Price your SaaS tool correctly to increase willingness to pay (more) by Ingrid Bonde Åkerlind, Principal Oxx

Wilma Eriksson: [00:00:00] Hi, you a warmly welcome to fail and grow the home of pricing and profitability. This is where you get to learn and love from the best within the topic and the ones. Good. Dare to share their fucks. If you love what we do, share this episode with a colleague or a friend who shares our nerdy passion about pricing and profitability.

I mean, who doesn't? My name is Ilma, your host and the co-founder and the CEO of Vox, Q-C-P-Q-A perfect fit. When you're CRMs quoting, functionality isn't enough. But enough of this shape. Lets janin into today's episode, and today's guest is an honor to have here. She, her name is Ingrid Bun. She's an ex and blah blah car, and now a principal at ox.

So Ingrid is a [00:01:00] true expert within pricing. She has actually written the full market toolkit that is provided by o and o partner with the most promising European B2B software companies. At a scale up stage, so there are specialist sauce investors, and strategy is to build around concept of go to market fit.

Ingrid is a pleasure to have you here and tell me a little bit about you, uh, yourself and Ox.

Ingrid Bonde-Akerlind: Hi Wilma. It's lovely to you here as well. Um, you know, I'm a huge price signal nerd and want everyone, all SaaS companies to know how important it's for them. But, um, first a little bit about me. So, um, you guys get the little bit of the, the context of, uh, not just random thoughts from one person, but like.

Why does she, where does she come from? What, why does she think this? Right. Um, so I am a Swedish group in the US as you can hear from my lovely, lovely accent. Um, and I guess my foray into the startup world really did start at blah blah car. Um, which for [00:02:00] those of you who don't know, it is the world's largest, uh, car to car, uh, ride sharing, um, service.

So a C two Z marketplace. I've been at blah la car for about a year, and then one day I became responsible for. Pricing, full stop. Um, so both sort of the take rate, which formed the company's own revenue, but also balancing the recommended price between drivers and passengers, which really gets you pretty far into sort of the theoretical underpinnings of how do you figure out what the right prices for your product?

What do people want to pay, how do you balance the marketing product, marketing and sort of customer value size of the equation, which are very qualitative. With the sort of more hardcore data science, let's build the best algorithm out there. So for two years, that was really all I thought about. Um. And then after that period, uh, I then moved on to vol, uh, have been now in Stockholm for about six years and as their first VP marketing.

Um, it was a lot [00:03:00] of the go to market journey actually, from sort of what I would say, step zero to one, the product is already built. You have PMF, but there's still a lot of infrastructure ground, the go to market that needs to be built. So. From that sort of broader role, um, of building up the marketing team, building up the go to market infrastructure, obviously also building up the thinking about why do we have the price we have?

If we're launching new products, how do we want to launch those? That's sort of the contextualizing pricing within it as one tool within many as how you build to go to market fit. Um, four years ago then I, um, switched to the investor side and I joined a venture capital fund called ox. Uh, we are based in London and Stockholm, and we are then B2B software specialist investors.

We, I. Only invest in B2B software companies. And, uh, moreover, we invest at a very particular stage. So the conviction that we are, uh, predicating our investment on [00:04:00] is that we see that companies have emerging go to market fit. Um, product market fit is, is sort of widely known in startup land. I think go-to-market fit is starting to become more known, but the premise is that once a company understands how, how to identify its target customers, how to.

Find them, acquire them, retain them, and upsell them and to do so predictably, that's when you have go to market fit and that's really actually when you can just really start international scaling at, um, at a very high clip and sort of skipping that foundation step of building out the go to market side.

Is one place that many SaaS companies, uh, act can go wrong. You have the perfect product, but if you don't know how to sell it, that's, uh, that, that sort of sets you, sets you back. And so it's been sort of a third lens to get look at. What is pricing and how does that fit into the whole? And that's really what I've been doing then for the past four years.

And I think along this journey, you and I met and, [00:05:00] uh, bonded over pricing, um, as a wonderful topic. And I think that's, that's kind of why we're here today. Yeah. So yeah, that's a bit about me. That's the, that's probably where you're gonna get to hear more stories, uh, from today.

Wilma Eriksson: Mm-hmm. I was thinking, I'm gonna ask this, I'm gonna ask that, but you answered all my questions and also did a, a beautiful segue into, uh, today's topic.

But we obvious, uh, uh, share the passion for pricing. Uh, and I think. That your journey is very inspiring and also how you, uh, as you said yourself, uh, change side from being a part of the start scale up world, uh, to moving over to to ox. Was there something in particular that you found more interesting on that side?

If I could silo us in, in this, in this kind of way,

Ingrid Bonde-Akerlind: I'm not the sort of person who thinks that one is sort of ultimately better than the other. I actually think that there's, there's sort of. Unique joys in each when, when you build a company yourself Mm. You see your impact every [00:06:00] day in what you build. Um, the, the win, the wins are many.

