'd be hard to pull off.
Chris Hopf:
Tennis coaching, you lucky duck. That's a great first job.
Wes Bush:
Paige, hostess at Montana's. Yes. I love Montana's. It's got like this crazy birthday hat of this moose head. All right. Every time you go there on your birthday you get embarrassed, but it's a fun photo. YMCA, awesome. Yeah, I also worked there. Andrea, as a lifeguard.
Chris Hopf:
The [inaudible 00:02:42] corn. That one could go back many, many years. Many, many people's first jobs. Yeah.
Wes Bush:
Totally. Awesome. Thank you so much for everyone for sharing that. Ramli, why don't you kick it off and just go through a couple of a few things before we dig in today's class.
Ramli John:
For sure. Let me just share my screen. Can everybody see that?
Wes Bush:
Yep.
Ramli John:
Awesome. Welcome everybody. We are talking about monetization strategy today. And one of the few things that we're going to be covering is about volume metrics, which Chris will be walking us through.
Ramli John:
Just a brief overview of where we at. I love seeing this roadmap because this kind of gives you an overview. It was like where are we going and what do we need to do? Talking about onboarding, it's essentially a progress bar. It's a progress indicator, right?
Ramli John:
So week four right now, we've covered so far designing a product strategy, understanding your end user. And today, we're going to be figuring out the pricing strategy and how that fits into product life strategy.
Ramli John:
I just want to share a few announcements here. Next Wednesday... First of all, last Friday, we had an intro to PLG, to all those people who invited, thank you.
Wes Bush:
It was nuts. In a good way.
Ramli John:
We had like 80, 90 people show up. Wes and I were like, "Let's do this." Well, actually it was Wes. Wes was like, "Let's do this every week." And I was like, "Wes, you're crazy." So now we're going to do an intro to PLG every Wednesday at 12:00 PM for the next four weeks. Invite your team. This is part of how to get buy-in from your team. Imagine getting to ask Wes, the author of Product-Led Growth, questions about Product-Led. It really does get the juices flowing and getting everybody on the same page.
Ramli John:
So same link, lu.ma/intro-two-PLG. And you can sign up for any of those sessions. One of the things that I've been asked a lot is doing a meetup for specific topics around PLG. So it's a great opportunity for people who are facing similar challenges. I'm going to be sending out a survey tonight again, to just ask what topics you want to cover, whether that's buyer versus user persona, which I know some folks have asked or PQL, or onboarding. Whatever the topic for the meetup, we're going to get together, we're going to have a discussion on what you guys are doing. And it's a great way to just connect and just to kind of have a therapy session around that specific topic.
Ramli John:
I mean, that's just an announcement for today. I'm going to pass it off to Wes now, just to briefly go through why pricing is so important to your Product-Led strategy.
Wes Bush:
Awesome. Thanks for the overview, Ramli. I am not going to dig into everything that was covered in the [inaudible 00:05:23] class. I don't want to do that. But what I will touch on here is just how important it is for you to really understand what your pricing metric is, which is why I'm so happy for us to go through that in a much deeper detail today in this workshop.
Wes Bush:
When we think of pricing metrics and how it really fits into your customer acquisition model, there are different trade-offs. For instance, if you give everything for free in your product, it may sound great, and it might be a way for you to get a lot of users very quickly, but that kind of leads you in this user hungry area, which, if that's what you're optimizing for as a business, power to you, as long as you know what you're doing.
Wes Bush:
But then there's easy enough for you to kind of create this very forceful pricing model and really at the end of the day, not have as many people upgrade, but you do have this really strong pricing model that really generates a ton of revenue for your business.
Wes Bush:
For each of these, what I want you to think about is where do you stand on this? Are you more user hungry? Is that where you're trying to optimize for as far as your pricing model and your customer acquisition model? Or are you trying to be more upgrade hungry, where you're just creating this forceful pricing model but you, right now at least, have a strong customer acquisition model? And then the two other ones... I won't touch on danger zone because clearly no one wants to be there where you're not making any money, you don't have a customer acquisition model yet. The goal is to kind of move through these three quadrants.
Wes Bush:
And so the last one I'll touch on too is really the short-term profits. This is where you have this weaker customer acquisition model and you have a super forceful pricing model.
Wes Bush:
So whenever you're in this zone, it means it's really a short-term play where you're trying to capture as much revenue as possible, but it's not long-term sustainable.
Wes Bush:
So the goal here, in this workshop today, is to try and figure out what does that sweet spot look like for your specific business? And now one of the things that you need in order to get there is a pricing metric, or maybe a couple pricing metrics that you can use to really marry your customer acquisition model and your pricing model together. And so that's what we're excited covering. On the next slide too, Ramli has a quote that he wanted to go through.
Ramli John:
Yeah. This is what Kyle said actually. Kyle Poyar from OpenView partners. And we had him on also live expert for this. I shared it already, but I'm going to share it again. He said that, "Public companies with usage-based product like pricing models are growing 38% faster than their peers."
Ramli John:
And it's really when you figure out the right value metric, that your end user success becomes your success, then that's where really the Product-Led magic comes in. I just made up that word now, and I'm going to trademark it. Create a new book called Product-Led magic.
Wes Bush:
There you go.
Ramli John:
That's really our goal today, is the outcome today, as Wes was talking about, deciding on the best pricing metrics for your business.
Wes Bush:
Perfect. So I just wanted to quickly introduce Chris Hopf. And so Chris has been a... I've had him on the Product-Led summits. I believe it was almost about two years now. And I still remember the first conversation I had with Chris. We were going through pricing metrics, and I was just blown away by how deeply he had thought about this particular topic.
Wes Bush:
There's a lot of people out there in the pricing space that'll just talk about metrics and you got to just have this kind of one size fits all metric, and it's like, "No, every business is so unique. You can't have that." And so what you're going to be able to learn from Chris by the end of this workshop is really a decision guide.
Wes Bush:
He might not be able to give you the exact answer because there are a lot of you here that it is unique for your business, but he's going to get you to think differently and think about the way you can craft that metric for your specific business.
Wes Bush:
He has helped over 2,000 businesses really help improve their business around pricing. So it's going to be a fantastic time with Chris. So Chris, thank you for joining us.
Chris Hopf:
Hey, thanks for having me. I will enjoy working through what we'll be working today and interacting with each of you. I think that you also might want to mention that Alison is going to be participating at a certain level, correct?
Wes Bush:
Yes. Thank you, Alison.
Chris Hopf:
This will be great. I'm going to go ahead and share my screen if that's okay. All right. So there's the agenda. This is something I didn't mention to Ramli and Wes before, but one thing I just want to highlight is this visual here.
Chris Hopf:
I'm not a graphic designer, but what I'm trying to emphasize here is that a lot of companies, for various reasons, will circle around looking for low hanging fruit and stay on this somewhat perpetual path of just waiting for the next low hanging fruit. And they'll never invest the time and attention and their priorities into topics such as monetization, pricing, or even this program that you're going through with Wes and Ramli.
Chris Hopf:
And so I just want to commend you for allocating your time and attention to this, because there are a lot of opportunities and new insights that you can learn if you're willing to put in the effort and take the risk, because that's why a lot of people don't do it, is they just don't know how, they don't know how long it's going to take. It's more complex than maybe they thought. And so then again, they go back to what's easy, the least path of resistance. Again, I just want to commend you for taking the time on that.
Chris Hopf:
The other is that these pricing decisions and the things that go into making better, informed pricing decisions, quite literally will determine the revenue that your company generates. It has determined those outcomes for you in the past, it will determine your outcomes, and will determine those outcomes in the future.
Chris Hopf:
And so these decisions are really worth that time, that attention, and that priority, because really everything else, as far as what your company can do, your ability to attract and keep the right talent, is all going to come and the opportunities are going to be created from how well you generate revenue within the context of discovering and getting paid what you're really worth.
Chris Hopf:
Another thing I just want to highlight that as when it comes to pricing confidence, this also has to do with confidence in your pricing metrics. The confidence that you have is going to be increased simultaneously as you increase your understanding and the value clarity you have. Not only for yourself around understanding the value you deliver to your customers, but also your ability to communicate that in a way so that your customers have that value clarity as well.
Chris Hopf:
And so again, I just need to really also emphasize on the front end, that my approach is very heavily focused on truly understanding your customers. I believe that knowing your customers better than anybody else should be one of your competitive advantages.
Chris Hopf:
And so it really starts with you putting in that time and making it a focus and a priority to make sure that you have a competitive advantage in how well you understand your customers, how they're thinking, the things that they're not thinking about, where they're going, and where maybe they wouldn't even consider going, but you get it and you can help them in ways that they perhaps don't even expect. That's your path to revenue. As I've mentioned there.
Chris Hopf:
Another thing that I'll just mention. This is something that you can find if you follow me or I can send, but again, if for some reason you had to drop off the call today, this pricing metric decision guide is on my website. But also this, just taking time to have answers to how you would answer these questions, even if it's just a hypothesis, is going to, again, determine the outcomes you're able to generate as a company. And I just encourage you to spend time on these and fine tuning based on what you learn in the real world.
Chris Hopf:
So pricing metrics. So there's going to be an opportunity today to walk through the pricing metric kind of process and through the decision guide with Alison, and today with guide, which I think it's great that Alison was willing to kind of step up and participate in that way. Just so you know, I haven't worked or ever had any conversation with Alison prior to today, so this is on the fly and I think that she'll be glad that she did. And I think each of you will be glad as well that you participate.
Chris Hopf:
I had sent this before. I believe that Ramli and West had perhaps made this available to you around. So identifying pricing metrics. And also, on my website, for example, this pricing metric decision guide. I don't know if any of you spent some time. But this just talks about just some of the basics. And one of the things I want to just highlight at the beginning is, there is a distinction, there's a difference between if you were to do research online around kind of understanding how to determine your pricing metrics. What you'll probably find is a lot of reference to value metrics.
Chris Hopf:
And different consultants or different people may have different approaches and ways that they define things. I just want there to be clarity upfront that while there may be a number of value metrics that you identify, ways in which you can make a credible convincing case that you deliver value in some way that your customers care about, right? That doesn't mean by default that those should be your pricing metrics. And this pricing metric decision guide that we'll walk through will help you understand better which should be the most likely candidates worth testing and pursuing versus others, and the Harvard reasons why you might prioritize some over others.
