2 builders who never spoke to each other

Let the price point decide the sales motion

What you charge per month dictates who you can afford to talk to. Below a low ceiling there is no margin to fund a phone call at all, at mid prices you need collateral and reference customers, and at the top you need cash to survive cycles measured in quarters.

The method

1. 01

   A hundred thousand a month restricts you to the largest enterprises and to sales cycles of nine to eighteen months, so you need the cash to wait, a pilot you can charge for, and people willing to fly out to the customer.

2. 02

   At around a thousand dollars a month you are selling into annual budgets, approval chains and discount requests, which means you need real salespeople, collateral, recognisable logos, case studies and customers who will take a reference call.

3. 03

   At a hundred dollars a month, larger buyers approve it casually but small ones need convincing, so build sales material and a demo aimed at explaining the value.

4. 04

   Do not plan on phone-and-email selling for anything under about $200: there is not enough margin per sale to fund the time.

5. 05

   Do not sell a low priced subscription through one to one meetings. The hour you spend does not come back at that price point.

What it returned

• $200

  He used direct sales successfully on more expensive products but found it unworkable below roughly $200

• $20

  An hour long meeting with a planner was worth $20 a month in subscription. The founder says he would never repeat it.

• Cohen cites WorkDay, much of whose revenue is consulting, and IBM, and notes the pilot may be running head to head against a rival vendor's pilot.

• Product work at this level also drags in enterprise requirements like role-based permissions and directory integration.

Sources

• How many trials should I be getting for my SaaS?Justin Jackson · justinjackson.ca · How many trials should I be getting for my SaaS? · undated
• Pricing determines your business modelJason Cohen · longform.asmartbear.com · Pricing determines your business model · 2014-11-05
• How teaching and storytelling can build a profitable businessNathan Barry · nathanbarry.com · 2013-09-03
• Eventloot: Failing to Listen Feedback Means $20,000 LossJustin Anyanwu · failory.com · What didn't work? · undated