The losses are also many. And you're cons consist consistently working as a small team sort of against the world. There's, there's a, there's a huge joy to that really, right. On the investor side, I would say that. You, you do lose that sort of building, of course, but on the other hand, you, you get the, get the privilege to get to work with many different entrepreneurs every week and learn about a lot of different areas.

So it's, it's a very different type of thing. But I think what what's sort of uniting among, among the two roles is the belief that. The future can be better, should new companies and new products, uh, get an ability to gain market share in the world.

Wilma Eriksson: Mm-hmm.

Ingrid Bonde-Akerlind: I could really

Wilma Eriksson: see that. Oh, great. I'm looking forward to get all nerdy, but before that, the listeners knows I'm always.

Uh, questioning what kind of, not the question I'm asking for. Your favorite of the work drink. If maybe you're celebrating a [00:07:00] new investment or some of your portfolio bolo, uh, companies making great results, what would you done to like, to have pour in your glass?

Ingrid Bonde-Akerlind: Well, if, if, if I'm celebrating, I'm always gonna have bubbles in my gloss.

Yeah, that's, that's pretty much like clear. Um. I would say that probably for after work itself though.

Wilma Eriksson: Hmm.

Ingrid Bonde-Akerlind: My drink of choice. But that's more like after dinner is a negro. Hmm.

Wilma Eriksson: Good choice. Good choice. Mm-hmm. And, uh, your funniest work related fuck up that you want to and dare to share with us. What do we have?

Ingrid Bonde-Akerlind: Well, more may be embarrassing though. Thank God it worked out in the end. Um, so this is probably what. Yeah, about two years ago mm-hmm. I had been at a conference, I had been for a work trip in Paris. Mm-hmm. And it so happened that, um, my husband was coming to Paris that weekend mm-hmm. [00:08:00] To spend time with his friends.

He's French.

Wilma Eriksson: Mm-hmm.

Ingrid Bonde-Akerlind: And we had a six month old baby at the time, and we were intercepting each other. And I was going to take back, said baby on the work trip back. To Sweden, but discovered when I arrived at the airport, this was probably what, like, uh, an hour before the takeoff that, uh, she was not registered on the flight.

So there I am. I have like a 1-year-old in Paris. And I have a ticket back that obviously is, it's like it's a work trip, right? I was more like, well you can bring babies for free on planes, so this will be efficient and will flip flop and like be this super cool. We can, we can sort of navigate the whole world together.

Um, no. So had to call our travel agency like. Um, can you please add her? The gate's closing in about 15 check-in's, closing in 15 minutes. Like this is really, really, really important. So, um, potentially one of the more embarrassing work related calls I've had to do. Like, how stupid am I [00:09:00] get my own gate?

Wilma Eriksson: Well. Uh, I don't think you're the only one who's done this. And as you say, I, I also have a son. He is two years old, two years old, and, uh, yeah, I mean, they are included. Mm-hmm. They don't even, they don't look for their ID card. They don't, I mean, sometimes I could feel like, do you guys even know if this is my child?

And you just, you know, move out, uh, uh, entering the, the airplane. Uh, but of course it's something quite, uh, important. As well. So

Ingrid Bonde-Akerlind: maybe one should have thought about it. They apparently need to have a number. At least they need to have a ticket number. Even if the ticket number doesn't include a seat, they need a ticket number.

Okay. So yeah. Um, anyway, we did both make it, but like that was a very, very stressful. Useful airport journey. Oh. Um, which wasn't because we arrived late, by the way. More because I'd forgotten to get all the passengers on the ticket. So. Yeah.

Wilma Eriksson: Well, uh, it just shows that everyone is human, uh, both you and I as well.

Exactly. [00:10:00] Well, thank you so much for sharing, and I ha I'm very happy that it end up well.

Uh, so moving on to today's, uh, subject. We are gonna get very nerdy about, uh, how to price in sales. Mm-hmm. And, uh, how would you label this? I mean, we, we heard in the intro you are passionate about this. Mm-hmm. You have, uh, quite long experience. I would say pricing isn't, uh, from, from my point of view, talking with companies, uh, in SaaS industry, but others as well.

Uh, you, you. You believe it's important, but, uh, sometimes it's a lack of, uh, what the management team, uh, actually believe that you work with strategy, uh, pricing as a strategy and what actually happens in the real world when quotes are sent out. Mm. Uh, so when we had like a pre-call about this, I asked, could we be as nerdy as possible, of course.

About pricing. And you were like, of course. So how would you like [00:11:00] to. Uh, to frame this, what, uh, what topic should we have

Ingrid Bonde-Akerlind: on SaaS pricing today? Look, I, I think if you're listening to this podcast, you've probably been drilled into your head that like, pricing is important. So I'm gonna assume that if you're listening, you're bought into that.

So we're gonna take that as a given.

Wilma Eriksson: Yep.

