For this episode, we spoke with Patrick Campbell, Co-Founder and CEO of Price Intelligently, pricing software for SaaS companies. Founded in 2012, Price Intelligently now has 30 employees and has consistently doubled or more than doubled revenue each year, reaching over $5 million in 2016. They found success by building empathy for their customers and their team through collecting qualitative and quantitative data.
Learn about their growth journey, insights into effective pricing strategies for SaaS businesses, how to hire, and more below!
Venture capital isn’t always the answer. If you don’t have a clear need for investment capital, then you probably shouldn’t raise. If you can afford to bootstrap to start, try that first and test monetization. Bootstrapping gives your founding team more patience to build something sustainable without the pressure from investors to grow immediately.
But VC money allows you to develop the product quickly. On the flip side, Price Intelligently wasn’t able to develop the product as quickly as they could have because they were focusing on cash flow. As a result, they’re still paying some tech debt they wouldn’t have otherwise.
The 25-30 person wall exists. Once you reach 30 employees or more, the dynamics of the company change. The CEO is no longer able to sit down with everyone to work through an issue. Communication of the vision becomes critical at this stage, and creating processes that help with alignment will help avoid a directionless team.
Hiring is crucial. Who you hire will impact your ability to rally your team around your goal. Make sure candidates are clear on what their job description is before hiring them. Consider having them complete a small challenge regarding their role. Ask them what they see for their first six months considering the challenges they’re aware of. Be completely transparent regarding the mission and financials to give them the opportunity to opt-out.
Acquisition channels are ephemeral. Many companies focus too much on one channel (content marketing is a popular one) and ignore pricing and retention strategy. This leads to a lack of buyer knowledge.
Customer data builds empathy. By paying attention to customer data and building empathy for your target buyer, you’ll create more effective feedback loops and build features they need.
Know your unit economics broken down by customer. That way, you’ll understand the value of each customer, and the value your product is providing to them. If a customer is making $1 million/year because of your product and is costing you $12,000/year while only making you $7,000/year in revenue, you have a problem. B2B SaaS companies should focus less on volume, more on value.
There are three fundamentals to pricing. 1) Know your buyers and target them, 2) have data to support the decisions you’re making, 3) use a value metric for your pricing.
Value-based metrics for pricing are the future. Tie your price to the value that you’re creating for your customers. This leads to better relationships with your customers, higher value customers, and better products for them to use.
Have a customer development framework. This will help avoid getting overwhelmed when collecting customer data. Make at least 20% of an employee’s job to do customer research. Data collection can be complicated, but if you start simple, you’ll ease into it.
Focus on alignment. Stop focusing on disagreement internally. Focus on what you’re aligned on first (like your mission and goal) to take the confrontation out of an argument and solve it faster. Have clear decision makers who know who’s in charge of what.
Take the time to know your team’s personal goals. Price Intelligently creates alignment documents where employees outline their personal and professional goals. The company then aligns their personal goals with the company’s, which then builds motivation to reach them. These docs also include how they like to communicate and receive feedback.