Chris Hopf:
Now, keep in mind, this isn't going to magically put you in some sort of just revelation, that lights and fireworks are going to go off and, "This is your pricing metric." But what it will do is it will help you in a very organized, deliberate way think through some of the key considerations, what I refer to as tests, there's 11 tests, if you will, to really help you evaluate and then better understand which ones might perform better over others.
Chris Hopf:
I'm going to just pause there as we transition. Any quick questions or anything unclear so far? Doesn't sound like it.
Chris Hopf:
To stay true to that, I'm going to give you an overview of kind of an example. And an example that we felt most people had been exposed to, at least at some level, certainly over the last few months, or just over your travels in what you do.
Chris Hopf:
I was a very early Zoom user. In fact, I remember meeting the CEO at a sales conference in San Francisco. He was in the hallway on a plastic table trying to get people interested in using Zoom. But I, of course, was using GoToMeeting at the time, and had my challenges with GoToMeeting. The key thing for me as a consultant was that it was reliable, that my interactions with my clients weren't interrupted or had some sort of quality challenges or something like that.
Chris Hopf:
When I first started using Zoom, I was pleased to find out that I very rarely, if ever, had any of those challenges. I've actually been a Zoom user ever since. And really it's given me... And this is a key thing to think about with your product. It has really given me no reason to go and look for an alternative.
Chris Hopf:
I just want to actually just jump back to this here. This right here, that's why this question is so important. It's one that a lot of people don't think about, and even people would never have answered this question two years ago, why would somebody stop choosing you? A pandemic. Nobody would have said that. Right?
Chris Hopf:
So there are some things you just will not anticipate, but there are things that you can, and therefore you should proactively address and put yourself in the position so that you aren't giving your customers a reason to maybe consider alternatives, right?
Chris Hopf:
Back to what I was discussing. So when we land on this Zoom pricing page... I don't know when was the last time any of you were on the Zoom pricing page. What comes to mind? Any quick chat comments? What's the first thing that comes to mind when you land on this page? Free.
Speaker 1:
There's a lot going on.
Chris Hopf:
Indeed. A lot going on. Organized? Sure. Options. Upgrade is in orange. Yep. Yep. Yeah. Very good. Yeah, I appreciate those comments. And I agree. And here's what's key around your pricing page. If you get people to your pricing page, you want to make the most of it.
Chris Hopf:
Now, it's hard to argue too much with Zoom because of the success they've had in the market, but that doesn't necessarily mean that there aren't opportunities here for improvement, right? So even a company like this.
Chris Hopf:
I will just always say, and I just am compelled to offer this comment before we go into the pricing metrics, is that any complexity anywhere on your website, even before this page, but especially on this page, any complexity you add, anything, absolutely anything on this page should be there for a specific reason. And it should be there because you have a hypothesis that it's going to help you move them towards an outcome, right?
Chris Hopf:
Whatever that is. To sign up. To pay. To start a free trial. To contact sales. And so what I see a lot of times with companies, and I've worked with a lot of clients have redesigned their website. It's really counterintuitive for a lot of people that invest a lot of time in those types of efforts.
Chris Hopf:
But what I found, working with a lot of companies, to be true, is if you're willing to be uncomfortable with how simple you are, you'll be in a better position to then add elements and better understand how they actually impact outcomes. Rather than starting with a lot of elements and then trying to understand which of them or which combinations of them are really contributing. Much more I could go there, but I just am compelled to just encourage you to keep it simple.
Chris Hopf:
Another thing that I'll mention really quick before I go on is the use of cents, so 0.99 and so forth. Again, hard to argue with Zoom, and people have certain approaches. You think about the volume that they are probably going through, so this 99 cents may actually make a difference. But I would actually, again, to stay true with what I just said, leave off the cents initially if you're trying to think this through. Don't add that additional visual complexity. I know it may seem like it doesn't make that big of a deal, but I just encourage you to just take that out and don't have cents, unless again, your prices are in cents of course.
Chris Hopf:
Okay. Another thing to keep in mind is they have this summary part of their website, and then they have a full plan comparison. Things that stick out, why don't I just... When we talk about pricing metrics, what are their pricing metrics? Any comments? What are the most likely ones that stick out to you, even if you're a user and you kind of know, just looking at this page, what are the pricing metrics that seem to stick out to you? Number of participants. I see count. Yeah. Okay.
Chris Hopf:
Well, very good. There are a lot. And so as a potential customer of Zoom or potential user, again, anything you have and you present to them, you're basically asking them or requiring that they ask themselves, what does this mean? Should I care? Does it matter? Right?
Chris Hopf:
So you're adding friction to the whole process. So just be careful what types of questions that you're presenting to your customers or your prospects, and how you're setting them up to answer those questions. There are some example pages that we may go into or maybe you've seen where they may refer to a pricing metric, but it's not really clear what is the pricing metric. And sometimes even the terminology isn't used consistently even on the same page. And so, again, that is really important to keep in mind. Once you narrow them down, make sure that you're communicating them in a way that's clear.
Chris Hopf:
Let's look at this full plan comparison here, which is a little bit more efficient way to kind of look at what they might be using as pricing metrics, right? License count, participant capacity. So here's where I wanted to stress the importance of understanding what should be your primary pricing metric and what could potentially be secondary pricing metrics.
Chris Hopf:
A primary pricing metric is typically going to be the most common, most frequent pricing metric that could possibly change in some way in which they're going to pay you more or pay you less.
Chris Hopf:
A secondary pricing metric oftentimes is used to just differentiate, in this case, different plans, right? And so it's really to communicate and frame the value of, for example, the basic plan versus pro. In best case scenario, the reason that you're going to take a good, better, best approach. Again, this is kind of going off the pricing metric topic a little bit. But is so that you can land and expand with your customers, so that you can make it as easy as possible for them to get started. You think about Product-Led Growth, why you might have a free or a free offering, or in many cases with a lot of companies, they may limit it to a free trial, whatever the approach.
Chris Hopf:
But the same goes with once, even if they have, how can they step in? How can you de-risk it for them to step in? And the key here is, will they get a sense that they're paying for more than they'll use? Or not using as much as they were paying for. And that's the conundrum, that's the challenge with coming up with your offerings, and then ultimately deciding your pricing metrics, and then deciding your pricing, and then deciding your approach to any type of discount, if that's appropriate.
Chris Hopf:
I also want to highlight the fact that with a primary pricing metric, that certainly is going to be most likely going to be highlighted in a different way for a usage-based type solution, if you will. Right?
Chris Hopf:
So for some usage-based solutions, they keep it simple and it's just based on a primary pricing metric around a certain way they're defining usage, and then they may have other secondary metrics, but oftentimes those may be related to add-ons or accessories, if you will, or other things.
Chris Hopf:
But oftentimes, secondary metrics are primarily used to differentiate packages or plans or offerings. Whereas a pricing metric may be consistent across perhaps all offerings. But again, much more I could say there around being careful not to make it overly complex. Your goal should be to make it as easy as possible for your customers to buy from you, and make it as easy as possible for your sales team and those types of people to sell.
Ramli John:
Chris, just a question from Fraser here. Do you see a difference between building a page for B2C versus B2B in terms of pricing? Yeah.
Chris Hopf:
Well, sorry to say that it does depend, but I guess I'd need to know a little bit more about your solution and kind of the decision around kind of why you think that might be appropriate.
Chris Hopf:
If there's enough legitimate reasons that will make sense, then yeah, I think there certainly can be a case made. And one thing that I will say is... And this is one thing that I shared with Wes and Ramli is just in general, what matters most... The reason this is coming up is the nature of question. What matters most is not my personal preference or your personal preference around how you want to do business, but what performs best.
Chris Hopf:
If you have a hypothesis that you believe that having a separate page for B2C versus B2B may actually perform better in some ways, may resonate more. Because one thing that we do know is the more tailored an offering is to a particular segment or a particular persona, the more it's going to resonate with them and the more likely it's going to perform.
Chris Hopf:
If you have a solution that's tailored to the real estate industry versus a more horizontal solution that kind of is a catch all and doesn't really speak specifically to how it can help real estate agents, it's not going to perform as well unless you really deliver and frame it within the context of that real estate agent. So, similar, what is the difference between these two contexts? And it's always worth testing. Right? So is that helpful?
Chris Hopf:
But with anything that you test, I don't know if it's a part of your program or not. But you should be building a proficiency from day one or wherever stage you're at in your business, building a proficiency around testing, that what you do as an organization is you're always learning, you're always experimenting. And one way to do that is to just have a simple list, you don't need to overly complicate this, of just kind of a stacked list of what is the next test that you're going to do. And again, don't make it overly complicated, but there should be some level of detail there. Anyway, along the lines of answering your question, I just felt compelled to share that as well.
Chris Hopf:
This is Zoom, and so I'm going to go ahead and just kind of transition over to...
Chris Hopf:
And just kind of transition over to just an example of not necessarily Zoom, but I'm going to transition over to an example of the pricing metric decision Giide and just kind of highlight the questions... I got to move something on my screen here. Sorry. And then that we want to think about with respect to Zoom. All right. So is it relevant to the business of most buyers and what am I talking about specifically? Well, let's just talk about the very first one around participant capacity, right? Where they've broken this down to 100 for basic, 100 for Pro, 300 for business and so forth, right? So this pricing metric decision Giide is going to be basically putting you through asking yourself these questions about the metrics that you are considering.
Chris Hopf:
So for example, these first set of one, two, three, four, five, six questions are really from your customer's perspective, the balance, these other five are really from your company's perspective. And so when we work with Alison and Giide, we'll be walking through these around some of her pricing metrics that she's considering. And we'll go into more specifics about these. So I'm just curious if we think about, and I'm not going to go into these details until we go through it with Alison, but let's just go to this one easy to understand. I'm just curious from within the context of Zoom, do you feel like are there any pricing metrics that are not easy to understand? Is there any that just in the past, maybe when you originally signed up, was there anything about trying to decide where you land and should land or where you should start with zoom? Was there anything around the pricing metrics that didn't seem very easy to understand?