Ingrid Bonde-Akerlind: Um. I think the sort of two, let's, let's, sorry. The two different topics we should definitely get into is, first, there is a notion that, um, startups are one of the most changing types of companies that exist, right? What? A company of 10 people, 50 people, a hundred people, a thousand people need is not the same from an organizational perspective per process to any topic.

And pricing is obviously exactly the same. So what is the right level to like. What's the nerdiness level your company should have at each phase of the journey is actually quite important to think about, uh, because the types of experiments, how you change prices will change during that, during that portion.[00:12:00]

But then I think the second topic, which is also quite important, is this notion that. Pricing as such as actually quite theoretical discipline. What you're trying to do is define what is the perfect amount that the potential customer is willing to pay, and therefore, how can I set up a perfect model that gets as close to that willingness to pay as possible?

But then to your point, after that comes a lot of people, marketers, peoples customer success people, and the actual invoice then that the finance team sends out might not look like that. That sort of. Perfect model. And so I think there's an interesting discussion to have around who does what within a company in relation to where you're starting from, which is really a product marketing question.

What is the customer willing to pay towards a finance question of how much money do we actually get and what timeframe from this customer? Um, so that's probably sort of the second thing that I think is worth. Diving into,

Wilma Eriksson: I fully agree. And if we [00:13:00] should maybe start a little bit with the end in mind. So we take a mature SaaS company, so we start with when it's as complex as it could be, or, and then we go, I mean, not back, but to a smaller and earlier stage of sa uh, if we take it from there.

Ingrid Bonde-Akerlind: Sure. Um, I. You, you will be able to hire full-time people whose job it is just to think about pricing.

Wilma Eriksson: Hmm.

Ingrid Bonde-Akerlind: But you need a pretty large go to market team to get to that level because the pricing. Person or team as it is that is a sub discipline of product marketing. Rev ops. It's sort of you listeners to this podcast if you're at an early stage start, but you might not even have your first rev ops or product marketing person.

So of course you will not have a full-time pricing person. Um, but what's the role of that person as such? They basically need to be a person or, or team? Well, it could be either. That has [00:14:00] the mandate and buy-in from management because at the end of the day, price is, it's a powerful enough lever that it's something that top management really does need to be very aware of.

Um, but to both gather information from the market, I. Together with the marketing team on what is the willingness to pay of the customer, but then to construct the pricing models that that work for the, the products that you're selling. We're talking bundling, discounting, how should that work? Hmm. And that needs to be done in conjunction with the product team.

Which in a SaaS company, obviously how you are able to sell your product is dependent on how your product can be modularized, which is a product in question, and the sales team, which actually has to go out in the field and actually affect these prices. Plus obviously the finance team, since whatever prices you're going to, if you're changing them, that will affect your future financial projections.

And therefore, it's also very clearly fp a question.

Wilma Eriksson: Hmm.

Ingrid Bonde-Akerlind: So you end up, instead of having at an earlier stage company. You won't have [00:15:00] somebody hired full-time to do this. It will, you'll probably need still somebody responsible, but it's a decision of a, it's not a decision of committee, but there will be a committee involved at a.

You get to enough different complexity that you're going to want to have a person or team involved, and the signals that you've reached that complexity, well, first of all, again, you need to have a large enough go-to-market team that you can handle the cost of having somebody employed for that and that the benefits of having of optimizing your pricing are going to.

You're gonna get that back in sort of revenue. That's when it becomes worth it, so to speak.

Wilma Eriksson: How, how big enough is that going to, we were

Ingrid Bonde-Akerlind: three, 400 people. Okay. At the time that I took over pricing full time. So I, I'd say you definitely want to be in the. Uh, some point before, before 500 people is probably when you'll, you'll get to that, roughly speaking.

Wilma Eriksson: Yeah. Once the, uh, science, uh, despite being a size of the organization, could you [00:16:00] see trends in your. Go to market model, uh, how you expand, how you grow. Could it be science, uh, other than, yeah. Uh, organization size. Absolutely.

Ingrid Bonde-Akerlind: Um, and so I think that where you get to there is that the, a SaaS, we talk about it as one thing, but a enterprise SaaS company and a product like growth, uh, sort of SB SA company are actually quite different in product like growth or, uh, sort of SB inbound sales.

You actually have a lot of people actually doing the selling. It's, well, you have a, in product like growth, it's, it's more upsells obviously, that you're working towards and then you add on the sales team over time, but sort of an inbound s and b sales, you're actually gonna have a very, very simple pricing package for a pretty long time because you want to really dec, you want to keep your sales cycles really short.

Increase your conversion times. And people aren't gonna want that much complexity in their decisions. And so it'll take [00:17:00] longer. But if we're talking enterprise sa sa very quickly, actually, you may end up with multiple different products. If you're selling multiple different products in a suite to your customer base, uh, you will probably have a relatively complex upsell scheme that could depend in multiple dimensions.

