I have to say out of the strategies shared, Customer Surveying is the one I am least in favour of, based on not knowing what they anchored their pricing on; could be a sunken ship.
Also time and how long they have had to use it will determine the figure they give, certainly in B2B, and not just in regards to value metrics, but it can take some time for the overall holistic value to be appreciated.
The other information one can obtain from the survey, some of which you covered "the value metrics that your potential customers think about, your customer’s willingness to pay, and your customers’ buying habits", to me is actually more valuable than the price they name.
Obviously I am not saying ignore the customer, but as with most things, pinch of salt.
Cheers, Ace.
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I'm glad you liked it.
I think Customer Surveying sometimes has a bad reputation because people don't often talk enough about the surveying methodology.
The other information one can obtain from the survey, some of which you covered "the value metrics that your potential customers think about, your customer’s willingness to pay, and your customers’ buying habits", to me is actually more valuable than the price they name.
With a proper methodology, this is definitely the biggest takeaway you can get from the survey.
We go into it in more detail in our Pricing Bootcamp, but I'll explain the process a little bi here and how the real benefit of the questions is you start to see why people are paying for what in your software.
To start, you ask them...
A) At what point would you think the software is too expensive?
B) At what point would you consider the software inexpensive?
And you run the average to find an average willingness to pay per customer.
After that, you ask your customers how much they use certain aspects of your software to pinpoint the value metrics. For us, we asked our customers before questions like...
How many customers do you have?
How many active users of the platform do you have?
What is your revenue?
How many invoices do you generate a month?
Then, you divide the average willingness to pay by each data point. That gets you the willingness to pay by metric, which you then run a coefficient of variation analysis ((standard deviation / mean)*100) between your various customers to see which metric has the lowest variation.
For us, we learned that the number of invoices generated per month had the lowest variation, so that was our value metric.
That said...
Obviously I am not saying ignore the customer, but as with most things, pinch of salt.
I completely agree. There's no perfect pricing strategy, only a mix :)
Hello @caffeinatedwes.
Good article mate, thank you for sharing it.
I have to say out of the strategies shared, Customer Surveying is the one I am least in favour of, based on not knowing what they anchored their pricing on; could be a sunken ship.
Also time and how long they have had to use it will determine the figure they give, certainly in B2B, and not just in regards to value metrics, but it can take some time for the overall holistic value to be appreciated.
The other information one can obtain from the survey, some of which you covered "the value metrics that your potential customers think about, your customer’s willingness to pay, and your customers’ buying habits", to me is actually more valuable than the price they name.
Obviously I am not saying ignore the customer, but as with most things, pinch of salt.
Cheers, Ace.
I'm glad you liked it.
I think Customer Surveying sometimes has a bad reputation because people don't often talk enough about the surveying methodology.
With a proper methodology, this is definitely the biggest takeaway you can get from the survey.
We go into it in more detail in our Pricing Bootcamp, but I'll explain the process a little bi here and how the real benefit of the questions is you start to see why people are paying for what in your software.
To start, you ask them...
A) At what point would you think the software is too expensive?
B) At what point would you consider the software inexpensive?
And you run the average to find an average willingness to pay per customer.
After that, you ask your customers how much they use certain aspects of your software to pinpoint the value metrics. For us, we asked our customers before questions like...
How many customers do you have?
How many active users of the platform do you have?
What is your revenue?
How many invoices do you generate a month?
Then, you divide the average willingness to pay by each data point. That gets you the willingness to pay by metric, which you then run a coefficient of variation analysis ((standard deviation / mean)*100) between your various customers to see which metric has the lowest variation.
For us, we learned that the number of invoices generated per month had the lowest variation, so that was our value metric.
That said...
I completely agree. There's no perfect pricing strategy, only a mix :)