ProductCamp Boston May 12 2018

1. © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.1 © 2018 VERACODE INC. A BUSINESS UNIT OF CA TECHNOLOGIES.
Pricing Strategy: How to Price
& License Your Product
Chris Kirsch
Director, Product Marketing, CA Veracode

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What’s in it for you?
• Make the number
• Grow profitably
• Keep sales happy
• Accelerate pipeline
• Grow & retain customers

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#1 – New Markets

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Value Metric
The measure by
which you sell your
product
Litmus Tests
Easy to explain & understand
Easy to scope for a quote
Scales well with value received
Easy to count and enforce by your
solution

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Do the Value Metric First
Interviews with customers
Surveys to confirm

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Gross Margin
Customer ValueCompetition
$
Price Level

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Pricing Sensitivity Measurement
aka Van Westendorp
Good for early markets
At what price would you consider a
ticket to a Rihanna concert to be...
...priced so low that you would feel something is wrong with
the ticket?
...a bargain—a great buy for the money?
...starting to get expensive, so that it is not out of the
question, but you would have to give some thought to
buying it?
...so expensive that you would not consider buying it?

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Acceptable Price Range
Source: Conjoint.ly

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Revenue vs. Price
Source: Conjoint.ly

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Packaging
Figuring out product tiers

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Feature A
Feature B

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Force a Trade-Off
OR

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Max-Diff Conjoint Analysis
Source: Price Intelligently
Feature A
Feature B
Feature C
Feature D
Feature E
Feature F
Feature G
Feature H
Random

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Max-Diff Conjoint Analysis
Source: Price Intelligently
Low Preference High

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Finding the Price Fence
Source: Price Intelligently
Pricing Fence

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Product Tiers
Feature Business Edition Enterprise Edition
Accuracy  
Actionability  
Uptime 
Depth  
Price $ $$

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Applying the Intent Scale
• 70-80% of “Very Likely”
• 30-50% of “Somewhat Likely”
• Ignore the rest
Likelyhood to Buy

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#2 – Established
Markets

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Choice-Based Conjoint Analysis

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Choice-Based Conjoint
Which cell phone plan would you pick?
Option A Option B Option C None
Price $70 $50 $30
Data
Included
500MB Unlimited 10GB
International
Minutes
300 90 0
SMS
included
Unlimited 300 300
Your Choice    

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Relative Importance
Source: Conjoint.ly

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Relative Value by Level (Partworth Utilities)
Source: Conjoint.ly

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Understanding Partworth Utilities
• Stack up all utilities like lego
blocks to create any
product/feature/price
combination
• Tallest tower wins!
• Aggregate utilities great for
overview
• Individual utilities used for
market simulations
$30
300
SMS
10GB
$70UltdSMS1GB
Preference

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Marginal Willingness to Pay
Source: Conjoint.ly

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Preference Share Simulation
Source: Conjoint.ly

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Top Performing Combinations
Source: Conjoint.ly

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Segmentation
Source: Conjoint.ly

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Simulating the Market
Current Market Market A Market B Market C Market D
Competitor A
• • • • •
Competitor B
• • • • •
Feature Set A
• • •
Feature Set B
•
Feature Set C
•
Feature Set D
•
Feature Set E
•
Our Revenue $10.0M $17.4M $7.0M $10.4M $8.6M

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Surveys

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Anatomy of a Survey
Research Questions
Segmentation Questions
Screening Questions Screen out wrong people
Slice & dice answers
What we actually want to know

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Sourcing your Survey List
Marketing DB Marketing Lists
• Free
• Best results for us so far
• Sample bias
• Respondents not
incentivized – need
additional incentive
• Usually right audience
• Pay for name and email
• Respondents not
incentivized – need
additional incentive
• Mostly not
recommended
Panels
• $25 to $75 per
response
• Pay for response
• Respondents paid for
responding
• Quality? Screening
questions!
• Recommended: SSI

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Product Lifecycle
Pricing Strategy
Concept Features Development Market Adjust
Viability
Price Point
Segmentation
Preferences
Packaging
Licensing
Engine
Forecasting Impact Testing
When to Start Pricing Initiative

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Survey Tools Overview
Simple
Survey
Max Diff CBC
Conjoint
Price
Survey Monkey    $372/year
SurveyGizmo Market Research License   * $1,500/year
Conjoint.ly    ~$1,000/experiment
~$4,700/year
Qualtrics    Simple Survey: $5000/year
MD & CBC: +$10,000/year
Pricing Consultant    $30,000+
Recommendations:
SurveyGizmo + Conjoint.ly = $1,500 to $6,200 per year
Or New Qualtrics license ~$5,000
* CBC questions are fine but analysis is
very weak. Requires Marketing
Engineering for Excel (MEXL) license for
proper analysis, which is cheap
($100/month) but very hard to use.

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Resources
• Monetizing Innovation by Madhavan
Ramanujam and Georg Tacke
• Price Intelligently Blog about SaaS pricing
• The Strategy and Tactics of Pricing by
Thomas T. Nagle, John Hogan, Joseph Zale
• Getting Started with Conjoint Analysis by
Bryan K Orme

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Q&AQuestion?
99¢ each
@chris_kirsch
www.linkedin.com/in/ckirsch