Pricing & Revenue

On Your Next Big Deal? Double Your Pricing.

echojason@gmail.com'

Jason Lemkin

There’s a fun — and very lucrative and rewarding — exercise I like to go through with most of the startups I work with.

It’s goes like this:

  • First, who’s your largest customer?  OK.
  • Now, do you have a prospect in the pipeline that’s somewhat similar?
  • You do?  Great.   Now …
  • On that deal … go quote twice your highest price ever. Go try to do that.

This is a terrific exercise to drive your deal size up.

It does >not< mean rip off your customer.

What it does force you to think about is providing a true solution to a big problem (more on that here: A Solution Sale Can Capture 3-20x the Revenues of A Tool Sale. With Almost the Exact Same Core Product.).

$1,000 a month is a lot of money for a widget, even if everyone on my team uses it. But $12,000 a year is dirt cheap for anything that solves a true problem. That solves me having to hire an engineer, or 3, to do something. That fixes something broken in my 500+ person org.

Challenge yourself.

Your biggest deal so far is $100k, with Google?

Well … when Facebook comes in as a prospect … ask for $200k. With confidence.  I know you just got comfortable asking for $100k.  But if you’re worth $100k … then either your product today, or some future variant of that product, is worth $200k.  Almost always.

You may have to build them an extra feature. Provide better on-boarding. Improve customer success. Upgrade your sales team, or at least, add reps with more experience selling larger deals. Build a new integration. Who knows.

You may have to change a bunch of things to get twice what you did on your largest previous deal.  Or possibly — nothing.

Either way, you’ll learn.  It’s a journey.

And if you have a true solution, that really makes an impact … you’ll probably get the 2x pricing. At least some of the time.

Once you do it once, level up.  Make 2x the new 1x.  $200k your new enterprise price point, not $100k.  Do that for a little while.  And then.  It’s time to start again.  2x again.

Rinse. Wash. Repeat.

Published on August 15, 2016
  • Really liked the pricing being based off of the problems being solved for the client. I’m going to test this out right now writing out my next proposal for a new customer. Think it will work for recurring monthly fee accounting firms too?

  • Bain & Co. published their “Value Pyramid” piece in the Sept 2016 HBR. If you can re-engineer your product to solve more needs, and if you can figure out how to address more valuable needs than merely functional ones, you deserve greater prices.

    https://hbr.org/2016/09/the-elements-of-value

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