I’ve met hundreds of people Over the years the founders, and most, especially the early stage founders, share a common go-to-market grip: price.
For enterprise software, traditional pricing methods such as per-seat models are often easier to figure out for products that are hyperspecific, especially by people in the same way, such as Zoom or Slack. However, it is a separate ballgame for startups that offer more complex services or products.
Most startups struggle with the per-seat model because their products, unlike Zoom and Slack, are used in a variety of ways. Salesforce, for example, uses regular seat licenses and admin licenses ગ્રાહ customers can choose lower prices for solutions with low-consumption parts જ્યારે while other products are negotiated as part of an annual renewal.
You may be a strong champion in CIO or you are buying a very friendly person, but it does not matter if the price is not easily explained and understood. Complex or ambiguous prices add more friction.
Initial price discussions should be centered around the buyer’s perspective and the value created for them. It is important for founders to think about the output and the outcome, and the number they can reasonably defend customers moving forward. Of course, self-assessment is difficult, especially when you’re asking someone else to pay for something you’ve created.
This process will take time, so here are three tips to make the ride easier.
Pricing is a journey
Not a cost-effective exercise. The enterprise software business involves many intangible aspects, and the perceived cost, quality, and user experience of a software product can be extremely variable.
The price journey is long and, despite what some founders think, is not the first stop jumping headfirst into customer acquisition. Instead, one step is ensuring that you have a full-featured product.
If you’re a late-seed or series A company, you’re focused on getting those first 10-20 customers down and getting some wins to showcase your investor and board deck. But when you get your organization to the point where the CEO is not the only person, you will want to know the state of your market.
Many startups fall into the trap of thinking: “We need to find out what the prices look like, so let’s ask 50 estimated customers how much they would pay for a solution like ours.” I do not agree with this approach, as the product has not yet been finalized. You haven’t thought of product-market fit or product messaging and you want to spend a lot of time and energy on pricing? Sure, income is important, but you should focus on finding a way to earn income as opposed to finding a pricing model.