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Published: 16/02/2024

How To Find the Perfect Price as a Tech Company? Tech Excellence Podcast with Maja Voje

Tech Excellence podcast with Maja Voje

In the latest episode of the Tech Excellence podcast, our communications expert and host, Monika Dawidowicz, had an inspiring chat with Maja Voje, a bestselling author of “Go-to-Market Strategist”, a book where she shares invaluable advice on how to reach product-market fit. They discussed the topic of pricing in the tech industry, with some insights on the best research methods.

Key takeaways

Consider price a value exchange

  • Make sure that your price reflects the value you deliver to your clients. Aim to capture a fair share of that value to sustain the business.
  • Avoid the lowest price competition. Competing on price alone can be detrimental to your business. Strive for profitability and value creation to show that you know the worth of your products and services.
  • It’s essential to understand and quantify the value your product or service provides to clients and price accordingly.

Thorough market research is a must

  • A good business is always on top of competitors’ pricing, but that’s not everything. Apart from extensive research on business rivals, you must understand your clients and their willingness to pay.

Pricing strategy is a dynamic thing

  • You should regularly adjust your prices to reflect changes in value provided, costs, market conditions, and inflation.
  • Different customer segments may have other valuations of your product or service, which you should consider in pricing strategies.

Know the common mistakes and avoid them

  • Underestimating the psychological aspects of pricing, such as fear of rejection and the impact of pricing on perceived value, is a common mistake when estimating the price. Make sure to avoid falling into this trap.
  • You shouldn’t underestimate the psychological impact of pricing on consumers, including how pricing affects the perception of value.

The cross-functional collaboration will help you find the most optimal solution

  • Sales, marketing, and product development teams should work closely to develop effective pricing strategies.

Learn from feedback

  • Engaging with current and potential clients can provide insights into pricing sensitivity and value perception.
  • Even if you don’t close the deal, if the client is willing to talk to you and explain why they decided to go somewhere else, it shows that your products and services have value that needs some rework in presentation or pricing.

Watch and listen


Transcript

Monika Dawidowicz: Hello, everybody, and welcome to Tech Excellence podcast. Today, my guest is Maja Woje and I’m Monika Dawidowicz, your host today. Basically, we started this podcast to support startup founders and entrepreneurs on their journey. And every week, I’m interviewing experts who share what they have learned on their way. And today, it’s Maja and we’re going to talk about pricing strategies. Hi, Maja. 

Maja Voje: Hey, hi, Monika. Thank you so much for having me and introducing me to your community. Initially, we wanted to talk about go to market, but then you said we should be more specific and we should be narrowing down on something which is really an important subject. So Monika said prepare a lot of examples, be as heads-on as possible. And this is my mission from today. Happy to be with you. 

Monika: But before we get to pricing, I would like to highlight some of your achievements. So, let’s make it a brag column. You’re a book author, a best-selling book author, and I have this book right here. Oh, wow, perfect copy. 

Maja: Yeah, definitely. Sorry, let me. 

Monika: Yeah, definitely. We need to make a screenshot with-, with the books for those of you who are just listening without the video. We just both actually put the book in the frame. Yeah. So yeah, Maja is the author of “Go-to-Market Strategist” book that’s available right now. And actually, I have to say it’s a masterpiece, Maja. I know you have broad experience as a marketer, as a mentor, as an advisor. And I have this impression that in the book, you’ve made the research of all the methods out there. You picked the best ones and filtered through your experience. So definitely anybody who’s launching their product or services or already is on the market but struggling in some ways should get this book and try to pick what resonates with them. Let me…