Wes Bush:
I think for myself, one of the first ones was the license count going from Pro to basic, just understanding when you need to hit that, it could be seen as is that the number of participants you can have? I mean, it depends if you see the first metric before, but I think it is still it okay way of breaking it down but without reading that little thing you're hovering over right now, it can be tricky that's for sure
Chris Hopf:
Well, and here's another thing to keep in mind, so that's one of the reasons why I'm bringing it up is that when you present these, make sure that you're giving yourself an opportunity to explain them. And it is a good practice to not have this text also be here just by default, because then you have a lot of this visual friction with all this text and you want to avoid that, but give them the option if they don't understand or want to learn more to go ahead and hover, which is a great practice and understand, well, what does that mean? So this says license count. So you can have unlimited basic users in an account, but each plan has specific limits on how many users can be assigned meetings licenses. Do you think that helped? I don't think so, me personally, I think that there's an opportunity to word that better.
Chris Hopf:
Now, again, hard to argue, they've had a lot of success, people have been able to figure it out. But again, these are some of the things that I just encourage you to challenge yourself on initially, because the more you do this on the front end, the more opportunities you won't be missing, right?
Wes Bush:
Yeah, that seems pretty self-explanatory. But in terms of visual clarity would you take out the columns where it's a tick on each one of the columns? Tell me that's an option when it doesn't vary from one plan to the next?
Chris Hopf:
So take out the columns?
Wes Bush:
So if you look at unlimited group meetings, that seems irrelevant because it's a tick box in every single column, it's not a differentiator between two plans, right?
Chris Hopf:
Right. So there is something to be said around how you have these check boxes and this around displaying there. And I would say it's worth testing, but you do initially want to demonstrate that there are things included in this. So if the alternative was to not even include that row, I don't know that that's necessarily cause you do want to highlight the fact that though that is available in all the offerings.
Wes Bush:
Okay.
Chris Hopf:
Was that helpful?
Wes Bush:
Yeah. I was just curious if it wouldn't be better just at the top to say all plans include unlimited group meetings, unlimited one-on-one meetings, screen-sharing, breakout rooms, all of those are the same across all the plans. And that would save you a lot of space on the page.
Chris Hopf:
Right. There is I think this page does that, similar to this, is that what you're thinking?
Wes Bush:
Yeah. That would take a lot of noise out of the just in terms of cerebral load, it's a lot less things to put into your brain in order to distinguish one offing versus the next.
Chris Hopf:
Right. And I think one thing that they might say about this, this is the full plan comparison section, so they are giving the details. But to your point, right? Maybe this approach on more their summarized view, right? Might be a better thing to kind of highlight what's included in all the plans and then go into what's different about the plans, right?
Wes Bush:
For me, I think this page is a lot more digestible, at least from one end.
Chris Hopf:
Yeah, I agree.
Speaker 2:
All of those things are just convention, right? Just about every SaaS plan you look at as a quick scan checkbox. So in less than a second, you can know where you want to direct your energy in terms of do I buy this plan or that? It's just a standard convention that people have come to accept and it's just pervasive. So sometimes you don't want to overthink things and try and reinvent the wheel either, right?
Chris Hopf:
And here's another example that's similar to what both of you are commenting on. And here it has the simple view of the different between the plans, right? Then you can expand it and see more of the details, but keep in mind,
Speaker 2:
I think Fraser's point that's probably a better explanation in visual explanation than the one that Zoom has.
Chris Hopf:
Yeah. But here's what's key is look at how they're categorizing or again, grouping, right? Their functionality, their capabilities, right? Within the context of empowering [inaudible 00:36:55] smart spending, right? Really around from a value communication standpoint. So some of these companies, because I work under NDA, I may or may not have worked with before. So let's keep going and let's transition to kind of working more specifically through the decision Giide with Alison if that's okay. But before I do that, did anybody else have any thoughts that just kind of touching on Zoom, maybe you want to just ask really quick before we transition and as Alison prepares to be interactive?
Wes Bush:
I'd be curious to hear from your perspective, is this a thumbs up page for you or thumbs down?
Chris Hopf:
I think there are significant opportunities for Zoom to even improve on the great outcomes they've been able to achieve already. I do like the fact that it's organized and so forth. But one thing that I wanted to share with you, well, maybe I can share later, but when you're lining things up, it really is important to be consistent. What you see with some pricing pages is for example, they'll say group meetings for up to 40 and then you go across and it's like, okay, group meetings is now down here and then they don't mention group meetings anymore, right? And sometimes there's this the approach where it's everything in the basic plan plus everything in the... That is okay in some situations. But sometimes people just by default take that and they don't think about really how it's displayed and how people can really digest that, right? And interpret it.
Chris Hopf:
So there's lots of things to keep in mind, but I do highly recommend that, that you do do this very intentionally. I mean, again, it really is if you get somebody to your pricing page, make the most of it and always be experimenting. Even if you don't feel like you're going to get that statistically significant threshold, that doesn't mean that you can't still be learning, building that proficiency around testing proactively and then also it can be very directional still. It can still be informative and directional even though you don't hit that threshold. All right.
Wes Bush:
I was also quickly curious about the $14.99 statement you made. I mean, I've got to assume Zoom tested $15 versus $14.99, and we're playing some kind of psychology trick like a gas station, right? Do you have faith in that idea that people will buy at $14.99, but will bulk at 15 bucks?
Chris Hopf:
Well, I've actually seen it actually matter in some cases, what I think what they're doing here to some degree is they're basing it on maybe some of their past lives at some of the other companies that they've worked for in the past or the industry that they've been in for a while. So I personally do not think that they would see a significant drop in conversions or anything like that. In fact, there could potentially be an increase if they simplified this to $15 and $20.
Wes Bush:
Cool. Thank you.
Chris Hopf:
But again, it's you don't know unless you try, right? And I think that they're just going by because of the volume they're just going with what probably if they weren't going to test it and so forth then starting lower at $14.99. And it is the 1 cent going to really make that big of a difference versus on the flip side, if it's somehow favors them in some way, they're going to go with it, right?
Speaker 3:
Hey, Chris, could you comment on the thing, the bouncing ball on the lower left that says explore ad-ons?
Chris Hopf:
Well, the thing that I would say about that is well done. So do you want me to give you an actual specific example? I think I mentioned this.
Speaker 3:
Yeah.
Chris Hopf:
So there was a time when I didn't have any add-ons with Zoom and then I got tired of managing my recordings because I do a lot of recordings with my clients and so I pay for the additional cloud storage. For a while, I thought, you know what? I can just clean this up. So I cleaned it up one time and I went ahead and downgraded or I removed that add on. And then for a while I thought, which was fine and then I started building up more recordings and like, no, I'll go ahead and add it on again. So I forget the exact numbers, but Jason Lemkin and a number of other folks, even Kyle Poirier, I believe with OpenView venture partners, they comment, I believe on... I'm trying to think there's one, if I think about it I'll pass it along. But there was an interesting commentary just around their metrics.
Chris Hopf:
So their net revenue retention, their ability to expand with customers is exceptional, right? And that's because they've been willing to make available options for customers to add on. So I highly encourage you to be careful around what you include in your offerings, how you approach your offerings, but also what you include and what might actually be best to include, or be available as an add on rather than by default be part of a particular plan. You can always roll it into a plan if it doesn't perform well as an add on, and so that is often what I recommend. In every respect, any client that I ever worked with, what is a key topic is what's on their roadmap. These discussions around offering and pricing are very important, not only for the here now and where they've been, but where they're going.
Chris Hopf:
And what a lot of people don't do is they don't think about where they're going as a solution, they configure and come up with their offerings and then when new capabilities or functionalities available, they tend to just roll it in and they never give new valuable functionality or capabilities to chance to perform from financially. So what I recommend oftentimes is to define what's an update? What would be a potential add on? And then make sure you're giving new functionality a chance to perform for you financially as an add on initially. As a default view, evaluate it rather than at default roll things in and then come to find out people would have paid for it. So does that make sense?
Speaker 3:
Yeah, that's extremely helpful. Thanks.
Chris Hopf:
All right. So how are we doing on time, gentlemen? We doing okay.?
Wes Bush:
We're doing okay, but let's dig into what Alison is up to at Giide, that's going to be fun.
Chris Hopf:
Yeah. So Giide, and hi, Alison.
Alison:
Hi.
Chris Hopf:
Thanks for volunteering.
Alison:
I'm on the hot seat.
Chris Hopf:
So she was kind enough to share this with me. And there was this version and then there's this version. And one of the differences between this version and this version tell me, Alison, is it correct that we have total creators added here, is that right?
Alison:
That's right and then we limit the Giides that you can create on a free plan.
Wes Bush:
Hey, Chris, just before we dig into the exact metrics, Alison, would you mind just giving everyone a quick of what Giide does?
Alison:
Yeah, for sure. So Giide is a platform for listening, creating, and sharing interactive audio. And the easiest way to think about interactive audio is it's voice or audio plus on screen clickable content. So as the person is speaking they can link articles, videos, quotes, references, resources. And so we truly are making sort of this two-way interaction happen with audio versus just passive listening.
Wes Bush:
Awesome. Thanks for the overview.
Chris Hopf:
And another way, or just one thing that came to mind you tell me if I'm thinking the way that you're thinking, the use of show notes in podcasts, right? And perhaps sometimes the inconsistency across different platforms, how they display? What's included? Sometimes what's not included? Can lead some listeners to not even go there anymore because it's not what they expected or hoped would be there, any thoughts on that?
Alison:
That's right. I mean, the format Giide was developed after about two decades of working with businesses and creators who were publishing content that no one was interacting with and had trouble getting to the resources that were mentioned. And so as I've told Ramli, often I'm listening even to this course, and I hear something mentioned, and I want to be able to click immediately on what was mentioned, whether it's a book or a worksheet and that's what Giide provides. And you can do that on the mobile app, or you can do it online within a web player.
Chris Hopf:
Can I offer you one quick comment that I just am compelled to share with you?
Alison:
Yes.
Chris Hopf:
I think with some solutions like Giide, what sometimes is missed is putting your users or your creators in the position to be more successful. So providing them guidance on how to be a good Giide if you will. So if you think about, for example, Google ad words, there's all this best practices. If you think almost again, I wouldn't necessarily use this word, but like a Giide university or some sort of way in which you can help them get the best outcomes by using Giide. because some people will probably have use it in ways that really, maybe aren't putting them in the best position to achieve their goals and they may be in a sense be working against themselves. And it's going to be important for you to maintain a trajectory of users and customers that they're getting the most out of it and associate value with it rather than using it in ways that are kind of counter productive to what they thought they were choosing it for.