It could be more seats, it could be more. Data usage. It could be other modules that that companies may purchase because even though you have one single software product. You're gonna wanna slice that out in different ways for these enterprise customers that have quite high demands. They also are professional on their side and will ask for discounts.

You need to understand what policies you want for that. So in general, the more enterprise you are, the more complexity you will have in your product packaging, which therefore also leads to potentially more complexity in your pricing. Therefore at an earlier stage, I would argue you can warrant having somebody specialized within that.

Very interesting.

Wilma Eriksson: [00:18:00] Okay, so, uh, that is when you should have it, what, uh, the month is to, to be able to afford having someone owning pricing. Uh, so it seems like it's. Somewhere between like 200, 400 employees depending on if you have more like an enterprise sales or you have a more an SMB. Is that the correct conclusion or,

Ingrid Bonde-Akerlind: yeah, that's, that's, that's again, roughly speaking where I would put it.

Of course. Okay. So in the earlier

Wilma Eriksson: stage. One being mm-hmm. I don't actually know. I mean, where do we draw the line from being startup to scale up and scale up to something else. So if you know that, please enlight me as well. I, let's, let's

Ingrid Bonde-Akerlind: maybe talk the, let, let's, um, I'll define this phase of like, what, like maybe 40, 50 employees to 200 say.

Hmm. Great. Um, at that stage, let's, let's say you're, let's let's call it scale up, uh, for the purpose of this podcast, um. I imagine at this stage you actually do have, um, people responsible for either rev ops or product marketing on [00:19:00] board. Mm-hmm. You have full-time people doing that. Um, pricing actually quite naturally in my mind becomes part of the responsibility.

In some companies you may have a sort of monetization product manager that sort of thinks about. It from a product perspective, if you're a PLG company, right? But regardless, you will have somebody who is probably relatively officially tasked mm-hmm. Um, with thinking about how you can, uh, maximize use pricing as a lever to maximize revenue.

It is gonna be a part-time role at that point, but there's a pretty natural potential owner internally that is not the CEO. And so that person usually is not gonna be an expert in this 'cause that's not their background. But you sort of, at that point, you can look around the company, see who does what, and figure out who has the sort of right mix of.

Customer understanding and knowhow, sort of that strategic side of thinking about the market.

Wilma Eriksson: Mm.

Ingrid Bonde-Akerlind: And also is, um, analytical enough [00:20:00] and very numbers oriented to really want to model out, oh, if we did pricing like this, what would happen? Or, oh, if we did this discount policy, what would happen? So somebody who has that combination of two, two traits, that person is usually a relatively natural, uh, person to take it on.

Um. They do not necessarily need to be in the management team, but they should be senior enough that they can drive this question with those types of stakeholders. Right. So that's sort of what I would put, like usually is what most scale ups do. Mm-hmm. And then below that, mark, it's the CEO's responsibility.

Wilma Eriksson: I'm nodding, no one can hear it, but I'm nodding.

Ingrid Bonde-Akerlind: Yeah, yeah,

Wilma Eriksson: of course. Uh, and yeah, I'm very curious about Compass companies that you see work with this well. What could then the leverage be? What would the recipe be? What could you see on the bottom line or the growth, uh, rate or something like that? So both like success case and also when it's not done properly, what can happen [00:21:00] then?

Ingrid Bonde-Akerlind: Um,

Wilma Eriksson: or the fixed be

Ingrid Bonde-Akerlind: maybe the challenge of putting in an average like percentage. Increase or change that you will get. The challenge with this is that the worse companies are at a historically, the more effect they might see from it. And so it's actually that. Like the better you are at working with it, the less.

Impact you may see every single time you make a change. And so it's, it's hard to speak as sort of like this is the average effect you will receive. Um, but sort of what, what does it, what does good look like is perhaps like what does good look like? What does it feel like is probably where we should take that instead.

Good. Feels like this is a question that is thought about. As part of the key strategy of the company, that is when you're thinking about your product vision going forward, what sort of product, like what is my two year product roadmap? Well, what is my two year pricing roadmap? How my, my business model and my [00:22:00] pricing packages, and ultimately, I.

The prices that customers actually pay, sort of payment terms, contract terms, they are considered in conjunction together because they do fit together. And so what good looks like is this question is naturally. On the management team's agenda, just like product strategy is, or how should we shift our go to market team structure, for example.

Um, it also looks like an appropriate amount of boldness is probably what I would say. So are you bold enough in your decisions? Um, if you're afraid of one customer churning due to a price increase. Then you're not thinking about the net gain you will get. And so that I think is the second mark, is that there's not, well, don't be reckless, that's not the point.

But actually most changes are actually reversible and you can roll out pricing changes that have slightly less risk than sort of just changing everything all at once. So that's the second thing. Um. [00:23:00] And the third one would be that there is still one clearly responsible. There's a responsible person to sort of build the recommendation, bring the material, and there's a clear final decision maker.

