Do you know how to unlock more profits with an optimized business model? The host of the Deep Wealth Podcast and post-exit entrepreneur Jeffrey Feldberg sat down with Bill Wilson, a seasoned entrepreneur with a rich background in SaaS pricing. Bill is the founder and CEO of Pace Pricing, which helps companies figure out how to price their products. This conversation was packed with insights on navigating the challenging world of business pricing. Here are the highlights of what Bill shared.
Bill Wilson didn’t start out as a pricing expert. He began his career as a software developer. Over the years, he realized that pricing is a big deal in business. Bill said, "I never, ever thought I would be in charge of monetization for so many amazing companies." Understanding how to set the right price can make or break a company.
Bill Wilson didn't always know he'd end up as a pricing expert. In fact, his career began in software development. But like many entrepreneurial journeys, his path took unexpected turns. As Bill shared, “Where I am today is not where I thought I’d end up." He started his first company to escape the confines of corporate work. At first, he charged $70 an hour for his software development services, but soon realized he needed to understand his worth better.
Bill discovered that pricing is more than just numbers—it's about understanding the value you deliver. When he began hiring staff, he found it crucial to charge more than just double what he thought he needed. "By the time you take everything into account, you're left with a salary," Bill explained. He emphasized, "Pricing is confidence. Know what you're worth, and charge it."
Over the years, Bill’s businesses evolved. He moved away from hourly billing to charging for value, creating packages that aligned with customer needs. This shift was pivotal. Bill noted, "With productization comes niching, and niching is really the key."
As enterprises grow, they face a lot of decisions about how to price their products. Bill’s experience showed him that pricing is not just about picking a number. It’s about understanding your customers and the value they find in your products. "Pricing is confidence," Bill emphasized.
What Is Pricing Confidence?
Pricing confidence comes from data and understanding. Bill noticed that many companies are scared to change their prices. They worry that customers will run away if prices go up. But Bill argues that without changing pricing, companies might be missing out on money. "It's the fear of the unknown that keeps companies from making changes," he explained.
By looking at the data, companies can see if they are charging too little or too much. They can find out how customers are getting value from their products. Armed with this knowledge, they can make smart changes.
It’s not just about how much you charge. It's about how you structure your pricing. Bill believes in aligning pricing with customer value. He says, "If you can get yourself really aligned, because if you're orthogonal to your customer, you won’t capture the right value."
A good pricing strategy includes both access and usage elements. This means you might charge a base fee for using a service and additional fees based on how much it is used. This dual approach can help companies make sure they are getting their fair share of value.
Bill believes that how you charge is more important than what you charge. He suggests rethinking pricing models. It's not about picking a random number; it’s about aligning the pricing structure with customer value. He emphasizes, "The real secret is how you charge… getting that right is crucial."
Tackling Fear of Price Changes
Fear of losing customers can hold businesses back. Bill's advice is to face that fear by gathering data. "The antidote to that is to really dig in and understand pricing." Businesses can conduct surveys and talk to their customers directly. By getting feedback, companies can see if a new pricing model will work.
Pricing can be intimidating. Entrepreneurs often fear raising prices will drive customers away or make sales harder. Bill found that these fears are rooted in a lack of understanding. He discovered that the antidote is data and confidence. "The antidote to fear is really digging in and understanding pricing," Bill said. By using clear data, entrepreneurs can gain the confidence to adjust prices based on true value, not fear.
Bill shared a story about a company that was scared to change its pricing. They ran a study and found that by making changes, they could increase revenue by 28%. Realizing the potential for growth helped them overcome their fears.
Bill’s Vision: Constant Pricing Evaluation
Bill believes every company should have a pricing team. This team can focus on regularly assessing and optimizing pricing models. He said, "I dream of a world where every B2B SaaS company has a pricing team."
Companies should evaluate their pricing at least once a year. This doesn't always mean increasing prices. Sometimes, it means restructuring how you charge. Keeping an eye on market changes and customer needs can lead to better pricing decisions.
Three Key Pricing Strategies
For any business, Bill suggests focusing on three main pricing strategies:
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Acquisition: Attract new customers with pricing that reflects entry-level value.
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Expansion: Encourage existing customers to use or buy more by offering added value for their continued patronage.
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Retention: Ensure customers see continual value, making them less likely to leave.
By using data to inform these strategies, businesses can boost growth and profitability.
Lessons from Bill’s Liquidity Event
Bill also shared insights from his experience of selling his company. He talked about the importance of having a plan for what comes next. Many entrepreneurs feel lost after selling their business. Bill’s advice is to have a plan for life post-exit. "Have an exit plan, plan what you're going to do next."
He also noted the importance of bootstrapping, or self-funding, a company as much as possible before seeking venture capital. This can help maintain control and avoid complications with investors.
Bill’s core advice for entrepreneurs is to act despite fear. He believes in making strategic pricing decisions grounded in understanding and data. For those unsure about their pricing, he recommends starting conversations within your team to explore current pricing fears and concerns. “Get the right people on the team together, have an honest conversation about where you are with pricing and what scares you about changing it,” Bill suggested.
Sum It All Up
Bill’s journey teaches us that pricing is not just about numbers. It's about understanding customer value and overcoming fear. His approach blends both art and science. By aligning pricing with customer value and regularly reviewing strategies, companies can position themselves for sustainable success.
ricing is a powerful tool that can propel your business forward if used wisely. Bill Wilson’s journey shows that understanding and aligning pricing with value can lead to remarkable growth. His insights teach us not just about numbers but about confidence, understanding value, and aligning pricing with what your customers truly need. As Bill said, “If you’re thinking about a pricing change...you’ve probably waited too long.” So start now, dive into your data, and make your pricing work for you. Remember, success is on the other side of fear.
The message is clear: Don’t let fear stop you from revisiting your pricing strategy. Dive into the data, understand your customers, and confidently make necessary changes. As Bill Wilson wisely said, "All the good things are on the other side of being uncomfortable."
If you want to learn more about pricing strategies and hear success stories from Bill, the full episode of the Deep Wealth Podcast is a treasure trove of valuable insights. Get inspired and start crafting pricing strategies that work!
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