Alison:
No, it's good, it's good. And I would mention that I will mention that this website is getting replaced. As a company we've been selling directly to businesses really just ad hoc pricing through big enterprise businesses for the last 18 months. We're launching for the first time at the end of June a self-service PLG model. So this is the old website that you're looking at, just so everyone knows, and the new website with pricing. And funny, you mentioned we're going to have a whole section on how to be a better Giide maker. So I just want to mention, I probably could have sent some design comps for that ahead of time, but this is the old website.
Chris Hopf:
Because you see these again, maybe some of the people on the call haven't actually experienced your solution, I certainly have with what's available to me on your website. But even the practice of having just like a pile of dots just in one area that you may or may not be... You see what I'm saying?
Alison:
Yeah, totally. No, it's good feedback.
Chris Hopf:
Okay. Well, very good. So again, thank you for that. And again, I encourage people to check out what Giide is doing. She's not paying me to say this, but I actually think that I'm glad that, I mean, one thing I'm just getting out of working with Ramli and Wes on this particular session is being exposed to this. How else would I have found you? How do you think I would have found out about you?
Alison:
Well, most people right now find out based on a Giide maker sharing a Giide because we've never launched publicly. We've haven't done any PR or advertising, that's all rolling out in June. So the best way you would find out is through a network, through our social media if someone shared a Giide with you, but that's a behavior that often happens is someone makes a Giide, shares a Giide, and then the Giide listeners see it, and then they want to make a Giide. So it creates this nice little circle of creation if you will.
Chris Hopf:
Kind of like a survey solution, right?
Alison:
Yeah. Or if you were to share a video and you see that and you're, wow, that's interesting enough I'd like to try making one myself, yep.
Chris Hopf:
Very good. All right. So thank you, Alison. Was there anything more, I don't want to assume, was there any more around introductory?
Alison:
Yeah, I think that's [inaudible 00:50:30].
Chris Hopf:
All right. So again, congratulations on thinking in terms of a good, better, best out of the gate. I just encourage people, if you haven't come to that conclusion, even if you don't think that you have enough functionality or capabilities to really differentiate a good, better, best, or even a good, best, just start with that and make sure that you don't. And even if you don't have the functionality available today, it can still give you that important view of kind of where you might be going or where you might want to go. So very good. So that's one thing that I'll just jump ahead and is on these features coming soon right here, Alison. You might want to consider how you can maybe have those represented up here, right? And then just have coming soon up here rather than have it be at the bottom.
Chris Hopf:
Again, I understand this is a PDF and isn't necessarily what you're going to display, but just in case I just was compelled to let you know that. So a lot of good things I see you have going on here. But why don't we get into pricing metric decision Giide? What should Giides pricing metrics be? Should there be more than one? I typically encourage folks to try to limit it between a pricing and how many additional secondary metrics. You're going to want to be just very careful around again that where you go as far as introducing complexity to the whole decision-making process. So try to keep it three or under three to five, maybe at the most. The fewer actually the better, but you're going to have to balance that with a number of considerations.
Chris Hopf:
So I went ahead and I put these total number of creators, total number of guys, total number of listens, total number of feed cards, right? Just for starters into this Giide. And so those are the options that Alison is considering or planning on using. And so we're going to go with the first test here and we're just going to work across for total number of creators, so relevant to the business of most buyers. So you say you've already interacted with a number of existing customers or prospective customers, would you say that total number of creators is relevant to the business and those buyers?
Alison:
Yes.
Chris Hopf:
Yeah, right. And so what we're doing here is we're asking ourselves three means you strongly agree and one you somewhat agree in zero, you do not agree. And what I often recommend with any type of scoring type approach, whether it's a tool that I've created or anybody else is you shouldn't just go and score it, you should be able to actually make a case, right? Kind of explain why it's a three, right? And or why it's a one. Or even if you say zero, you should say why it's a zero, right? So to really get the most out of any type of tool. So we're going to say that this is a three, right? You strongly agree that it's relevant to the business and most buyers, is that right?
Alison:
That's right.
Chris Hopf:
So when you think about the range of most use cases, does it apply across the range of most use cases across most buyers?
Alison:
Well, I'd say I'd probably give that a two.
Chris Hopf:
So excellent, I'm glad that you brought that up. So don't take this wrong. Wes will even admit to it as well. On the webpage, I actually speak to... Where do I speak to that at? Oh, it's down below. I'm sorry. So I give some tips here, right? So how should you think about scoring, right? Can I score using decimals two, zero, four? No. So just keep it three, one or zero.
Wes Bush:
I like decimals, I'm kidding.
Chris Hopf:
A lot of people do so again, you're not alone, Alison. But again, for the purpose of this evaluation, it's going to be most helpful if we force ourselves, do we either strongly agree or we somewhat agree or we do not agree?
Alison:
I would give it a one then.
Chris Hopf:
Okay. And why is that
Alison:
Only in that, what's interesting for us is we've always sold to the business buyer and now we're opening up to the individual creator. So when I think about a business buyer, I strongly agree, they want to know how many creators within our organization can make Giides? But in individual, we're learning more about them every day, but we don't quite know them yet and how important that will be? But I would say so that's why I would say one.
Chris Hopf:
Okay. So you've mentioned something there, I'm just curious, is the buyer the same as the user?
Alison:
In the business, not always, on the creator individual side, yes.
Chris Hopf:
Okay. Gotcha. Very good. All right. Is it relevant to how most buyers experience value in use, right? So when they think about why they chose Giide and the value they hope to get out of it, is total number of creators representative the value that they associate in using it?
Alison:
Yeah, I would say three.
Chris Hopf:
You'd say three?
Alison:
Mm-hmm (affirmative).
Chris Hopf:
Okay. Is it easy to understand, now keep in mind folks that the reason I have this weight here and I have these weights in here, and the reason that these particular ones are weighted higher is because they tend to make proportionately significantly more impact on how well a pricing metric for perform, so easy to understand, tell me about that?
Alison:
Yes. I would say a three.
Chris Hopf:
Yeah. It's pretty straightforward, right? It's not going to be too hard to explain who a creator for Giide is, right?
Alison:
Right.
Chris Hopf:
Right. Are there going to be a number of different user types?
Alison:
Generally not.
Chris Hopf:
Okay. Will you have an administrative type user?
Alison:
Yeah. If they're an enterprise customer, we might, yes. We have that option.
Chris Hopf:
But in many cases they may actually be a creator too, right?
Alison:
That's right.
Chris Hopf:
Right, right. Okay. So there's keep in mind a lot of the things that we're discussing today, the topics of monetization and pricing strategy, there's a lot to it. There's many variables, factors, considerations, and scenarios to take into consideration. And so I'm going to be tempted to go off on tangents and I'm forcing myself not to. Easy to estimate or forecast requirements?
Alison:
Yes. Sure.
Chris Hopf:
So in many cases, somebody that is in this case, let's say on your webpage, on your pricing page, trying to decide how next to move forward with Giide, it would be pretty easy for them to know how many creators they probably have or could potentially want?
Alison:
Yep.
Chris Hopf:
So you'd give that a three.
Alison:
Yes.
Chris Hopf:
Excellent. All right. Promotes favorable position over alternatives. Well, let me ask you, Alison, what are the most likely alternatives to what you have to offer?
Alison:
That's a really difficult question.
Chris Hopf:
And I specifically used alternatives, not competitors. Competitors can be alternatives, but there are also other things other than competitors that can be alternatives. One of those is the status quo, in many businesses it can also be a scenario where they're trying to determine whether or not to build versus buy, but go ahead, Alison.
Alison:
Yeah. I mean what's hard about Giide, is this nothing exactly like it? So the closest or something that would resemble it would be like a loom possibly where you're creating short videos versus reading short audio Giide. So we're in that sort of genre if you will a business.
Chris Hopf:
Right.
Alison:
So I'm not sure if it creates a favorable position over alternatives? That's a hard one.
Chris Hopf:
So if we can't say that we strongly agree that it promotes a favorable position and we can't say that, well, we somewhat agree then we're going to have to say that we don't agree, at least at this time. Now keep in mind, this is a tool that once you take an initial first passover, for example, once you complete this row, keep in mind, once you go to this, you may decide, well, now that we're thinking about total number of Giides, this might actually be a one, just as an example or something like that. So keep in mind that as you use this tool, don't feel like you're just stuck with, well, I scored it this before, it's a process, right? And you'll learn throughout the process. All right. So here we are now, we've thought about it from the customer's perspective. What about from your company's perspective? Well, does the revenue scale with customer success? So as they are using Giide and they're getting the value that they hope...
Chris Hopf:
They are using guide and they're getting the value that they hoped out of it. Will your revenue go up by if you were to charge by total or differentiate how you charge by the total number of creators?
Alison:
I would say yes. Strongly agree.
Chris Hopf:
Okay. So in a sense, you hypothesize that if they started with one creator and it starts working, they're likely going to want to have more creators, right?
Alison:
That's right.
Chris Hopf:
Right. And because they want to get increased value out of it and they see that having more creators will help them get more value out of it. They will likely be willing to pay more for it.
Alison:
Agree.
Chris Hopf:
Now, what would you say to some people that may have read some articles that they say don't charge per user? I'm just curious what you would say, Alison.
Alison:
If someone said that to me, don't charge per user?
Chris Hopf:
Yeah. Because then you're limiting it, just open it up to have unlimited users. Because then more people will come in and use, and so you're kind of, you're not constraining really the potential of your solution by charging by the number of creator. Aren't you penalizing them by just wanting to use your solution more by requiring them to pay?
Alison:
Yeah. I mean, it's a common discussion, right? I mean, we talk about it often and as you can see there's definitely the camp of just uncap users. Just let as many people as possible. Great. The more the merrier. But what I found is that it, at least for the business customer so far, we have more to learn about individuals that they really understand that seat. They're like, "Oh, a creator is making..." They get it and it's just a faster discussion and a faster path to a sale. That's how it's worked so far. But we have so much to learn now that we're really changing the business model.