Um, as with all things in companies, you need to have those two very clear. What does bad look like? Bad looks like you haven't done anything for three years. Easy

Wilma Eriksson: as that. Um, okay, so if we go into, uh, uh, the boldness part, when you actually trying to find models that increases both, uh, the willingness of paying from the customer point of view, but also maybe describes the value that.

Their, your product or service bring with, uh, what kind of tools can one have to work with this on a regular basis? To try it out, to test it, test it, to draw it back if needed and so forth?

Ingrid Bonde-Akerlind: Yeah. Um, tools wise, the, the more mature your company, sorry. Not mature, but the larger your companies, the more data you'll have at your disposal.

So one of the [00:24:00] challenges of pricing, and now we're in the sort of early startup land, is that your access to data is, is lower. 'cause you just don't have as many customers, you don't have as much history with them, et cetera. And you probably also don't have as, um, many your smaller as well. So, but setting that aside, um, I'll give sort of the general advice and then it depends again on who you are, how, how you have it available to you.

Mm. Um, on the data side, the two analyses that are often, uh, helpful to do, first you really want to, you want to get a good segmented view of your customer base. So you want to segment them according geography, uh, like industry, segment size, et cetera. And just start seeing patterns here of, um, what type of customers churn.

What type of customers down sell are you? Like you, you want to start seeing the patterns because what you will see is that the customers that upsell more, they might come from a certain target customer segment. [00:25:00] That might mean that they're willing to pay more. So you want to start looking at your customer base in segments because it's gonna identify.

How you might build out different pricing packages, uh, in the future. The second sort of data sets that you're gonna wanna start looking at a lot is product telemetry data. So what usage of features do you have from different user personas and different customers by understanding different types of user personas.

You might, you might arrive at, uh, oh, well this user persona, we're not even monetizing that one, but actually they're driving a ton of value from it. Or this particular feature we're seeing is. Barely used by some of our customers, but some use it a ton. So let's make that an upsell. So you're sort of sifting around the data to sort of identify interesting patterns.

And then the qualitative side of the research is what I would say is sort of the complimentary side that helps you. Solve out. Okay. Given this input, what might we do about it? For what it's worth here, by the way, just, just as an aside, [00:26:00] I'm imagining here that you're actually rethinking your, your business model itself.

That is the, the basis on which you are. Charging customers, we can, we can separate the concepts of what's the right pricing model and what's the right price level. Price level is just this sort of, it's the sticker price. At the end of the day, like every month I will invoice you, uh, $5,431. Pricing model is what is the logical justification that you think that's a fair price?

Hmm. And so those two sometimes can be slightly different concepts, right? Um, the qualitative side is actually where the pricing model can become very relevant. Most companies, you're going to have some earliest customers. You will have prospects. You will also have sort of power users. Ask them like product managers, do product research with users all the time.

Product marketing managers do buyer research. So include the pricing questions within this. If they are really sort of [00:27:00] genuinely your top customers, they really wanna work with you, they will probably give you pretty brutal, honest feedback of like, that would be a stupid model. Don't do that. Or that might make sense.

Obviously don't take it at their full, right? Like your job is to sort of envision the future for your customers and then make it happen. But they're still gonna give you insights about what works and doesn't work in your industry. And so that's really on the sort of gathering, the sort of data nugget side, getting ideas from that, and then testing these ideas with customers, um, in then the sort of phase of how do we, how do we set the pricing levels as such?

You can kind of think of it in two different ways. Either you want to try to figure out the right answer ahead of time or you're going to test your way to the right answer. If you want to try to figure out the right answer ahead of time, you're probably gonna need enough customers that you could survey them, uh, sort of ahead of time or be able to survey their market.

Like given product [00:28:00] X, what would you be willing to pay? You see the ranges of willingness to pay and your answer's probably somewhere, somewhere in the middle. Um, there's. A lot more theory behind where that comes from. Much pricing research, by the way, in that theory comes from consumer research and not B2B research.

So it's not all directly applicable, but I'm just gonna leave it up there for now to not not get into a half an hour lecture here. I feel I just talking, talking about that. I would love,

Wilma Eriksson: I would love it, but I mean, it's, it's, it's too nerdy. Yeah, exactly. Like let's, let's just

Ingrid Bonde-Akerlind: maybe a little too nerdy. Um, but on the other hand you can, what, what you can do too is that, you know what.

Just increase them 10, just increase prices, 10, 20%. See what happens.

Wilma Eriksson: Right. I actually had a, a, a, a friend or someone I, I worked quite closely with. Uh, she challenged us and, and said that, uh, she, yeah, she just described how she had done in one of the companies she is involved with. So every two [00:29:00] months they increase the prices for prospect with 10%.

Yeah. Uh, and she said, we have been doing this for, I don't know if it was years, I don't think so, but maybe a year. Yeah. Uh, and she was like, we haven't, uh, hit the roof yet, so we are just gonna continue in doing this. Uh, moving on. And what I love about this, it's that you simplify it. Yeah. Because I could.