Maja: Thank you so much, Monika. It has been like a wonderful intro. This book, like I mean, it took one year of my life and I was just like working in the trenches a lot because, you know, all the advice out there is like Silicon Valley, America style. And I was just like, hey, in Europe, we don’t have as much funding in Europe. You need to be profitable in a couple of months. You need traction. So let’s try to write something for bootstrap founders, for founders who are just getting started. And just like coming from a marketing and growth background, I wanted to explain my fields to technical people and product managers the best that I could so it wouldn’t be repulsive, and it wouldn’t be a turnoff for them. Because at the beginning, you know how it is. Founder does all the sales. You need to. But nevertheless, personally, I learned the most from just, like, exploring product and pricing because these were like not my blind spots before. I always knew that they were important, but I wasn’t directly making these decisions. So I was just thrown a product and say, no, let’s launch. But I think that these are very important pillars for how the product will land. And I always require now to be a part of this decision-making as well because it does make a difference in terms of how much traction can you gain later. 

Monika: OK, so maybe let’s jump straight into the basics. What is pricing? Because, you know, some people say, “OK, it’s just putting a price tag on a product.” There’s a science behind it. You can’t just do it like that. So what is pricing anyway? 

Maja: Cool. So when it comes to pricing, a lot of people are literally thinking what you said. So set it and forget it. Let’s just get rid of this. Maybe let’s be a little bit cheaper than my competitor, and fingers crossed that we are going to sell more. Well, this is not always the case because competing on the lowest price possible is the race to the bottom. And if you are, like, living in a country with some sort of, like, living expenses and where inflation happens, you cannot be sustainably building business upon this. That’s why I see pricing as this exchange unit for value exchange. Imagine that product creates value to a specific market segment, and pricing is your mechanism of just, like, capturing a certain amount of value. Usually, this is between like 10 to 30 per cent in order to sustain your business and to have more money to build beautiful products later on. And I was thinking about pricing really from the psychological manner as well, because you know how it is, like, you come from Poland, I come from Slovenia, we had communism and everybody had the same salary. So when you are earning per hour more than your mother does in a month, you have this “what the hell” moment, like it doesn’t compute, like you see that it is not being fair. 

But in reality, when it comes to pricing and if you think about this as this exchange unit of value, it becomes liberating because you know that you are building something good and you know that you need to sustain the business. So suddenly, it becomes mission-critical to deal with this pricing and to make sure that we are not leaving more than enough money on the table, that we are capturing enough value in order to cross the chasm. 

Monika: OK, it sounds really liberating, as you’ve mentioned, because sometimes we feel restricted that, oh, I shouldn’t charge that much. I don’t even know how much value do I bring to the table. So how can I charge so much? 

Maja: I have these calls on a weekly basis. So, like, almost every day, somebody calls me and asks, like, “what price should I put on this offer?” And the first thing that I usually tell to them is, “OK, have you gotten like any competitors’ offers?” Because in GTM, in go to market stage especially, we are a little bit binded, a little bit constrained, like, let’s say 20 to 30 per cent plus-minus from whatever competition is doing because we are new to market and we are always compared against existing alternatives. And God forbids that existing alternative is an Excel spreadsheet because then you would have to display 10x value for the target audience. But nevertheless, in terms of benchmarking, like, this is a pretty simple exercise. Everybody can do it. You can just, like, check out a couple of pricing pages. You can ask jus,t like, for some quotes, or your friends do. And you have this paradigm. Value often comes with a delay feedback loop. So you don’t know exactly how much money are you making for them as they are buying. You know this later. That’s why it’s also OK to start with this hypothetical price and then see and increase it later as you know how much value are you capturing. If you have the case study and also your product is getting better, you’re all the time working on the product and you are delivering more value. And you know what else is true? Inflation. So, in times, prices should definitely be changing as your audience is changing, as your product is changing, as the competition arena is changing. So, yeah, just be dynamic in the ways how you think about pricing. Don’t do it once, and then do it again in five years. 

Monika: And are there any patterns of mistakes that you see when it comes to pricing? Because you’ve worked with so many companies that probably… 

Maja: Where to start? 

Monika: So maybe the most common ones, because probably there’s a chance that some of our listeners have done it in the past or maybe even are the victim of that mistakes right now and just they keep the money left behind, yeah. 

