not sure about this specific situation but was just on the phone this AM with an investor/advisor talking through a specific pricing situation
highly recommend getting at least 1 senior sales VP into the cap table to help with these kinds of things
Some thoughts on your questions:
- Yes ask for the meeting with co-founder. Always good to meet all of the decision makers.
- Yes find out where he got the perception of $1
- No. Never agree to a 90% discount. No deal is worth that. You'll never get the price back up to your acceptable level
- Leave pricing discussion to the very end. Get their agreement on value and do they feel the pain. If not, then it may not be worth it.
- Pegging the price against Slack or any SaaS app is arbitrary. Slack in particular is one of the lowest priced SaaS out there because when they deploy they take on the whole organization. So, a 100 man company at $5 PEPM is $500 APRA. Whereas, CRMs have really high PEPM that go well into the $100s and that’s because it’s for a specialized group in the organization (sales) and because it’s a revenue producing segment, you can justify the math easy (a dollar invested equals $XX in return)
- If this is an early customer, you may want to figure out what are your goals for this: is it for them to help you build out the product, help test and for them to pay for this “in kind” with time, insight and expertise? In that case, you can go with a lower price; not as low as this but a middle ground
- There will often be multiple buyers and early on you want to ask your champion “what’s your approval process like? Is there anyone else we need to talk to? If yes, we should set up a call/meeting with them (it’s the same VC process, you need to talk to decision makers). Depending upon how real the process is and how much they believe in the product they’ll setup the meeting or push back against it
- You’ll need to articulate your value proposition in their terms. It’s hard to do this at the start as you don’t have a lot of data but you are able to build it over time. Early conversations are with friendlies where they know there’s a benefit and they are looking to quantify it but know this will work for them
- you need a good sales coach on your team, we would have a weekly with our sales coach and review entire pipeline, email templates, customer objections and even pricing (though I highly recommend you talk to some of the Alchemist pricing experts for help). We were ahead in our sales process so doing this weekly helped
- Your first 10 customers will have customer pricing; it’s too early to be able to peg it on something and the earlier conversations are around figuring out how much you can charge them and the model
- We started off at $80/mo with customer number 1 and moved to $2k for our mid-market segment. The earlier customers took a lot more effort after the deal because we worked with them on the daily yo get the product right so that paid for itself
some other thoughts (we also have per unit pricing). 1) you can make your PEPM volume based I.e., 1-100 employees at $10 PEPM, 101-500 at $7 PEPM and so on down to some floor. That way you can justify higher unit costs by saying he's purchasing lower volume. 2) if he insists on a lower contract value, you should build in perks for you in return. For example we have a customer "50% off" on the first SOW in exchange for 2 press releases, a case study & better payment terms