he tripled the price and the pipeline got better
the price is a claim, and his claim was too small for the problem he was solving.
a founder told me this month that they tripled the price of their service over the summer and their pipeline got better, and that he still does not understand why.
i think i do, and i think he does too.
they sell software to manufacturers. the kind of company deciding whether to spend a few million automating a production line. and customers had been telling him, in so many words, that this cannot be right. a thousand a month for something that reshapes how we spend millions does not compute. it reads as a side project. so they tripled it, and conversion went up rather than down.
the price is a claim. it is often the loudest claim you make and it gets read before anything on your website. a small number next to a large problem does not say bargain. it says you have not understood the size of my problem. buyers who are about to bet a quarter of their capital budget on you are not shopping for cheap. they are shopping for somebody who will still be there in eighteen months.
but the thing he said next was the better lesson.
they thought they were a marketplace. buyers on one side, vendors on the other, matching in the middle. wrong. it turns out the thing his customers cannot do is plan. they do not know which twenty projects to start with, who to call, what any of it should cost, or in what order. the matching was the easy part, and the easy part was never the business.
that is the second question hiding inside the first one. most of us charge for our easiest deliverable, because it is the one we can describe on a pricing page, and we give away the part the customer genuinely cannot do without us because it feels like advice.
one more from the same conversation, for anyone in hardware. no bank wants to finance a robot. they will lend against a building, they will lend against a truck, but nobody knows how to price a robot if it comes back. so a whole category of real, revenue generating machines sits stuck behind the fact that lenders have no model for the asset. anybody who has spent a decade explaining a new asset class to a banker knows that song by heart.
what are you charging for, and what are you giving away because it is hard to put on a price list?
the machine economy brief
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