Maja: Cool. I would start with just, like, an underlying fear, which is deeply wired in our brains and our biology, which is fear of rejection because evolutionary humans have been developing to be tribal creatures. And if you are left from your tribe, you are in danger, like, you probably would not survive. So, just like this, fear of rejections and lost aversions are very hardwired into our brains. This is why even if you know that you should be charging more, it’s really awkward to send out those emails, and your hands will be shaking as you are typing them because this is evolutionary wired into you. And that’s OK. 

However, we need to have a very firm conversation with ourselves. What are we doing business-wise? Is our product getting better? Are they getting more value out of this product because they are a larger client? Just think about the value. Value is the best proxy that I have to address this question. Then, just like pricing, how we think about this could also be an opposite way of our imposter syndrome. If you don’t believe that your product is really delivering that much value and is worth that much, when you will be doing sales calls, your voice will just shake, and you will get nervous, and you won’t be that convincing. So you really have to believe what you’re selling, and you need to work your way up towards this. Last but not least, it’s just like when it comes to pricing, I think the third component just, like, comes from this avoidance of doing it, right? To just, like, making it as an easy exercise to copying like somebody else’s prices because you don’t want to go to the nitty gritty. And this is laziness. This is just like something that you don’t want to do. But pricing is the only part of the marketing mix that actually makes money for you. Others spends it. So you should definitely, definitely, definitely do it. 

And also, sometimes you are operating with imperfect information. For example, I just had, like, a mentee who has VR sets and they are doing automated projections, how to, like, engineer the landscapes for fairs and big events. And he was selling to Saudi Arabia. He, like, did a proposal which was approximately 15k, and he was selling on 15k in this part of Europe. But Saudis just, like, denied his offer, laughed at his face because the lowest competitor’s offer was 50k. And just like these clients didn’t think that the product is any good, that it can deliver the value. 

Monika: Yeah, because the price is much lower. 

Maja: Exactly. But after you think about this, right, it makes sense because if you come from Saudi Arabia, you cannot even like leave your room without being air-conditioned. You have to, like, do stuff in order to get drinking water. And just like costs of operating a business are probably a lot higher. Also, willingness to pay is much higher. The same happens in Europe, for example, if you are selling to Scandinavia where the standard is different. Little did he know that he is anchored towards different benchmarks than in his native market. And this is something that I need to just, like, stress. Sometimes monetisation and 72 per cent of new products don’t survive because of mistakes with business model and monetization. There can be nothing really technical wrong with the product. It’s just like the best business model that we are building. 

So it’s really important to make these decisions with confidence, to make informed decisions and not to set up your product on this obscure market with really low willingness to pay, whereas there could be a potentially different market on which you could thrive. And that is learning by doing. These are iteration. This is research, but also tons of sales conversation and customer discovery in order to finally make the right decisions. 

Monika: OK, so do you suggest that the sales department, and the marketing department and the product department, they should just work together on developing the pricing? 

Maja: Oh, I’m even bolder in that department. I would even say that, like, product people and founders should be involved in sales. And if possible, the best way to really validate willingness to pay and just, like, price point is to go there on these sales calls and ask, like, if they would buy a phantom version of the product, if they would pre-commit to buying the product after a certain milestone or something like that. And this is where you get the majority of information. I mean, you can go out, and you can send a bunch of surveys. You can do like Gabor, Granger, Van Westerdorp, you can do conjoint analysis. But in reality, when you are especially marketing an innovation, these survey results are not very accurate because people might say that they will do it. 

But at the end of the day, if you are really thinking about this, whose job it is to set up pricing? Is it customer jobs? No, it’s your job. So it’s really, really, really important to just like go in the trenches and try to just, like, illustrate your offer with a flat price and iterate with it. The first version is something that you will make up, like, literally based on market research, based on competitor analysis and your assumption of how much you think you’re worth. But the second and third iterations will be much better. So, I’m always saying you learn the most if you are out there speaking with people, not watching your spreadsheet. I know it’s scary, but this is just like the way how humans learn. It’s hands-on learning is much more effective. And even if you think about this, how much time would it take you to send out a proper survey and get the right type of responses if you would be getting the right type of responses in the first place? In comparison, if you just like are there with your document, with your PDF and do like 10 or 20 demo calls, sales calls, what else is to do? Have you ever done it, Monika?

