Ideas and Validation September 26, 2020

How to price a curated dataset?

Bugra Ozkan @bozkan

A VC company (actually a competitor) wants to buy the dataset I curated for Incubator List. I don't have a pricing in my mind, but I thought I can give a price based on:

number of hours I've spent curating & updating the data
X hourly rate
X some coefficient for the value of Incubator List 🤔

What do you think? How should I price?
Thanks in advance for every single suggestion.

  1. 2

    As far as expectations go, you are unlikely to recover the costs sunk into the production of your data set from a single customer. (Unlikely, but not impossible.)

    A couple of thoughts:

    1. have they seen the extent of your dataset?
      Might be good to share screenshots with them if they haven’t, so they can get a very clear understanding of the breadth & depth of the data that they are paying for.

    2. have they mentioned a price that they think is fair? Of course they have a strong incentive to make a low-ball offer but ask for a number nonetheless to get an idea of their level of seriousness.

    At a certain price, buying from you is cheaper for them (opportunity cost) than trying to scrape the data themselves. Scraping will also delay their time to market.

    As an example, if they shopped around before contacting you, they might have arrived on a rough estimate of what their opportunity cost is. Let’s assume they have received an average bid of $1000 and a 5 day estimate from Upwork freelancers to scrape a comparable data set to yours, then they’ll readily agree to pay you an amount around that $1000 ballpark since it doesn’t exceed their opportunity cost too much, plus it will significantly reduce their time to market. If your price is high multiple of that e.g. $10,000 they might shutdown discussions unless you are willing to negotiate.

    1. will this be a sale ($$$) or a license ($)?

    Offering to license rather than sell may also serve your interests if they offer a really low amount (e.g. based on the price of a 1year subscription: $9/mo x 12 = $108).

    With a sale you can charge a higher amount than a license. In a sale they will become owners of a copy of your data set — that is a snapshot of your data on the date the sale was entered into and they can do whatever they want with it. They will not be entitled to future updates unless they specifically negotiate this into the terms of the sale.

    With a license you can’t charge as high as a sale since you retain exclusive ownership of the data and can dictate how or where they use your data. They may be entitled to 1year of updates of the dataset, unless they explicitly waive this right.

    1. 1

      Thanks a lot for your elaborate reply, which really answered many questions I had already. I appreciate it a lot, thanks again!

      They don't know the extent of my dataset. It will definitely work to share some screenshots about it, it's a very nice tip.

      My calculation seems wrong as it is not fair to expect to recover the cost in one sale, I agree.

      They haven't mentioned any price. They just asked what I wanted. Your Upwork example made it clear for me to determine the pricing. I think I will ask ~75% more than a freelancer pricing, then hopefully we can meet at a common point.

      1. 1

        I’m really glad you found my reply useful.

        Good luck on the sale 💸💵💰!

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