jbusiness

Sales Manager

What return on investment numbers are buyers comfortable with?

If you are trying to deliver value based pricing, what ROI numbers do buyers find tolerable?

I'm in a position where I believe can conservatively deliver a 20x return on money. However, the pricing is flexible since we haven’t delivered it yet.

I’m hearing numbers as low as 8x and won’t let myself go below 20x.

Oh sage sales people. What’s fair for both the buyer and the seller?

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📈 Closing

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10 comments

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Chep

WR Officer

Bitcoin Adoption Specialist

What's fair is an honest number with a clear process for how the R.O.I is calcuted

jbusiness

Catalyst

Sales Manager

Completely agree the process to calculate ROI needs to be clear and most importantly the buyer needs to agree.

What I'm asking is if the buyer agrees the solution will generate $1m in new money then what should they be comfortable paying to obtain that?

In this example charging $50k (20x return) feels like I'm getting ripped off. Does charging $125k (8x return) make the customer feel like they are getting ripped off?

Chep

WR Officer

Bitcoin Adoption Specialist

Good question. Every buyer is different, but maybe something in between. 10x has a nice ring to it and would still generate 100,000 (In the example provided above)

softwaresails

Politicker

Sales Manager

Yeah why are you asking us what a fair ROI is? We can’t determine that.

Use what the actual ROI is for the product.

SADNES5

Politicker

down voters are marketing spies

I think you're looking for the IRR?

ROI has an END date.
IRR is indefinite.

ROI would be a in/out transactional meeting. Buy this product once. You'll make your money back by X date.

IRR would be more like, buy this product, and you'll see an annualized Return of X annually.

jbusiness

Catalyst

Sales Manager

I’m not sure that’s what I’m looking for.

In my world the rate of return would increase annually as adoption grows and new customers come on board. What it doesn’t account for is a theoretical new product that gets developed or a new revenue stream that gets created.

They would pay $X every year and for 5 years I can lock a price in.

is IRR the better model?

SADNES5

Politicker

down voters are marketing spies

Yes. You want long term. ROI is fine for napkin math, finding when break even is. But IRR has the math for increases in user base etc. So their savings get better.

SADNES5

Politicker

down voters are marketing spies

=IRR in excel. I use incremental cashflow etc to build the models. I wish we could DM I'd walk you through it.

jbusiness

Catalyst

Sales Manager

Thanks for the offer. I’ll kick it around tomorrow and see if I can figger it out.

CuriousFox

WR Officer

🦊

What did you come up with?

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jbusiness

What return on investment numbers are buyers comfortable with?

10 comments

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