Monika: Yeah, I have joined some sales calls. 

Maja: How was it?

Monika: So yeah, it was honestly these leads were lost, but I’ve learned so much from the customers’ feedback and what are their problems. Why have they not chosen our solution? Why they have chosen the competitor’s solution? And sometimes, you know, they say it’s not the price, but anyway, yeah, even learning from the calls with clients who will not buy from us eventually. This is a lesson. 

Maja: Yeah, I would say that you learn more than with your clients, because especially when you are, like, in early stages of development. And I’m so happy that you said this because these are, like, churned customer interviews. You know, customers that bought from you can do, like, great, great, great, great usability interviews, and you can learn a lot about how to smoothen the user experience for them. But with customers who didn’t buy and are still willing to talk with you, you have, like, a great signal there that they have a pain point. It’s just like you need a little bit of adjustment either, like, in positioning department, rarely in pricing department, because unless you have some very cluttered market such as CRM or some sort of other really red ocean technologies, you have like a little bit of a wiggle room how you can display value. But nevertheless, this is like this is such a good signal. If people who didn’t buy are willing to speak with you because that means that you definitely have the value. You just have to work on it and you can learn so much from this. 

Monika: And even if it doesn’t work with this one, you know, it’s some kind of data we can use in the future. 

Maja: Yeah. But imagine, like, it’s such a strong signal of product market fit. I’m really hyped about this because, you know, as a customer and just like I didn’t buy from you yet, I would still talk with you for 12, 20 minutes or, like, 30 minutes. That means that like you’re really on to something here because what else could be motivating these people to just like engage in this communication? That’s huge. 

Monika: Yeah, definitely. And it’s worth to take advantage of those opportunities if we have them. OK, let’s get back to pricing. One of the consequences that you said that are possible if you don’t set your prices right is actually going out of the business. 

Maja: Yes, that can happen. 

Monika: And that’s a severe one. That’s a severe one. 

Maja: No, we’re laughing now, but it’s dreadful. It’s really dreadful in practice. Like, we had one team, they sold something, like, analytic software to, like, Fortune 500 companies. They fucked up pricing really bad. So they sold, like, yearly subscription for 10K. And, you know, the big ones, the amount of legwork when you have when you are servicing these clients, this team was, was just exhausted. Like, everybody was just servicing this client. And yes, it was a beautiful, beautiful, beautiful use case. And they were happy with it. However, it drained all their product resources to just, like, catering this client. So there are horror stories down this department. 

Monika: OK, yeah, so definitely, it makes sense to put some more effort into pricing than just setting and forgetting. Any other potential consequences, maybe less severe ones, but still, you know, better to avoid? 

Maja: So let’s talk about target audience and whom you are attractive. In theory, you might be optimizing for adoption from a get-go. And if you are bringing a social network or like dating platform or a game or some sort of B2C product or a marketplace, that’s OK because you need volumes in order to make it happen. But in most cases, especially B2B, you should be optimising if you’re not extremely product led for profit, right? And a lot of times, I see teams early on attracting the wrong type of ICP in the product because they are just positioning there as, like, either free or cheap and they are not testing this willingness to pay. It’s not something that is attracting the right type of people. And I’ve been talking about this with Enzo Vigo. So he’s a founder of JuneSO, otherwise a Frenchman, but he was in Y Combinator and is very famous on Product Hunt and LinkedIn. 

