Jun 9, 2022
“An effective price helps you capture fair value for the value that you’re delivering to customers,” says Dan Balcauski, who specializes in B2B SaaS, which stands for business-to-business Software-as-a-Service. Balcauski is the Founder and Chief Pricing Officer at Product Tranquility, a business consulting and value creation firm, where he helps businesses optimize their pricing models. This includes dispelling a number of myths.
One of these myths is the
“freemium” pricing model, where users are offered basic features of
a product or service for free while they are charged a premium for
higher-tier features. Dan explains that as tempting and seemingly
effective as these models may be, they are almost never a good
idea. Constantly churning out new features takes a toll on a
company’s development team, and creates an illusion of free
growth.
In this episode of Billion Dollar Tech, you’ll learn the four pillars of a successful SaaS package, the three Cs of pricing, and the subtle but crucial difference between value metric and price metric.
Quotes:
“In terms of a company’s objective, I believe that an effective price maximizes the company’s long term profitability.” (1:04-1:10 | Dan)
“When it comes to SaaS pricing, most executives think that what you charge will determine your success, in fact, who and how you charge determines your success.” (4:09-4:14 | Dan)
“Without a product manager there to be the voice of all the stakeholders inside the building and the voice of the customer when the customer’s not represented at the table, it’s hard to make decisions in an efficient manner to move the conversation forward about what should be built and when.” (11:36-11:48 | Dan)
“With segmentation you really have two fundamental directions that you can start with: you can start with who customers are or what customers want.” (15:48-15:54 | Dan)
“When I think about value drivers in jobs to be done, there’s three categories of value drivers: the economic value drivers, (or economic function market value drivers), there’s emotional value drivers, or there’s the social, or community value drivers.” (23:50-24:07 | Dan)
“For most B2B, you have to do research. So that’s talking to customers or doing surveys. Testing your pricing and packaging is highly problematic.” (35:54-36:05 | Dan)
“Software is what economists call ‘an experience good,’ which means my perception of value changes as I use it.” (49:28-49:36 | Dan)
Connect with Brendan Dell:
LinkedIn: https://www.linkedin.com/in/brendandell/
YouTube: https://www.youtube.com/c/BrendanDell
Instagram:
@thebrendandell
TikTok: @brendandell39
Buy
a copy of Brendan’s Book, The 12 Immutable Laws of High-Impact
Messaging:
https://www.indiebound.org/book/9780578210926
Connect with Dan Balcauski:
LinkedIn: https://www.linkedin.com/in/balcauski
More about Dan:
https://www.producttranquility.com/home-extended/about-dan/
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