Understand that pricing feels a bit overwhelming, as you said. It's tricky. I mean like

Ingrid Bonde-Akerlind: 10 minutes of like, look, by the time you hire, hire somebody full time to do this. They're going to have mountains of things that you can do. Exactly. But at the earlier stage, what you're going for is not perfection of precision of exactly the right price level.

You just wanna be within like. 10, 20, 30% of what it could be. Right. Since there's many startups, honestly that underpriced with agree that they can triple their prices and customers still stay with them. You don't need an entire like six months of research to be able to know, huh? We are [00:30:00] underpricing. In fact, usually the sign of that is that if you have customers are like, you guys are almost so cheap.

I like my manager was wondering like, are you guys for real? Mm. You don't need research. You can just be like, oh, maybe we should increase our prices.

Wilma Eriksson: I've actually received that question when I, when I set out our, one of our biggest proposals. Then they come back. Yeah. And we're like, they were like worried for real.

Like, do you understand the complexity of our solution? And we were like. Yes. That's why we have like 10 extra meeting with you guys. Mm. But I see it from, you know, um, uh, uh, a nice point of view. They wanna help us, we wanna help them, they wanna encourage us. And we are a small startup, so it just makes sense, you know, but it's still very, uh, amusing.

Exactly. When you get those kind of questions, then you know you should charge more.

Ingrid Bonde-Akerlind: If you have that, then you know that you should charge more, right?

Wilma Eriksson: Mm-hmm.

Ingrid Bonde-Akerlind: And this is where also. Especially in the early phases of startup land, right? You don't need to have a perfect pricing model. You just [00:31:00] say a number and see how they react.

And if they, if they like shut the door in your face, then you're like, okay, maybe that was a little too high. I'll go a little lower next time. But if, if your first reaction isn't sort of like, whoa, then your first 10, 20 customers, it's a one off. It's a one by one negotiation anyway. Yeah. Like every single one of those is a direct negotiation and you're actually gonna be arriving at your price according to the skills of you as A CEO because you're still at the level where it's not a sales team.

There's not perfect policies. And so that's where, in a way, until you do have your sort of initial go-to market team, pod of five, so like five, six people that are independent of the founders really don't need to over complexify it. Take each, each potential prospect as sort of a one-off conversation and see, figure out their willingness to pay through conversation.

And then from that, you're probably gonna [00:32:00] arrive at the bad thing, right? Is they'll arrive at very varying different pricing levels for these distant customers that don't sort of fit together. Mm. So then the right step is that when you do have that four sort five to six person team. Then you sort of set a policy, then you make it clear, then you set your discounts.

But that's where maybe then from our earlier analogy, the sort of. Maybe we should split the zero to 25 person company between the 25 to 50 person company, something like that, right?

Wilma Eriksson: Mm-hmm. So I'm curious about the data, uh, because, uh, from my point of view, and I know that you're gonna correct me where I'm going wrong here, uh, it's quite easy to see the billing data Yeah.

That you have that is like, okay, this is how it ended up. Yeah. Obviously us being a CPQ provider, we know that that companies that first of all need a CPQ mm-hmm. Um, thereafter implemented well with A CRM. They get a lot of more data when it comes to the quoting and the proposal phase. Yeah. Uh, so my question to you is, uh.

What kind of data do [00:33:00] you really need when you are a more mature company? Not in those startup years, but when a more mature company, what data do you need? How do you receive it? And how can you work, uh, in a, a simple as possible way, doing an analysis, uh, looking for those interesting patterns and so forth.

Ingrid Bonde-Akerlind: Um, if you're a mature company, you're probably, if you're a very mature company, you're still probably going to benefit from having. All these various data sources collected in your data warehouse, data lake, and that you run analysis on top of that. So in. The information that comes from your CRM, like this is what the customers quoted initially, you should port in there for the, the data from your, from your finance system, which it has contains the in invoices, the sort of the contract information, and you quote in as also the product usage and sort of the customer, the customer error or data this together you will have then obviously if you do have a sort of a CPQ solution.[00:34:00]

Um, then you'll have more specific information around. Each of those contracts around each of those, sort of exactly how the quotes were constructed. And so you can bring in the sort of deeper level of information, but in general, what you're just want, what you want to see is that you have sufficient information, but the, the fact that the information is unified in one place under sort of, and the customers can easily compared, uh, from different data sources, one to the other.

Wilma Eriksson: Mm.

Ingrid Bonde-Akerlind: That's probably the most important thing to make sure that it's set, set up. So

Wilma Eriksson: both the billing and invoice data, we have the quoting data, if you will. Mm-hmm. Yeah. And also, of course, the usage. Yeah, exactly. Three. We have to have them combine one single source to me being able to do this ANA analysis.