Chris Hopf:
Sure. Yeah. So what I'm touching on here a little bit is this encourages increased use, right? So, or another way of thinking about it, it does it discourage them from using it less? You see what I'm saying? So-
Alison:
I mean the more guides you see published, the more guides will be made. So it's like this volume of energy around different people making guides generally creates the motivation for more people to make guides and more people to listen to guides. It all sort of builds upon itself. So the more in circulation with the different creators, the more it grows.
Chris Hopf:
Okay. So would you say that if you were to charge by total number of creators, in a sense it would encourage increased use? They'd actually be encouraged to add more creators because even though they're having to pay for it for an additional creator, they're getting more value. I mean, it's very much similar to what we're saying, it's relevant to the business. It applies to range, most use cases, relevant to, this is the key one, to how they experience value in use.
Alison:
Yeah. That's right. So I would agree. Three.
Chris Hopf:
Okay. Can we take a moment? Are there any quick comments with anybody on the call that maybe just feel like, "I don't know if I'd give that a three." "That would be a zero for me." Says SOT.
Ramli John:
Some few comments around charging by users, Frazier said, "Why not just use one account to publish all guides?"
Chris Hopf:
Say it again, Ramli. I'm sorry.
Ramli John:
Yeah. Frazer, do you want to unmute yourself and say a comment?
Wes Bush:
Yeah. What's going through my head throughout this conversation, Alison, is how do you, it's not exactly police it or enforce it, but it's more, if I was in a company, I would just buy one license and have three, four, five publishers all just log in and use the one license. Not to say we do that in our company today. And if anybody accuses us of that, I will deny it. But I may have seen cases where other companies have done that kind of thing.
Chris Hopf:
I've heard of that too.
Wes Bush:
Yeah. As despicable as it is. So, yeah. So we all balance here where you want to promote virality. You want to see guides all over the internet and see the brand. And that I've been checking it while we're talking. It looks fantastic. I think going back to the very first slide that Wes showed is the question of what of those four models are you going for? Are you trying to get tons of users very quickly, which is why you've got the free version of it? Are you trying to maximize revenue early on? And depending on that strategy, that really is what you want to go back to, to determine what pricing model to use. And I think the per seat license keeps people fairly honest, especially in companies where people are not spending their own money, but that will determine how quickly you grow and how quickly you acquire new customers.
Chris Hopf:
So here are my comments, brief comments on charging per user. So yeah, I've read a lot of those posts as well around kind of encouraging people not to charge by user. My personal opinion, which seems, which is very relevant to our discussion here with guide and with Alison. Is that if you're willing to make the case and in a very convincing, credible, compelling way, I believe that you can make the case for somebody paying for an additional user otherwise, why would they ever want another user? But to your point, I think the gentleman's name was Frazier or along the kind of the talk stream that maybe that could have gone, was what's key is what you charge for that additional creator. So if your price per user is just kind of a static price, it's the same price for every additional user.
Chris Hopf:
Whereas if you charge per maybe initial creator or the initial creator, but then to add creators as a lower price. You will be in a much better position where you will de-risk it for them, they'll be less likely to share passwords because it's just going to be easier for people to have their own login than to have to share the password, but you haven't necessarily... And again, it really depends on where you end up with your pricing, right? With some solutions and companies that I work with, their price per user is hundreds of dollars in some cases, thousands of dollars per month per user. Well, in those cases, you definitely have to be very careful not to charge that same price for once you hit a certain number of users. Otherwise you will see without a doubt, people sharing passwords. Whereas if you're priced lower and then maybe you have a slightly lower price for additional users, you still are in the position to generate expansion revenue and... Sorry.
Wes Bush:
While Chris is recovering there, maybe I'll just throw in a quick thought, which I'm running into with this very issue. I have many customers now are complaining to us because we're more of a B2B enterprise platform. So we'll have one person, for example, with guide, you're going to have somebody in the company who wants to bond metrics and analysis and reporting. And what my customers are saying is, "I don't want to have to buy another license, just so somebody in finance can log into your system to report on usage and costs and stuff." So that's something to look at potentially breaking out or if you want an admin free license, that's something you can build out, but there's some pushback you might run into.
Chris Hopf:
Yeah.
Alison:
Yeah. And just to comment, I think what's been the most challenging thing for us at least at this stage is we've always sold to the business. So it's always been sort of custom, mostly based on number of guides generated in with slight consideration to the number of creators. But if we are betting, which we are, that the scalability of the business is in the individual seat, the creator, the YouTuber who wants to start making guides or the sub stocker wants to make a guide or the podcaster, then it's a different lens that we have to look at it. So we've really tried to push all business and enterprise to the business column, which is custom at ad hoc in a way pricing still and really optimized for the individual free moving to a pro. So I just want to just say that because it's hard in a way to answer the questions because it's like, am I still thinking about this business customized pricing? Or am I thinking about our bet on optimizing for the scalable individual creator? Does that make sense?
Chris Hopf:
Yeah.
Wes Bush:
Yeah. Can I ask if, do you host the guides once they're published? The [crosstalk 01:09:37].
Alison:
Yeah, you do. Yeah. So you can publish on the mobile app, on an embeddable player, or you just make a guide and create a URL and share it.
Wes Bush:
But you control the platform, right? You're hosting them.
Alison:
That's right. Yes.
Wes Bush:
So you could be charging by a number of guides published or even by a number of guides viewed.
Alison:
Viewed. Yeah. And that's a lot of the discussion as well. Should we charge for listens?
Wes Bush:
Yeah. Because then your customers have every incentive. They want to ramp up the number of listens anyway. Right? That's why they're in this game.
Alison:
They do. Yeah, for sure. There's pennies on a listen. So to calculate that, that we've talked about that quite a bit similar to how AWS charges.
Chris Hopf:
Yup. So those are all important considerations. And oftentimes just going through this guide and then when you're evaluating the other options, especially if you're doing this as a team, you're making sure that you're addressing some of these things that you naturally have just identified on your own, but are really important considerations before you ultimately make a decision, and what you initially go out with. There's challenges you can avoid by taking the time to do something like this, versus having to delay kind of these key learnings and opportunities as well. So simple to measure, if we can just keep going forward just for the sake of time.
Alison:
Yes.
Chris Hopf:
Simple to measure, we would say that it's easy to measure, right? Easy to enforce, which was touched on just briefly. Which believe it or not, for a number of my clients, it's amazing how they will say, well, our clients actually have access to everything they may or may not know it, and we really don't charge them anymore. So anyway, so would it be easy for you to enforce, have you built in that functionality?
Alison:
I would say I would somewhat agree.
Chris Hopf:
Okay. And then tracks to differences in costs to serve. We kind of touched on that again briefly when you're starting to talk about some of the costs associated. Now, one thing I will stress here is that what I don't want you to do is to make a pricing decision solely on the cost aspect related to that decision. I believe from my work as a pricing consultant, that costs are very important, but ultimately what you need to do is you need to put yourself in a position to understand where you want to go with your pricing. And costs are really to come back and say, does this approach actually makes sense? Is it feasible? Does it financially make sense to pursue this?
Chris Hopf:
Because if you take the other approach of starting with your costs, what you'll find out. And again, I've seen this time and time again, one of the most successful things I do with my clients is help them increase their prices is when they take a cost-plus approach, as they tend to de-value their solution, right? Oftentimes they won't even go to understand their customers and understand the value and they tend to underprice. So anyway, so with regards to total number of creators, it is important to understand, does that somehow affect your cost to serve a particular customer?
Alison:
It does have an impact. Mm-hmm (affirmative).
Chris Hopf:
Okay. So we'll say three.
Alison:
Yeah. That's it.
Chris Hopf:
Okay. So right now, just as a quick visual, you may have heard this in the other video that the folks kindly linked you to Ramli and Wes. That just from a quick visual, if you're seeing more green here than here, then again, it's better to favor your customer's perspective than your company's perspective. Because what I've seen in many respects is sometimes people don't do that and then they wonder why they're having challenges. An example is a company you may or may not have heard of called ServiceNow, a number of years ago for a while, if you added one type of user, you by default had to add this other type of user, but then there was also this multiplier of 0.0, whatever. And so it was adding a lot of friction to their renewal process. A lot of people were kind of complaining, "Why do we have to do this?"
Chris Hopf:
And again, they got too clever and they didn't really think about it from their customer's perspective. So just be careful. All right?
Alison:
Mm-hmm (affirmative).
Chris Hopf:
Okay. So relevant to the business and most buyers, we're looking at total number of guides. So again, that would be total number of these or total number of these. In this case we have six guides. Correct?
Alison:
Right.
Chris Hopf:
Right. So would you say that it's relevant to the business and most buyers, are there some customers of yours that could potentially just have maybe two guides and they'd be good?
Alison:
It usually volume is connected to value. People want to make as many as possible. Rarely do people just want to make one or two. So I would say a three, there.
Chris Hopf:
You say a three?
Alison:
Mm-hmm (affirmative).
Chris Hopf:
I will just tell you that. Just say that there's a scenario where somebody is using a guide on their homepage or on a landing page. And they typically only have maybe one or two active at a time. So they may be getting a lot of value out of just-
Alison:
True.
Chris Hopf:
... One or two. Right. Depending on how they're using it. But again, I see where you're going, but just thought I'd mentioned that. Applies across the range of most use cases.
Alison:
Yeah. I would strongly agree.
Chris Hopf:
Okay. And then relevant to how most buyers experience value in use. I'm thinking three.
Alison:
Three. Yup.
Chris Hopf:
Yup. So at this point between column E and L, I have this little note where you can score by segment. I was tempted to say that a little earlier, but I just thought I'd wait to say it now. So when you open that up, it gives you these additional areas where if you did have different segments or personas or different scenarios, you could potentially score those. And in a way your total score would be, which of these options seemed most appropriate for all of these different segments. Right? Versus maybe just one or two. So that is optional to consider as well. But for the sake of this total number of guides, easy to understand, I'm thinking a three, right?
Alison:
Yup.
Chris Hopf:
Right. I'll stop saying what I'm thinking. You tell me what you're thinking.
Alison:
[inaudible 01:16:10] the forecast. Three. Yeah.
Chris Hopf:
And how about this? Promotes favorable position. Again, we kind of discussed that. So I don't know if any of these are going to really possibly change based on what you said before. Yes? No? How about this? When particular, total number of guides, is it a favorable position to charge by total number of guides over maybe some other alternative?
Alison:
Yeah. I would say I could strongly agree with that.
Chris Hopf:
And why?
