class_fact

Account Executive

Job at Start-Up with Complicated Pricing Structue

Hi all,

I was hoping to get some advice at managing complicated pricing structures at a start-up. I've been working at a start-up in a small country in Europe for around 4 months now handling inbound leads from around the world. I haven't made any sales yet. The discovery meetings usually go well and solution itself is well-made compared to competitors. But I'm falling short when it comes to the quotes.

We have a base price for the software license, a one-time fee for designing the solution we are selling (we design every solution to order by the customer) and recurring fees for different types of communications generated by the solution. We don't have a set price list and my boss (the founder) seems like he makes up the prices for each quote depending the country the company is in and how much he thinks we can get. For instance, we sell the solution for around 50% of the base price in our country, but much more expensive internationally in the "money" countries.

When I'm quoting by myself, he usually says the quotes are too low or occasionally too high. Which makes me rely on him to help me with a quote that he is happy with. One problem is, the quote that he gives is usually way more than the customer is willing or able to pay (and I find myself typically agreeing with the customer). It often does not make sense for them to buy it at this cost-benefit ratio. Another problem is, is that my company has loose policy for attendance and my higher-ups are often not available to help with quotes.

Has anyone been in this situation or have any advice?

Thank you.

👍 Sales Process

11

10 comments

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cw95

Politicker

6

Head of SDR

I'd look into the different country part a bit more, might be a bit more too it in terms of currency exchange, tax reasons etc etc etc.

What's your boss's background? Is this his first time founding a start-up? I have read a lot on this platform that sometimes first time founders are of course, greedy!

I have been in a similar scenario regarding a CRO that made up prices and sold too high - rarely got the sale and ignored the smaller ones.

What I did is simply presented a slide / excel sheet with all the potential revenue the company could have made if you simply went off of what the prospects / market are willing to pay. Usually at a start-up you need to get the small sales to gain new logos and get yourself into the market which I imagine your boss has ignored.

Put all the 'could have hads' from your closed lost pipeline and then reiterate the importance of building that customer base to then go into the big deals where you might be able to play around with the price a bit.

Or something like that

Gasty

Notable Contributor

4

War Room Community Manager

@class_fact .
It’s right here.

Since it’s a startup, try creating a pricing sheet for the company, give them an idea on how it should be, while they already know but flexibility is very much required for your job. Tell them the problems you’re facing and just prepare and present, don’t talk in the air. It almost never works out that way.

Sunbunny31

Arsonist

4

Sr Sales Executive 🐰

I like this a lot.

jefe

Arsonist

3

🍁

Really great approach, well said @cw95

MRK47

Tycoon

1

VP of International Sales

Really strong advice. Out of interest, is there a finance team (probably just 1 person if a small start-up)….worth collaborating with them for help with setting pricing especially per country prices (as they’ll have insight on any tax and exchange rate variables plus can act as a second champion when presenting pricing suggestions to the founder). You also mention variable fees depending on type of comms generated…if using a 3rd party comms provider, finance will have insight into those too to ensure they are factored into calculations. If no dedicated finance, still important to get cross-functional support...perhaps marketing (who are incentivized to see MQLs convert)?

The main friction points for you are no set / consistent pricing to refer to (or easily explain to prospects) and lack of accessibility to higher-ups when help is needed with quoting. Creating the sample pricing sheet will address both issues as with a pricing guide, you can quote autonomously. And as already mentioned, to sell the justification of the need for a pricing sheet, show value of closed lost (both initial opportunity value as well as potential lifetime value). Not knowing your customer base but if selling to different ICPs, maybe create price packages for each one….and to appease the founders habit of over-valuing your product, price one of those ICPs above market (for now)…..if he sees lower pricing across the board, he will likely push back….your objective is to secure a handful of quick wins which then allows for a land/expand model to prove the concept and create momentum (if you have specific ICPs already in your pipeline who show strong intent, try to create a more competitive price package for them to get a quick win).

Pachacuti

Politicker

5

They call me Daddy, Sales Daddy

Here's what you do:

YOU figure out the "price to win" and then tell your boss why its the price to win. Be bold. Don't side too much with the customer (who wants it for free) or your boss (who wants to charge too much). You need to tell your boss, proactively, why this price makes sense. And remember, people buy based on emotion and justify with logic.

Sunbunny31

Arsonist

4

Sr Sales Executive 🐰

Spot on.

Goofyfoot

Personal Narrative

1

Operator/Independent

I can relate to this as I’ve had a few roles where pricing wasn’t consistent and based on things like location. First tell the CEO that if he ever wants to get more funding, sell the company or go public having consistent pricing policy holds a lot of water with investors and legal due diligence. This can be a real red flag in those scenarios. And it’s a strong sign of a well run RevOps team and smart leadership. Secondly when you have a firm policy it serves as a baseline across all sales to really understand if your pricing model works to help win deals and your not leaving too much on the table. Which also feeds into my first point. Good luck!

SkunkBum

Good Citizen

1

Head, Sales

I've been in a similar position, so I want to take different angle for you to consider.

First, I second all the comments documenting your own price list and being firmer internally with what you think will get the deal done and why, particularly from @Pachacuti

Also, try to to get some autonomy to set your own pricing in certain circumstance (with exceptions)

However, there may also be something to learn from your founder, and there may be method to their madness, so don't discount them too quickly. Since they were the first sellers at the company, and have access to insights you do not. Having access to them can be valuable for your development, and help you help the company mature it sales process.

What I learned from my startup experienced was if in doubt, charge more.

ChumpChange

Politicker

1

Channel Manager

IMO your post tells me that you don't have a functioning revops or finance arm that creates standardization for pricing. The goal isn't to charge one customer a lot of money for a single project. The goal is acquire a customer at a fair price, demonstrate your capabilities and build enough credibility to where they now know become repeat customers and create more opportunities in the future. Do this enough times and you'll create a flywheel that's completely built on reputation and credibility.
"Stay small enough, long enough and you'll be big enough soon enough."

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