And he said that just like in early days, they managed to attract developers and just like early adopters to the product. But there was a huge issue because those people were not displaying any indication of willingness to pay like everything would be too expensive for them. So they were amazing product testers. But after, like, they were pitching to investors and wanted to have the real business, the segment that displayed willingness to pay signals were B2B SaaS companies because they needed this advanced analytics software in order to make better business decisions and that had a lot of value for their business. So they literally had to change positioning and messaging. They literally had to just, like, do things differently in terms of marketing and even, like, product tweaks after they learned this. And my big message here is always, like, if you are bootstrapping or if you are really early, test willingness to pay as soon as possible. Don’t just like go and attract some users on the product. That’s great for bug hunting, but it’s not great for building business, you know. 

If you want to make money with this within the next three or six months or so, you need some sort of signals that not only will they use it, but they will also pay for it. And that’s huge. 

Monika: Yeah, that’s huge, definitely. And when the department or the company decides on the actual price, what are the factors to consider? Yeah, obviously, that initial phase it’s a mixture of benchmarking and maybe some assumptions or educated guesses. But once we gather the data, what are the other factors to consider here when we’re deciding on the pricing strategy? 

Maja: Cool. So, let’s paint this landscape again. As you said, there is competition. These are benchmarking. Then we have, like, what is called a value metric. So what value is our product delivering to people, and how much can we capture of it? Ideally, we would have an element of value pricing there, not just, like, smash the price, 10 euros for everybody and let’s see what’s happening. And then we also need to see how this value is being delivered throughout different segments because if you are selling something to Monica and Maja, like, video recording software, we would be paying less as individuals than if you would be selling this to freaking Disney or Walmart, right? 

So you need to have your pricing packages done in a way that you can capture more value if client is receiving more value. And you need to have at least, like, three or five options in order to make it happen. Is that always the case? No, because I was just, like, analysing a bunch of product pages, pricing product pages. And, for example, Calendly is a really interesting example because their free version of the product is not even limited for the amount of meetings. You can always, like, have one event type and you can continue to use it. And that’s a very, very important lesson in terms of what sort of business model game are you playing. And they are optimising for adoption because every time that I send you a Calendly link, there is a potential new user exposed to it. They have good experience, and that’s their growth loop. This is how their system spins. And if you have an instance like this, like Calendly is not stupid, Calendly would not smash the usage limit there, 50 minutes per person or something like that. They love this because it’s bringing new people in the ecosystem. 

Whereas once you get more serious about your selling attempts, like video selling attempts on meetings, you would require different meeting types. And then you start paying like $10 or $12 per month, something like that. And you can monetise your meetings and you can do advanced integration. But only after you have displayed and consumed enough value from the product that you are being considered a serious user. And then they have the enterprise package, which is story of its own. This is always the black box, but you know how it is. If you’re, again, like a really big company, Fortune 500, they shouldn’t be charging you 10k a year. Oh, no. 

Monika: Exactly. Anything else to consider while you’re setting the pricing packages?

Maja: Yeah. Yeah, I think it starts with value metrics, right? To just, like, figure out what people are willing to pay for and how much is fair to them. So, you ask two questions here. I learned that from Ulrich Schmidt, he’s an author of like B2B pricing book. And I just love these two questions that he sets in early stages before he haven’t, like, even considered putting the price tag to it. So to just like have this hypothesis of the offer that you will be presenting and talking with, let’s say, 10 people up to 20 people, maybe, and asking them, so how would you like to pay this? How? What is the package? Is it per user? It is per transaction. It is per apical. How would you like to pay for this? And how much would it be, wait for it, fair to pay for it? Fair is a really power word here because if you ask me how much would I pay for this, I would be as little as possible. 

Monika: Probably nothing if I could. 

Maja: Coming from the same cultural space here. But nevertheless, when you change this to fair, like, what’s the fair unit of pricing? If you change, you have, like, a really, really, really good manoeuvre here. Then, you do a sanity check. If like this does make sense for your business, can you keep the lights on in your office? Would this sustain? Otherwise, you would be proclaimed towards interviewing a different segment and rethinking this. 