Yeah, exactly. That's good. Uh, okay. I actually forgot. I mean, how can I forget? The only job I have being a podcast host is to like, you know, making you comfortable and, and keeping, keeping the time. But we, we entered with. The one thing in different stages, [00:35:00] and then it was a very interesting second thing you wanna address.

Uh, I hope that you remember since I am obviously too sloppy and taking notes on other things. So please enlighten me. What was the second thing we wanna know about?

Ingrid Bonde-Akerlind: No, but I think we actually started, we started sliding into the conversation itself, right? Um, the first part of the conversation we talked quite a lot about sort of, um, we, I mentioned the difference between price model and price level.

And then I think the final part of that equation is really like, I. Actual invoiced amount. So billing that at the end. And the sort of difference between the first two is actually usually the responsibility of pricing as such. Then that sort of last portion, what you actually get from the customer tends to be more, uh, on sort of the sales team and the finance team.

And there's a lot of complexity in sort of the policies within that portion of the organization really do matter towards. At the end of the day, it's your revenue trying to increase. But if you have a perfect model, uh, perfect business model, [00:36:00] and you have perfect price levels, but then you end up with a lot of sort of discount leakage around along the way, it kind of doesn't, or, or sort of, or just literal errors, right?

Like, oops, we kind of forgot to, we forgot that the contract actually stipulated X, which would've been beneficial for us. Maybe it's something that the salesperson negotiated for.

Wilma Eriksson: Hmm.

Ingrid Bonde-Akerlind: Then, uh, the sort of effect, the sort of real world does not look as good as it did on your model anyway. And so I think what we were gonna talk about was the fact that each of those three are actually quite important.

And one thing that happens a lot, I think when one talks about pricing in general is that that last portion doesn't get thought about as much. And I think one of the reasons for that is that pricing as a discipline, uh, comes more from the consumer world. And so what we're dealing with is actually like.

Sort of very sophisticated pricing really came from what it came from airline industry, the hotel industry were some of the first that actually adopted relatively complex [00:37:00] pricing schemes, but they're still with individual consumer customers. Um, which means that you have very, very high volume. But still, comparatively speaking to our B2B world, you have lower complexity, um, C two C marketplaces, then sort of the one I worked at Baba car also take that it's a relatively simple price model.

And like there's not so much complexity in the contract terms as such, which means that actually the first two parts, the price model and the price level are the most important. Mm. B2B software. Very complex contracts sometimes. Mm. Which means that this sort of. Mod, the theory towards the real world is a higher de potential, higher degree of discrepancy.

But pricing didn't originate in B2B software. We're taking on sort of learnings in some ways from other industries. And so that third part is something that matters quite a lot to B2B software companies.

Wilma Eriksson: Hmm. Um.

Ingrid Bonde-Akerlind: That's what we were gonna talk about, but I actually

Wilma Eriksson: talked about it anyway, so that's good.

But, but it's good that you're addressing this, both that, uh, pricing as a [00:38:00] discipline, uh, lovely, lovely expression. Uh, but it comes from the consumer based world. Uh, it is always interesting, I believe, hear a little bit of the historical part to understand why it might be tricky for people to work with this, uh, from.

My idea or my experience is that it's a question about resources. Uh, it is a question about having a, a person that had that com, uh, combination that you very could describe, you know, uh, senior enough, uh, also into the data and also understanding the business. It's, it put quite high demands on someone doing this on a regular basis when you have so much else going on.

So that's also something that I believe why companies might need to be more mature. Uh, because otherwise you don't have time to think about this, because SaaS business also changes a lot. The, at, at least historically. Uh, we grew quite fast. I mean, there's a lot of going on there, uh, but I think it's very important that we, uh, address.

The fact [00:39:00] that it's B2B software, the agreements are often very complex and customer unique as well.

Ingrid Bonde-Akerlind: Yeah. I mean, the complexity is okay and can be warranted. The uniqueness to the customer, I think is where things do start to get hairy.

Wilma Eriksson: Mm.

Ingrid Bonde-Akerlind: Even if you can get. One more meaning concession. Is it always worth it to make a contract non-standard?

Wilma Eriksson: The

Ingrid Bonde-Akerlind: larger your SaaS company gets, the, the more likely that question, the answer to that question is no. And so this one, obviously I'm making up on this podcast, but probably a rule of thumb is that. Below what your, your sort of top customers that account for, I don't know whether, it depends on sort of how concentrated your customer base is, but your long tail customers should not have unique, unique contracts.

Wilma Eriksson: Mm.

Ingrid Bonde-Akerlind: It's pretty important actually, that they have, there is standardization in those packages. Again, those first 10, 20 customers. You're talking about the zero to 25 company. There's no go to market team. Everyone's unique. Everyone's a unique snowflake. Once you scale [00:40:00] past that, and more importantly, once you maybe get a VP sales on board and then you're really starting to scale up your your SDR and your AE AE team, it's really important that you don't have too much shifts between those different contracts and there's clear policies in place because otherwise your finance team will tear out their hair.