Alison:
Because of the value that people place on the volume of guides they create. And so if that makes sense.
Chris Hopf:
But a key is over alternatives.
Alison:
Over alternatives.
Chris Hopf:
Right. So say there is another alternative that they may be, you talked about Loom as a potential alternative and there again, we'd have to know what they're charging by. Do you recall what Loom is charging by?
Alison:
I don't have it off the top of my head.
Chris Hopf:
I think there is a user or a creator aspect to it certainly, but I don't know if there's much more than that. So total number of guides. Now, if you only charged by total number of guides, but didn't charge by creators. You see what I mean?
Alison:
Yeah.
Chris Hopf:
Then maybe, so.
Alison:
So maybe a one?
Chris Hopf:
We'll put a one there for now. Scales with customer success.
Alison:
Yes. Three.
Chris Hopf:
Okay. Encourages increase use.
Alison:
Yes. More guides published, the better. Three.
Chris Hopf:
Yup. And the more successful one guide is, the more they're going to want to, and be willing to pay for another one because hey, that worked, so. Right?
Alison:
Right. Simple to measure.
Chris Hopf:
Simple to measure.
Alison:
Three.
Chris Hopf:
I'm thinking so. Easy to enforce.
Alison:
A lot easier there. Yes. Three.
Chris Hopf:
And does the cost for you to provide guides to your customers? Does that somehow increase?
Alison:
It does because of hosting.
Chris Hopf:
Right. Yeah, exactly. So, wow, almost a perfect score. So-
Speaker 4:
I would challenge that charging by the total number of guides doesn't necessarily encourage increased use or-
Speaker 5:
Yeah. I'd put that comment in the chat. Aren't you kind of punishing them because the more you're using, you're going to have to pay more each time you publish? So you're sort of punishing them for making more guides.
Speaker 4:
And I would hesitate to ever make a short guide when I could make, instead of three short guides, I might make one long one and then you're not tied to success anymore. And then the revenue is not scaling with our success either. I really challenged those. I think they're both ones. I think total number of listens is where you're tied your success to their success. That's where it's three and three.
Chris Hopf:
So here's an opportunity for me to insert something here. I'm kind of waiting for the opportunity. So I appreciate the comments. But another scenario here, when you're looking at total number of creators, total number of guides is another option that you could consider by adding another row and see if it somehow scores differently. But I think it could, in this case is total number of active guides. So to your point around having a short or maybe limiting maybe you're going to, you can create a number of guides, but in a way you make them active or not active. And they're only having to basically pay for those guides that are active or that are available for people to listen to.
Alison:
And we have that now. So we have active guides per month.
Chris Hopf:
Okay.
Paul:
But [crosstalk 01:20:11] down to a value, but the value that the customer actually feels they're getting from the... We're all sitting here trying to pull apart the outside of it. But surely this is going to be value led for the customer, whether it's number of listens or number of brochures, it's kind of what the customer thinks the value is rather than what we're sitting here trying to do in terms of this model, no?
Chris Hopf:
Yeah. I like that comment, Paul, because when we talk about penalizing customers, because they have to pay more for something or punishing them or anything like that, it being a negative thing that we're charging them. I just encourage people to, I get where we're going with that. But also along the lines of Paul's comments, it's just, let's dive deeper and just really understand what's going on there, right? Because they will, if they associate value with more guides, they will be willing to pay for more guides, just like I was talking about with the number of creators. And so people can talk themselves out of monetizing something that actually resonates with the customer, right? Because they've concluded kind of how they're going to respond. Now, I'm not saying it won't be viewed that way at all. Or there could be a scenario where maybe just a certain percentage of people maybe view it as being penalized.
Chris Hopf:
And so there are going to be tradeoffs. But again, the purpose of this tool is to kind of surface these other key considerations. But I do also want to just highlight the comments, I believe it was from Angie and I think somebody else, that those are important considerations. Because ultimately whether it's perceived as penalizing or not, it is going to affect their behavior, what you charge them for. It will affect their behavior. But what's key is what are you trying to accomplish as a business? And what do you have a hypothesis around what you believe they're going to be willing to pay for what you can actually monetize? Right. So, all right. So total number of lessons, can we keep going and let's just complete these and we'll go pretty quick on these ones. Is that okay for time? We doing okay on time Wes and Ramli? You can just say no if we're not.
Wes Bush:
So we have about 10 minutes left. One thing I think that might be more helpful for people is trying to think about, okay, so we have these two metrics. I could say, everyone at the end, this is going to be your homework, by the way, it's going to go through this and apply it to your own product for your value metrics. But let's say they're stuck. They have two just like we have right now, they're pretty close. It was like-
Chris Hopf:
Let's say they weren't even considering these two, but these were the two that they were considering. Okay. Keep going. Yeah.
Wes Bush:
And then how would you decide, you know what, we should do guides versus creators? How do you decide what is that primary or even secondary metric, or if you should just focus on one metric for your products?
Chris Hopf:
Well, there's a number of different things to take into consideration, but one that'll just highlight is frequency. So the frequency in which these metrics could change. So how often, and again, a lot of this, unless you know because you've actually dealt with actual customers or users, a lot of this again is building, having at least an initial hypothesis, call it a guess, but a very deliberate guess with a way to measure and a willingness to be committed to measuring it. Is, do you think that you, Alison would have a more frequent if you think about all of the potential customers that you could have, do you think you'd see more frequency around number of creators or number of guides? I think I know the answer to this, but what would you say?
Alison:
Number of guides.
Chris Hopf:
Right, right. That would be most likely to change. Now here's the question. Now, what direction would it change? Would it likely always go up or could it go up and then down and then up, you see where I'm saying? So those are some key considerations around evaluating. Once you've gone through these tests is then asking yourself, that's one question is just around how frequently it might change. So yeah. Anything else, Wes?
Wes Bush:
No, I think this has been awesome. One of the things that I think is so unique with this workshop is how everyone's really jumping in around. It's like, "Okay, we should do it this way." I think pricing is one of those things that I think it's so easy to have an opinion. But to your point, Chris, it's at the end of the day, it's really just about testing, all of these things where you have great ideas, but you don't know til you actually test it. But I think this decision guide is going to allow most of us to really just get a bit more clarity on what are some of those metrics that we can charge on? So yeah, this has been fantastic. Thank you, Alison, by the way, for coming up on this hot seat, this is hard when you have 100 people looking at your business and jumping and giving you critiques. So I really do appreciate it. And if everyone else can give a quick, thank you to Alison in the chat too. I really do appreciate it.
Alison:
[inaudible 00:25:47].
Chris Hopf:
Thank you, Alison. Yeah. Do you feel like it was helpful, Alison, just a quick yes, no?
Alison:
100%. And it's just been, this has been one of the hardest things that I think I sent over a pricing sheet that had V7 on it. It's really V107.
Chris Hopf:
Yeah. And I want to just tell you, I'm just, and again, sorry, Wes, but for time’s sake, I have to say, when again, making these decisions, you're going to want to decide which one you should really change your price around, but also the use of unlimited. So here's some advice I'd give just simple advice when it comes to pricing, be relatively uncomfortable, especially initially with how high priced you are. You will naturally tend to devalue your solution because you want to close and win opportunities and you'll tend to price lower than you could. And you'll never put yourself in the position to really discover and get paid what you're worth. And it's harder to increase your price than it is to lower it. Now, on the other side, though, when it comes to what you're including and is included, you want to be relatively uncomfortable with how little is included.
Chris Hopf:
So when you're using unlimited a lot, just be careful because once you use unlimited, people will tend to de-value that just right out of the gate. It's unlimited and they aren't going to associate as much value with listens. So what can you do there? Well, again, I'm not saying this is by default, always the same approach, but in simple terms, what you might want to do is, well, what's the highest end that we think nobody would most likely go beyond, but we don't want to just kind of corner ourselves and have a regret around, including by offering something as unlimited? Because I can tell you after working with a lot of different companies, it's one of their most significant challenges is that they had something initially was unlimited and they wish they did not. The business decisions you make now are going to determine the questions and challenges you face in the future.
Chris Hopf:
So that is just something I'm compelled to also highlight there is even if it's on the high end of your high-end plan, even if it's 1000 guides maybe you feel like very few will get there. But then when you get that big opportunity, you haven't [inaudible 01:28:18] yourself or framed your value around, well, you're only charging this much for... You see what I'm saying? And-
Alison:
Yeah. Makes a lot of sense.
Chris Hopf:
I think you see where I'm going, so.
Alison:
I do. Thank you. Yeah.
Chris Hopf:
Okay. Keep going [crosstalk 01:28:32].
Ramli John:
Chris-
Chris Hopf:
Oh, anybody else?
Ramli John:
Yeah, just a quick thing. In regards to that, charging your worth more than you think. I see more and more companies that are using instead of the free the 99 cents or the $1 instead of the totally free option to actually show that there really is some value here. And also of course, then they make sure that their people have a credit card and they have the credit card information, all that stuff. But can you speak to that of, are you undervaluing by doing free versus something that's almost free than 99 cents or the dollar?
Chris Hopf:
And so not having a free, a perpetually free plan, is that what you're saying? That you have at least some sort of-
Ramli John:
Yeah, not only not having a perpetually free, but instead of free being you have something that's a dollar versus free.
Chris Hopf:
Yeah. Well, again, there's a lot of things that go into me answering that question, but if you had to force me to answer it, I would say this, test that out before you test it perpetually free. You can always offer a perpetually free one later than taking the other approach. This approach you're familiar with Ahrefs where they charge you for a trial? Starting a trial for $7. So this company-
Ramli John:
And that works for them.
Chris Hopf:
This company has done really well.
Ramli John:
Yeah.
Chris Hopf:
Yeah. Again, keep in mind their segment, who they're selling to, the nature of their solution...
Chris Hopf:
Again, keep in mind their segment, who they're selling to, the nature of their solution. There's a lot of considerations. It doesn't mean by default, it's going to work for you, but it is certainly something that's worth considering because...
Ramli John:
And I would say here the other component they have working for them is they've established this extreme value. It's worth $179. You can get it for seven. It makes it more valuable almost then that you can get it for free.