It’s a loop. These are iteration. But when it comes to just, like, setting up the packaging, in addition to tuning it to this unit of value transfers, like, how many videos did you record with Loom, such as, like, how many store admins do you have on your Shopify account? What else is true? How many transactions did you did with Stripe? That is a very tricky one. I don’t like this one because it’s always something that I hate to pay. But nevertheless, this is, like, something that makes sense naturally. And also, just like in terms of packaging, packaging of the prices, you can have hybrid models as well, right? A lot of times, people are just, like, thinking, OK, I should find one value metric. And especially if you don’t have a feedback loop, like what the revenue is that it would be such a no-brainer as Stripe or like other payment processors such as PayPal, you can have hybrid models as well. 

So they might be paying per value metric, like per amount of mirror boards that you can create and the accounts and the user accounts that are in the account. So, just like it’s not an easy exercise. It usually takes months to do it right. It usually takes, like, 20 to 50 customer conversations. But you know what? All you need to do at the beginning is just to have a hypothesis. So do your desktop research, see the competitive benchmark, talk with some people so you would understand what they are getting from it and what would be better to pay for it. And then just, like, go test it on, like, either sales or customer discovery calls or put it on the website and see what happens. 

Monika: Yeah. Sounds like legit science. 

Maja: This is how we do it in practice. I was pre-selling with Google Docs even. 

Monika: One interesting thing that you mentioned at the beginning was the psychological aspect of people actually setting the prices of feeling that, “Oh, I don’t know if I bring enough value.” How about the psychological aspect from the consumer’s or the client’s perspective? Is there anything interesting you could share for the people who set the prices? 

Maja: Oh, we just had this conversation yesterday, and I was obsessing myself with the idea of mental meta lots, right? So how much is it worth to me? What is the value per hour here? And we have one copywriter with one of the projects that I’m working and he wrote a brilliant headline. It was just like “develop your service in 20 hours and sell it to a customer for more than 500 euros.” And initially, I started calculating, OK, if you divide this, this is 25 per hour. It’s not that bad. Maybe this is something that I want to consume this training, right? And I was just so intrigued, by the way, how I did mental math there, because I was just like searching for my game in this. And I was, like, gamified. I was literally hunting. It was a fun exercise for me. OK, 20 hours doesn’t seem a lot. 500 euros, you know, not some money that I wouldn’t mind having. So, yeah, it was just like so intriguing for me. I was initially so hooked by it. You have a bunch of other, like, really weird quirks when it comes to pricing. Not all of them are like seriously tested. Some of them might be superstitions. 

So, for example, I like to end my prices with 7 instead of 9 because I read a bunch of research that this is something that these days people are more prone to. So I’m always superstitious about this. I don’t even test this like 9 versus 7. It’s just something that I like to do because I believe it. But nevertheless, I have been doing a bunch of conversion rate optimisation testing on online stores. And you can see that by just, like, changing the colour button into something which is a contrast. So it doesn’t have to be like orange or green, but something that pops out there, you can attract, like, a lot of more conversions. And I do believe that people are not making rational choices per se because, you know, when it comes to word, I don’t know how many, like, free online books have you read in the last year or so? 

Monika: I mean, I’ve downloaded hundreds, but I haven’t read most of them. I only read those that I pay for, to be completely honest. 

Maja: Exactly. And this is such a powerful mechanism because this is the power o,f like foot in the door offer, right? Even if they pay, like, very little to just like enter your ecosystem, they are usually better leads if you just have them on your free newsletter forever, and they haven’t displayed, like, any willingness to pay. Sometimes, I make this terrible joke that I don’t even know if they have a credit card because they haven’t demonstrated that yet, right? And it’s also very coherent with product philosophy, if you think about this, right? Because everybody would like to try it before they buy it. And, you know, at the end of the day, it’s a little bit like fitness. If I’m not paying, I’m probably not exercising. 

