Video: Identifying Negative Ripple Effects Before Tweaking Software Pricing

Transcript of Chris Mele’s talk:

A Company, you know, starts as a bit like a gang on the run. You start in the garage to go through startup, then you’re an emerging company with a stable base of customers and eventually you hit your growth stride. And then eventually, if you get big enough, you’ll turn into an enterprise company.

But when you’re in your growth stage, the company becomes more like an organism. And it’s very complex. All the sudden, some of the techniques that you used before have unintended consequences, and unintended ripple effects. And I think it’s at this moment where professional help and pricing is really important, because there’s so many variables to come into play. It’s a bit like, I would imagine what Warren Buffett maybe went through in his early years; when his wealth was pretty small, he could deploy capital with some pretty predictable consequences. But as he started to amass a tremendous amount of money, all of a sudden, if he was to go all in in the market, he might actually change the market, right?

So there are these real effects that happen when a management team, especially the founders, begin to tweak variables. So what might seem like a really innocuous or subtle change which maybe isn’t that big of a deal. If we make a little tweet to our lead gen, you know, this group is going to get bleeds of a certain characteristic, and when we make a change to that it can have far reaching implications. If we make a little change to our sales count program, all of a sudden, we can have far reaching implications. And if we make little changes to our pricing, we can have, sometimes, disastrous consequences.

So it’s really important as the organization gets bigger and more complex, is that we find ways to proceed with pricing, with thoughtfulness with discipline with some sort of frameworks and strategies that really work. Otherwise, we’re just pulling levers. The thing that really is painful about pricing is, unlike in product where you can reverse a lever, some levers that you pull on pricing, you can never pull back and I think that’s what makes pricing so complex.

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