Chris Hopf:
And also what's key for them, for you to understand and associate value with it. Is there certain things you're going to need to do. It's not as easy as just signing up, and the time to value is a little bit more delayed there with h-refs and using their solution. So they really want to qualify who they're exposing their trial to. To put themselves in the best position to make their value case and convert them to a customer. And they're willing to, in a sense, not make it available to those that aren't at least willing to pay $7. Go ahead, Wes. I'm sorry.
Wes Bush:
Sorry. I just wanted to jump in here since I know we're at time, we're happy to just stay on for Q&A, if you still have more questions about pricing, but I just wanted to remind everyone that the homework for this activity is make sure you go through that decision guide with your own value metrics, try and score them, try and figure out what are some of those primary and even secondary pricing metrics for your business. And if you still have questions, feel free to share it in the Product-Led Growth Slack community, and we can jam more on it in there, but thank you everyone for coming. If you have to jump, that's totally fine. You're free. Let you go. So thank you for coming on. And if you do want to stay on for Q&A right now, feel free to ask the questions in the chat or unmute yourself. Thank you so much.
Chris Hopf:
Yeah, for those that have to leave. Thanks again. And I hope you really did get a lot out of today's session.
Wes Bush:
Awesome. By all the thank you's, it sounds like it was super helpful.
Wes Bush:
So can I jump in with a quick question, Chris?
Chris Hopf:
Of course.
Wes Bush:
So going back to the conversation we just had, if I was in Alison's shoes, I'd be scratching my head right now. So let's say you've got these two pricing models. They're wildly different. In one case you're going to charge essentially per seat, per user. And the other, maybe you're going to find some consumption-based model, but they're so different. How would you test them in the real world? You're not going to have two different websites. What's the practical approach to testing those?
Chris Hopf:
Well, one thing about having your offerings in a format that is easily and well presentable to lead up to make your value case, to communicate your value, and then lead into how they can get that value. So that's your different ways in which you offer your solution. So those are your offerings. And so having that clear, so that's where you could possibly have two versions. So she's already had some conversations with some past clients, she could possibly set up some meetings with them, brief meetings, and just have a conversation with some of them, perhaps informally.
Chris Hopf:
If we took this approach, what would your thinking be? What do you think about this? And just keep it really open-ended, don't try to lead the witness, if you will, and see what types of questions they raise or comments they have. Just be really good at listening and sometimes okay with awkward spells of silence for a little while, because oftentimes if you're willing to do that in interviews with customers, if you're willing to push through what may seem awkward silence, they're oftentimes thinking, and they're about to say something or ask something. And so oftentimes we interrupt them.
Chris Hopf:
But with regards to this, this is going to drive different behaviors. If you just did, by total number of creators, then you're going to potentially have fewer people initially creating this. It depends though how much you're charging for it. So it depends on the price level. So depending on that, whereas if it was just a total number of guides, you may get a lot of creators doing an initial, experiencing the value, understanding how it works. But then they may be, well... So then you're asking yourself if we just chose one, which one would possibly work better? And then ask yourself, if we did both, how would that possibly change that in some way? Is that helpful?
Wes Bush:
Yeah. Can we jump back maybe to Wes' original four-blocker? Can you pull that back up?
Wes Bush:
Ramli, do you have that handy?
Wes Bush:
The four-block on slide two, I guess it was on the initial deck.
Chris Hopf:
I need to click stop sharing, right?
Wes Bush:
Yes, I think so.
Wes Bush:
But I guess, Chris, you would never see a situation where Alison's, she's with the startup, they're literally going to go to market with this come out from behind the scenes, you would not see a pricing page where it says, would you like to pay per users or would you like to pay per views? You're saying it would be a customer research exercise, not a literal, almost an AB test live on the pricing page where you say, we're going to give you two pricing models, you pick.
Chris Hopf:
Yeah, there's an example I just saw recently. I'm not saying it was a startup, but they actually had two ways. There were two pricing metrics and you could choose, and they had done the work to understand what the pricing made sense in both scenarios, and the customer could choose. Therefore, they were in the position to actually evaluate what seemed to be getting the most interest. Initially.
Chris Hopf:
But again, a lot of people don't take the time to think through, well, how would the pricing be different in both approaches? And then be in a position to present that, in a way. That's actually going to put them in a position to learn and understand. People tend to take shortcuts and therefore don't have that. Or even if they do have it, then they present it poorly. And it's overly complex. And then that's not going to help.
Chris Hopf:
So if you're able to do that, to think about both scenarios and where you might want to go with your pricing and you are willing to commit to actually giving it a chance to perform by doing an exceptional job in how you initially present it. I think you are then perhaps, Fraser in that position to maybe get some really key insights in maybe a different way.
Alison:
I think I just have one question. Thanks for everything and for letting me be on the hot seat for sure. But what's interesting is the reaction from everyone leaning towards a number of listens. I thought that was really interesting because what we found is that you can have an audience of 10 and get a whole heck of a lot of value out of guide, or you can have an audience of a hundred thousand and get... So people aren't always optimizing for number of listens because their audience is small.
Alison:
So I just think, for us, this has been so interesting because it seems complicated with what we're doing. How do you really determine that? So my question would be, how often can you change pricing? Can you go to market with your best guess? And then in a couple of months go, "That was wrong." Do companies do that?
Chris Hopf:
Yeah, certainly people do do that. What's important about any type of pricing changes that you really need to be in a position to make a credible convincing case around why you're making the change. It can't seem just willy-nilly. It can't seem like there wasn't thought that went into it. And then also the frequency. If you're doing that too frequently, then you're going to start losing people. And that's where that credibility is going to really take a hit.
Chris Hopf:
And also trust. So if you start doing that too frequently, there's some element of how they'll conclude whether or not they can trust you because is this just going to change again? And so forth. So yeah, you do have to really be careful. And one of the best ways to do this is in conversations and presenting your offerings and listening to see some of the reasonings around one might work better than another.
Chris Hopf:
The number of listens, I get where a lot of people might say, "Okay, charge the number of listens." Because really, effectively, "You're going to help me be able to grow my audience. I'm going to get a lot more listens." Well, There's a lot that is out of your control as a solution around whether or not they get a lot of listens. Again, it could be just they're early on and them doing what they're doing. There's a number of different factors that you really don't have an impact on.
Chris Hopf:
So I would be careful there around charging by the number of listens. I can see why some people might say it, of course. But then again, they may also not be as motivated to optimize it, similar to my earlier comment around you putting them in the position to really make the most out of this way of delivering content.
Wes Bush:
I'll say one last thing, and then I'll shut up after this because I spoke-
Chris Hopf:
No, it's great. I appreciate it.
Wes Bush:
But Alison, what I would say, which we ran into, is bear in mind predictability for the customer. They hate overages and they hate unexpected some surges in billing. So if you do tie it to views, while on the one hand while it's great, we're getting a lot more views. Some people may want to go really wide and a view may not be worth that much to them. Whereas some people are going after a really focused audience with their guide. And so every view is worth $15 to them. And people would be really annoyed if they launch something and suddenly it racks up a million views and you're sending them a bill for 10 grand. We run into that with overages on some of our plans that we had to dial it back.
Chris Hopf:
Yeah, how you communicate along the lines of what Fraser's talking about is so important. And so how you alert people and notify them that they're getting close to a certain threshold, that this is what's going to happen, proactively do that. Customers do not like surprises.
Speaker 6:
Chris, can you speak again to your advantage column promotes favorable position over alternatives. I'm working through mine right now and I'm finding that one a little challenging to fill out.
Chris Hopf:
So it was this one here?
Speaker 6:
Yeah.
Chris Hopf:
So again, the reason this is under the customer's perspective, because again, do they feel like if you think about maybe Zoom, for example, and again, I haven't thought through this example, but maybe there is an alternative that didn't charge by what Zoom charges by. Would the customer, or prospective customer, somehow associate some advantage that, "Oh, you're charging by this. That seems to make better sense than the way they're charging."
Chris Hopf:
So one common example that pricing consultants give, is that, what was it? With GE Jet Motors that they started charging by the hour instead of having to buy the motor. So there was an advantage, a perceived advantage that, "Oh, this makes more sense that you're just charging by the hour. We're really paying for the value we're getting out of this motor because we're paying for when we use the motor, not just..." Does that help?
Speaker 6:
Yeah, I think I got confused on the word alternative. So alternative here would be competitors, not the other pricing metrics.
Chris Hopf:
Right. And again, it could be competitors, but it could also be whatever they're doing today in some respects.
Speaker 6:
Okay.
Chris Hopf:
But yes, not overall alternative pricing metric options.
Speaker 6:
Yeah, I thought it was creators versus guides versus listens. So I think I better understand it. Thanks.
Wes Bush:
And I see Sam has a question. Do you want to jump in, Sam? Just about the teams and who owns pricing?
Sam:
Yeah, happy to. Thanks for the talk today, Chris. So my question is basically around if you're in a B2B startup and you're looking to experiment with your pricing, there isn't really a chief pricing officer and there's no single team dedicated to that. So in your experience, what's a good setup of a team who are able to experiment with this and what are the key roles, and who do you think they should ultimately report into, and that side of things?
Chris Hopf:
I see. Well, can you see my screen?
Sam:
Yeah, that's coming through.
Chris Hopf:
So, for many companies, they don't have a dedicated pricing person. And so that's one of the reasons why this topic isn't focused on, as much as it should be, when you think about the impact that it has on a business. So I have seen pricing reside in, again, marketing, sales, product, finance, typically one of these three areas. I'm just curious, Sam, which one seems to make the most sense for your business? Because then I'll just have one follow up question. For your specific business.
Sam:
We're a team of four. So it's the two co-founders, myself and one other. So yeah, it's with sales, but basically with the founders.
Chris Hopf:
Right. So who ultimately makes the final pricing decision though?
Sam:
Sales, at the moment.
Chris Hopf:
Okay. And that is because, the conclusion there is, they're the ones that are having these conversations with the actual prospective customer, is that right? So they're in a better position to really understand, is that right?
Sam:
Exactly. So at the moment, we're founder-led, founder / sales-lead. So all of the business is done through a traditional sales process.
Chris Hopf:
Yeah. What's important is to understand how pricing decisions are playing out. So what I would recommend, what I typically do with a lot of my clients is, as part of a project, is I help them form a pricing committee because they, depending on their size, even really large companies may not have a dedicated pricing-type function, or monetization function. So whatever you call it, a pricing committee, revenue advisory board, value monetization team, but just have a way in which you are keeping this, have a discipline around, a cadence around how often you're talking about these topics and understanding how decisions are performing for you.