So if a customer has a little bit of skin in the game and has pre-committed towards something, it’s more likely that they will activate and sustain successfully with the product. And even they displayed willingness to pay, which is always a very good news for me. We could be talking, like, ages about pricing, like, how many digits. But just like in terms of, you know, when it comes to pricing, you have like this immediate effect because people are very lazy, especially on the Internet. And I don’t like to put i,t like, with decimal numbers so that the number doesn’t look, like, this big. The smaller amount of digits that you can display, the better usually tests when you are doing A, B testing and stuff like that. But I think that if you just like run a couple of usability tests or a couple of just like heat maps or some sort of other user journey stuff that you can do in UX, that you will find like 90% of the mistakes that are on the pricing page and the new version will convert much better. 

Of course, like, whenever something is highlighted as the bestseller or something like that, we are also naturally drawn to it because we follow the crowd, and we are like tribal creatures again. So just like there are so many things that you could be doing, but some of the stronger ones is just, like, keep the digits as little as possible. Then if you have a bestseller, definitely, like, highlight this because this is how you can anchor them towards this packaging. You could be doing, like, a bunch of different stuff in terms of pricing anchors, but I don’t know how interested are you in this subject. 

Monika: That’s-, that’s crazy that a lot of those ideas are so intertwined with the human biology.

Maja: We are not making rational decisions like microeconomics one is bullshit. Like, we decide based on so many different factors, like, trust signs, just, like, how color it is on the website. If it’s a welcoming page, how tired are we when we are making this purchase, if our phone rings or something like that? I mean, it’s definitely not a rational behaviour in addition with some… Apart from some procurement departments who, like, job is really to find the lowest price. But that, again, is something that you probably won’t be engaging in when you are proudly going to market from a get-go. 

Monika: OK, are there any real-life examples that were extremely interesting that you could share of the projects or companies that you worked with in terms of pricing, maybe some cardinal mistakes and how they fixed it to close this conversation with some actual examples that happened? 

Maja: Cool. Let’s do the product-led first, and then we’ll do enterprise one. So, with a product-led example, I was working with an ad tech company. They are producing like this learning management system, and they’re competing against Kajabi and Teachable. And that’s a really, really, really tough race because you have a lot of features which are absolutely necessities. Right. So everybody needs to be able to download the video and, like, do stuff there, editing-wise, and it is an extremely commoditised market, but they still felt that they have a good differentiator in terms of providing better support, in terms of providing better integration, because the majority of LMS is quite clunky when it comes to just like payment gates and ability to do landing pages and sales there. And last but not least, one of their value proposition was also to be cheaper because whenever you go big with your online course, this is like 100K a year or something like that in our world, you start overpaying about this. 

So they will charge you extra for the mobile app. There are so many hidden costs that are occurring on this journey. And their value proposition was just like, “We will be transparent, no hidden costs. We won’t be punishing you because you’re growing, that you would have to speculate if you should be using this software more or less.” And they have, like, a really interesting learning from their initial target audience. As they were promoting this product on Facebook groups with just, like, entrepreneurs and, like, people who are into cooking classes and stuff like that, they got a bunch of users, but they didn’t manage to activate them. If you think about this in retrospect, it’s really, really, really logical because if they don’t have the ability to produce the video yet, if they don’t have the discipline for creating online stuff, and as well, if they don’t have the selling skills that they would make their course a smashing success, that means that their LTV is going to be wrecked at best. So it’s going to be really, really, really bad. 

When we pivoted to professional, like, course makers who make at least 50K a year and are in need in custom integrations and are maybe, like, a little bit upset with Tinky Feek or just like the clunky integrations that are killing their sales in their marketing funnel, willingness to pay was much harder, higher, and we were able to increase the price. Because with those people before, you know, they were not even that serious about creating the course. And then, like, when it didn’t sell, of course, they stopped paying about it for the software. But those people, like, the professional content creators, were sharks. And it was a really, really, really radical change in terms of how much value that we managed to capture. And what else is surprising, they required less support than just like people who are just starting out. 

