Y Combinator Startup Podcast
How To Price For B2B with Tom Blomfield | Startup School
Nov 16, 2024
In this insightful talk, Tom Blomfield, a YC Group Partner with a wealth of experience in guiding startups, reveals the secrets of pricing for B2B products. He tackles the perennial question of how much founders should charge and discusses effective pricing strategies tailored for software. Discover the importance of value delivery, competitive positioning, and avoiding price wars. Tom's practical tips will help you set a price that resonates with customers and drives sales.
17:45
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Quick takeaways
- Establishing a value equation through collaboration with customers ensures that pricing reflects the product's potential savings or benefits.
- Choosing a straightforward pricing structure aligned with industry norms enhances customer acceptance and facilitates smoother sales processes.
Deep dives
Understanding the Value Equation
Establishing a value equation is crucial for determining product pricing, which entails collaborating with potential customers to identify the value the product will deliver. This includes quantifying metrics like cost savings, time efficiency, or revenue increases, with all findings documented for clarity. By demonstrating this value clearly to prospective customers, especially to those responsible for financial decisions, the product's price can be justified effectively. For instance, if a customer service tool can save a company $2 million by optimizing efficiency, charging around $700,000—about one-third of that value—creates a win-win scenario.
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