And probably get things wrong. Yeah. The top few customers, yes. They're always gonna be unique snowflakes. I've seen that. I talk with them. Yeah. Yeah. But, but everyone beyond that just can't have a unique contract that is bespoke to them. That doesn't mean there are, there aren't terms that can be negotiated with each potential customer.

Of course there's terms that can be negotiated with each customer, but like it's important still to have standardization, uh, because otherwise the sort of beautiful work you did in creating a model, a policy, a level is kind of, kind of go, go out the door. Very

Wilma Eriksson: interesting. Okay. Uh, we need to start wrapping up soon, but is this something you wanna add that I forgot to ask about that we haven't mentioned earlier on?

Ingrid Bonde-Akerlind: I guess for, [00:41:00] for those people who've like managed to listen to this point, like we did get nerdy, we into the details, but, um, keep it simple is also a really important rule in pricing that if you don't need, if there's not a good reason to introduce. Into the model, uh, more specific price levels, what have you.

Don't, don't do it. Like, to your point of the, the anecdote that you shared that, well, they just increase the prices to new prospects by 10% every two months. Super simple might actually get you, if it gets you 80% of the way there with 20% of the effort, that's the way to go.

Wilma Eriksson: That's good. That's good. So when you, uh, want to be inspired about pricing and packaging yourself, do you have, uh, someone you think that we should follow?

So read some book or I

Ingrid Bonde-Akerlind: don't know if, did you ever watch the Price Intelligently, like pricing tear down videos before, before they were bought it by paddle because those were hell, I found those super. [00:42:00] Fun to look at. Um, otherwise, um, if you haven't read, um, the book on pricing from the pricing consultant down at Denmark Ulrich mm-hmm.

I do recommend that one. It is very B2B software specific and, uh. Quite a good read as well.

Wilma Eriksson: Great. Uh, I'll, uh, I'll post a link, uh, afterwards so people easily can, can receive this. Thank you so much. And I'm curious, uh, what your main challenges in your business are at the moment. Something that you wanna share that you keep, hopefully not keeps you up at night, but something that you're

Ingrid Bonde-Akerlind: Nah, I, I, I sleep pretty okay at night, which is good.

Right. Good.

Potentially this, this might come as a surprise actually to, to sort of people who work at startups or, or product companies that are much larger. Is that we're a team now of what, mm. 12, 15 people.

Wilma Eriksson: Mm-hmm.

Ingrid Bonde-Akerlind: We actually, sort of internal coordination is actually the thing that we're sort of working through at the [00:43:00] moment.

Um, in an investment firm, each person actually works quite independently. Mm-hmm. Um, we work. The majority of our day is actually spent with people outside of our firm and not within our firm. So the number of different connections and discussions that happen can be very, very large, but we still need to coordinate internally and that, um, that's a classic thing that happens at companies.

I. Uh, as companies grow, and it happens earlier than investment firms than you would think. Interesting. Well,

Wilma Eriksson: uh, I, I, I myself at least can fit with you there. Um, I only been working at startup or more one scale up, I would say, but it's quite clear when it goes from, you know, everyone knows, everyone knows everything, what everyone's doing, and then it's feels like yeah.

Knows everything about everyone. So. Sometimes too much, but that should be good. They say, you know, in the early stages then, you know, it feels like over a summer if you will, it becomes something completely else. Yeah. But, uh, I know that you're [00:44:00] very experienced people and, uh, super smart. So I feel secure that you will manage that out.

Um, who would you like me to invite to the podcast?

Ingrid Bonde-Akerlind: Um, so I, I was. Right. I can't remember the name of this firm, but I know that there is a pricing specialist, recruiting firm, or like, at least the portion of recruiting firm has a pricing practice. It would be super interesting to hear what their sort of like take on the market for like hiring pricing specialists in Europe is at the moment.

Wilma Eriksson: Definitely. Uh, we look into that. Yeah. Uh, and I'll share that as well. Uh, but, uh, I agree with you. Uh.

Thank you so much for joining the podcast. Uh, it was as nerdy as I hoped it would be, and I took so many notes. So I probably, uh, gonna, uh, bore someone, uh, close to me about this episode for a couple of days moving forward. So I hope the audience has received some, uh, good hands-on, uh, expertise as [00:45:00] well. So thank you for joining.

And before we, uh. I mean, I prefer bubbles. So we pop the bubbles. This song comes up based an after work. The sun is shining. Maybe we're in France. Seems like you like France a lot. Yeah. Okay. Yeah. Which song are we listening to and that you really enjoy?

Ingrid Bonde-Akerlind: Um. Well, France itself. Um, I, when I lived in France, then I used to listen a lot to electric guests.

Mm-hmm. Cool. But thank you so

Wilma Eriksson: much for joining us. She have a great weekend. Yes, you too. I've been.

Figure

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