Monika: Because they were already doing it. 

Maja: Exactly. And they were very passionate and technical-savvy in order to do all these setups to make the best value out of their advertising back. So it was literally the pivoting of a target persona before we could like build a sustainable model there. The second example that I would love to share is a little bit more enterprisy because, with some of my one of my team who’s making an AI builder, we were just like pre-investment, right? And we couldn’t invest a lot in launch acquisition. We were still, like, negotiating how to get the initial funding. But still, you know how it is. The development gets really slow if only, like, two or three people are working on this. So it’s very important to just, like, secure some funds in order to bootstrap till we get to a higher traction. And they actually went and pre-sold their service as just, like, a service for a local bank. It was not perfectly aligned with their product road map, but it brought enough money to the house that they continue the development of this product-led vision that they have, which is very community-driven and super cool. 

But by just, like, transacting with this bank, they actually got to the inception that they will create with this AI chatbot, whatever, 1,500,000 euros additional value savings in terms of how they handle customer support. And after they will have their use case, it depends, like, on a founder’s vision. They have, like, a really strong possibility to go to other banks as well or financial institutions like adjacent maybe would-be insurances and present this case and charge at least 100k per year to install this solution and maintain it, right? So, this business might be having two divisions even. I mean, it’s not my decision. I believe in focus. But you know what? We managed to go through one period, which was quite stressful for them. So something that I’m super, super, super proud that happens. And it maybe displayed another business opportunity that they will have. We will still have to tackle the product that part of the business and see what’s happening there because when it comes to AI, there are some real costs that need to be incorporated in this pricing. It is not an imaginary concept. But yeah, I just found that it is really interesting as the business roadmap and product roadmap sometimes interfere, and you’re literally in dilemma. How do you want to bring this further? Would you be now B2B? Would you still be product-led? What is going on? I mean, you can do anything, but you cannot do everything. And luckily, I don’t have to decide this. 

Monika: And it’s interesting that you mentioned that because the next episode we’re going to have will be actually about aligning the product development and the business development. Yeah, so definitely it’s worth subscribing to the podcast if any of the listeners is interested because soon we are going to discuss this topic further. And I think with all the examples you shared today, all the tips and information, there’s enough food for thought for the listeners. 

Maja: No, I could talk about this for hours. What are you stopping me? 

Monika: Yeah, and that’s why I recommend following Maja on LinkedIn, because she shares a lot of content. And if she’s somewhere in a podcast or doing a webinar, there’s always an information. And obviously, don’t hesitate to order the book. Yeah, let’s-, let’s put it on…

Maja: Our cringe moment of pulling the book up again. 

Monika: Absolutely worthwhile. And yeah, there’s a chapter about pricing, but not only. So definitely worth checking the book. And Maja, also, you have the online courses, am I right? 

Maja: Not yet, not yet. I’m right now testing this on a cohort. A cohort is a very good way how to test if there is potential for online learning. But I do have a free substack as well. Substack is really cool. So right now, I’m trying to test each week, each subject. So last week was product market fit. This week is pricing. Next week will be about sales and enterprise thingies. And I don’t know, I’m just like this cool journey of content delivery…

Monika: Yeah, we’ll link all the links in the description box. And I’m really interested in your content on Substack. So I’ll definitely also check it. And yeah, it was a great conversation. And I’ve already learned a lot from you. So thank you. Thank you very much. 

Maja: Thank you, Monika, for inviting me and for having this conversation. I know that, like, business science is not like favourite subject when it comes to tech circles. But you know what? It’s a superpower. If you understand tech and business, you have a superpower. 

Monika: Yeah, and there’s an art to combining the tech excellence and the business know-how. And then it gives you a headstart in the world of business. Yeah, so it was great having you. I invite all of you who are listening to us to check Maja’s profiles and links and also to check the previous episodes of Tech Excellence podcast, and follow us for the upcoming ones.

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