by isp on 7/18/23, 6:14 PM with 41 comments
by cldellow on 7/19/23, 3:36 PM
We were young, poor engineers with no idea how sales worked. When they asked what the price was, we picked a nice round number that sounded appealing to us.
"$100,000."
Our counterparty may have actually laughed at us. "I can't just write two twenty-somethings a cheque for $100,000."
Oh, shit. They're on to us. They're gonna bargain hard, and we're going to have to lop off tens of thousands of dollars.
"But what I can do is write you a $10,000 cheque for a 1-day training session, a $15,000 cheque for installation support, a $10,000 cheque for 1 year of maintenance and a $65,000 cheque for a perpetual 5,000 seat license. Does that work for you?"
It did. To do this day, I'm pretty sure we sold the government $100,000 of services because two high-up administrators were incapable of working out their interpersonal issues. Instead, they used our software as a go-between. Absurd.
by isp on 7/18/23, 6:18 PM
Excerpts:
> “And she realized… she left money on the table.”
> And Sandy gulped and picked the biggest number she thought anybody would ever rationally pay. And said, “$75,000”. And she said all the buyer did was write down $75,000.
> And she realized, shit, she left money on the table. Sandy Kurtzig was awesome. And she said, “Per year.”
> And the buyer wrote down, “Per year.”
> And she went, oh, crap what else? She said, “There’s maintenance.”
> He said, “How much?”
> “25 percent per year.”
> And he said, “That’s too much.”
> She said, “15 percent.”
> And he said, “OK.”
> [Ed: This is called “flinch pricing.”]
----
> They said, how much is it?
> And I was about to go, “$75,000…” And Gina goes, “Shut up I’m the salesperson.” She said, “A million dollars.”
> ... And the guy looks at Gina and said, “Gina you’re out of your mind. We don’t pay more than $675,000.”
> And Gina said, “All right. We’ll let you have it for $675,000.” ... “But that’s for the base module. What other ones would you like?”
by gnicholas on 7/19/23, 4:39 PM
This doesn't override other more concrete considerations, but when you're trying to price software (zero marginal cost) made by a startup (often no direct competitors/comparabales), it can be a useful factor.
by DonnyV on 7/19/23, 3:37 PM
by fwungy on 7/19/23, 6:12 PM
Never forgot it.
by dmbche on 7/19/23, 5:10 PM
So they raised it to about 100$ a pair and boom! Massive sales, become a huge player in the market.
If your stuff sells cheap, it's thought of as cheap. Branding is a part of the price!
by imiric on 7/19/23, 6:59 PM
[1]: https://www.businessinsider.com/venture-capital-big-tech-ant...
by HeyLaughingBoy on 7/19/23, 2:35 PM
by aidenn0 on 7/19/23, 6:51 PM
That's the exception rather than the rule though.
by bryanmgreen on 7/19/23, 10:40 PM
The most difficult thing is finding the balance and compromise in pricing because some customers will happily pay double the cost, but many won't.
My product is very expensive to make and my margins are not great, but this price gets me the most market saturation in a very important growth stage (business is only 2 years old) while still keeping the business profitable
by grahamgooch on 7/19/23, 10:11 PM
The Accenture EMEA head asked the room what can we offer to solve X.
before I could answer, of my engineers stepped up and said Product X
MD. How much does it cost? Engineer: $50000 per year
MD turns to me and says. What do you have that costs $1M or more.
Accenture made $2 for every $1 of our SW. They had no interest in selling solutions that didn’t move their and our goals.
by killjoywashere on 7/19/23, 9:48 PM
by pcdoodle on 7/19/23, 6:31 PM
I sent them a text with a price for the project and they wrote back "How much for baseball?". It was worth two times as much at that point.
by djmips on 7/19/23, 4:54 PM