Chris Hopf:
So sales may be just fine for you, but what's going to be key is who is that person in the sales? And how are their decisions performing for you? And being in a position to understand that, be able to speak candidly with each other, be willing to experiment, and those types of things. So I think that, again, without more information, you're probably okay having sales, but I will stress the importance of really... The more people that can be involved, you typically don't want more than this in a pricing committee, but the more that you have involved in a sense what you're doing, you're putting yourself in the position to get the best out of your investment in these individuals, because they're going to have perspectives, people in services or success or whatever, they're going to have perspectives that people in sales won't have.
Chris Hopf:
And that's why, oftentimes what I see sometimes is companies pulling it out of sales because they are disregarding what finance or product are trying to communicate to them because their goals, the objectives, are not aligned. And people oftentimes in sales, they want to close the sale and some can tend to not be as interested in really discovering and helping your organization get paid what you're worth. Is that helpful in any way?
Sam:
Yeah, very. Would you advocate therefore, with the squad model becoming bigger and bigger, having a squad dedicated to growth, a squad dedicated to pricing, is that something that you think would be helpful?
Chris Hopf:
Well, so I may have misinterpreted your question there. So when you say a squad dedicated to growth, oftentimes there are growth teams, that's their focus, they're focused on growth. But are you talking about having maybe more a growth initiative and different people from different teams participate in a growth initiative? Do you see my distinction there?
Sam:
Essentially, yeah, setting up a cross-functional team whose goal is to improve pricing with all of those roles that you've got there on your slide.
Chris Hopf:
Yeah. That's really what I'm focused on there. Again, there's still, people are focusing on sales and what sales is trying to do on behalf of the company. But they are also participants in this pricing committee, to help the organization and to offer their perspective from the sales perspective to inform these decisions around pricing.
Chris Hopf:
But what's key here is understanding how decisions are performing for you. So what I would say is when you close a deal, I don't know if you do win loss reports, but those are important. But also understanding if we gave a discount to this customer, why did we give those discounts? And did they actually do what we said they would need to do to earn those discounts? A lot of people don't go back and evaluate that and they just keep giving discounts. "Oh, you'll give us a video testimonial? Great. Yeah, we'll give you a discount." And they never get the video testimonial. Or they get it and they never use it. And then this discount is baked into the culture of the company.
Chris Hopf:
I worked at Microsoft there are millions and millions of price points. One of the things that I worked on was a solution in SAP, they customize a solution SAP to manage all their pricing. And so I had to do research throughout the organization, and there were aspects and pricing programs that nobody had any idea why it ever existed, or why this customer even had it. Again, just people had changed hands. And so you're early on, so some of these things may seem irrelevant to you now, but the reason I'm bringing it up is they will happen if you are successful and you start to scale, if you're not careful. And so having a committee like this early on. Again, don't make it a really complex, you can keep it real simple. You'll be glad you did.
Sam:
Try to get it right from the start. Thank you.
Ramli John:
Chris, before you jump off of discounts, could you speak to your experience with couponing? So instead of having, in a consumer-based SAS model, instead of having a dollar or free, having a thing and then having coupons that marketing sends out, or that are fairly easy to discover on the web, that would give it for a dollar or give it for free, whatever for free start of using those kinds of coupons, what's your experience been?
Chris Hopf:
Oftentimes, those aren't managed very well. I guess my initial comment when it comes to discounting are within the context of couponing, is kind of the same. And that is, be careful because if you're not careful, you're going to devalue what you're trying to communicate and demonstrate value around. Whether you offer a discount for annual versus monthly, similar to what I said, be relatively uncomfortable with how little of a discount it is initially. Don't be it too big.
Chris Hopf:
So perhaps in your example, when it comes to couponing, be real careful because if you devalue and you, in a sense, reframe the value in people's minds around a particular price point, it can be very difficult to change that, depending on the success of that particular marketing effort. So, small ones that don't really seem to get much play out of them, you may not be hurting yourself too much, but if one really goes over well, you could find yourself in a position where you're constraining where you can go with the value case you can make around your solution. Does that help?
Ramli John:
That really does. And this whole thing of framing value is huge to really think through.
Chris Hopf:
Yeah, people should not take it for granted. [crosstalk 01:52:01]. Oh, go ahead. I'm sorry.
Ramli John:
Do you frame value in a negative way when you give away things for free? Does your free option, and the things in that, frame your value, it's really not worth that much.
Chris Hopf:
That's right. That's why you got to be careful what you include in your free offering. I'd be very careful.
Ramli John:
Great, thanks. Appreciate it, Chris.
Chris Hopf:
So a lot of these companies that I worked with, just so you know, they reach out to me and they have multiple versions of pricing and they have multiple cohorts of customers on legacy pricing. I just want to share with you one example of a customer that I worked with, I made recommendations. They held off on making recommendations around transitioning legacy customers to new pricing for 18 months. They finally started doing it and it went well, but they were so afraid to even start trying. They reached out to me, unsolicited. They just had done a project with me and they said, "Hey, Chris, we felt like we've got acquired. We felt like we owed it to you to just tell you how things went down." One of the key things they shared with me was that if they would have started that process when I said, they would have had many multiples in their exit. But they were afraid, they didn't start the process of learning, they held off.
Wes Bush:
Awesome.
Chris Hopf:
So just another example of why you might want to have a pricing committee. Keep it simple. In your group, Sam of four people, maybe it's just two initially, and then you inform the other two on occasion. And then as you grow, as appropriate expand it, but at least you have two sets of eyes instead of maybe one set of eyes that doesn't maybe prioritize it as much as it should. And then before you know it, weeks or months have gone by and you weren't in the position to learn what you could have.
Wes Bush:
Totally, and I see, I think for the last question Lewis had was, how should we think about pricing for value when our buyer and user persona are different? Such a good question.
Ramli John:
So good. That's a good question.
Chris Hopf:
So when the buyer and user persona is different?
Wes Bush:
Yeah.
Chris Hopf:
So you're saying this scenario here? Buyer and user completely different.
Wes Bush:
Yeah, and Louis feel free to jump in too, if you want to add some clarification there.
Louis:
Yeah, absolutely. For example, we're a platform for data scientists and I guarantee you, no one in procurement is running any data science or analytics. And so the things they care about are things like SSOs and security and compliance requirements. And so we've started to think about these ones as maybe higher margin features, but seek less total revenue from them. But I was curious, what your opinion was on how to think of those kinds of pricing metrics.
Chris Hopf:
So to be clear, are these different types of customers or the same customer? But again, you're talking about the buyer who typically is going to be making the buying decision and the user who isn't making the decision, maybe is informing the decision.
Louis:
That's right.
Chris Hopf:
But isn't ultimately making the decision. Is it that scenario? [crosstalk 01:55:12].
Louis:
That second scenario.
Chris Hopf:
So what's important is that you're speaking to both, you have to speak, you have to make that value case for both. And you have to help that user make that value case to the buyer. It's going to be on you to help make that compelling, convincing value case to tell that value story. And when you tell a value story, oftentimes you can use the different people in the story. And one of those is in this case, perhaps the developer. And so make sure that their value stories being told too, and how that ultimately ties back to the buyer's value story. I know that's somewhat of a broad answer, but that's what's key in your ability to do that.
Chris Hopf:
One company that I worked with, they had a new solution for actuaries, but again, the actuaries themselves that would be using the solution, weren't going to be the buyers. The people actually making the buying decision. So again, you had to make that.
Chris Hopf:
So I think this is a good way that I was going to possibly close. And that is to just stress one thing that I often hear, because these topics are never at a lack for people having questions or thoughts or concerns or opportunities, is this link here on my blog around most important pricing advice. And it really is important, what I stress in here, and to your question. One of the most effective ways to communicate that value is to contrast life with and without your solution, so for the buyer and for the user. Keep it simple. White board.
Chris Hopf:
This is the user. What's life like for them right now without our solution? What would life like be with? For the buyer, what's life like? And what would it be with? Without and with. Start there. And again, this tool in here using, for example, [inaudible 01:57:14] Bain's elements of values is just one way to really accelerate your understanding of your value and putting yourself in a position to not only understand it, but communicate it, demonstrate it, and actually what's even more important, deliver the value.
Chris Hopf:
A lot of people talk about the value that they're going to deliver, during the sales and marketing conversations, but they do a very poor job of actually delivering and communicating and reminding the customers of the value they're getting. Is that helpful?
Louis:
Yeah, it is. What I took away is that you have two opportunities to price for value and think of both channels, your buyer and your user.
Chris Hopf:
That's right. And again, that's going to help you understand the ultimate value and that total value that you're delivering is really the case you're making to that buyer. But also you're not missing out on the realities and missing opportunities again, around the user value too. So some tend to focus on one more than another and they wonder why maybe they're not converting or why people aren't willing to pay what they're asking.
Chris Hopf:
There's so many things that I can tell you folks from a pricing world, but hopefully today's session has been helpful. And again, you should be thankful to Wes and Ramli, not me personally, but just that they had somebody like a pricing consultant, because let me tell you, if you allocate time to this, you will not regret it. It's not going to be something like, "Oh wow, we spent too much time on really understanding our value and getting paid what we're worth. Why did we do that?"
Wes Bush:
We made too much money.
Chris Hopf:
Yeah, exactly. We're converting too many customers, and they're upgrading. Why are they upgrading?
Wes Bush:
That's a good problem to have, honestly. Sorry, Ramli.
Ramli John:
Chris, do you mind dropping that link of the post? I know you said this is the most valuable blog post you have, and then I was like, I need to find that link, and then you close it too soon, and Bruce is looking for it.
Chris Hopf:
Oh, yeah.
Ramli John:
There it is, cool. We'll share this to everybody. Thanks.
Chris Hopf:
Yeah.
Wes Bush:
Awesome. Well, thank you so much for coming on Chris and for everyone else too, for staying on for an additional 30 minutes at the end to go through, ask questions about pricing. This has been a blast. Honestly, Chris, every time you chat and go through this guide, I always learn something new. So thank you for going through this with us. It's been a blast and for everyone else, hope you have an amazing week ahead.
Chris Hopf:
Take care, everyone. [crosstalk 01:59:50].
