Paul Orlando is the Founder of Startups Unplugged and is the author of the book “Growth Units”, a book that makes unit economics straightforward. He builds incubator/accelerator programs around the world, getting companies to solve problems that they couldn’t in other ways, which allows the building of autonomy and skills that keeps employee retention high and maintains the company’s top talent. Paul is an adjunct professor and runs the incubator at USC.
In this episode, Paul talks about calculating lifetime value as he shares why it is important to think about pricing in relation to the LTV.
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Why you have to check out today’s podcast:
- Understand the relationship lifetime value has with pricing and why it’s better to learn early and often than to fail fast
- Find out why overpricing and underpricing are present in various companies
- Discover why your lifetime value isn’t and will never be limited to one number
“People are really afraid of raising prices. I think it was Marc Andreessen who said, ‘a lot of problems go away if you can raise your prices.’”
– Paul Orlando
Topics Covered:
01:22 – How Paul got into the work of running incubators
03:16 – Building incubators and accelerators inside a company and changing the way people work to achieve a certain goal
06:05 – Why ‘learn early, learn often’ is a lot better than ‘fail fast’
08:32 – Writing a book about calculating lifetime value and its components; why thinking about pricing is important
17:15 – Pricing and lifetime value; discussion about over- and underpricing
21:00 – Thinking about lifetime value in relation to subscription and non-subscription businesses
26:03 – Your lifetime value is and will never be limited to one number; why you should model the sequence of flows
29:56 – Why Paul prefers using payback time as a metric as opposed to LTV/CAC
31:23 – Paul’s pricing advice for this episode’s listeners
Key Takeaways:
“I actually don’t want people to fail fast. I don’t want them to fail slow, either. But I’d rather that they succeed fast, or second-best – succeed slow. So, I’d like to say, learn early learn often rather than fail fast. Learn early – encounter the customer upfront rather than downstream, and learn often – keep that process going like you really probably have not figured everything out just yet. You need to keep iterating. There’s so much that you could test before you have committed serious resources.” – Paul Orlando
“If price is some metric of value or some measure of value, you want to be able to charge something. You don’t necessarily want a business that has to push prices as low as possible.” – Paul Orlando
“Lifetime value is not something that you can really get a full picture of until you’ve been out for a while.” – Paul Orlando
“These ratios or numbers that you hear about can be misleading unless you actually start digging in a bit.” – Paul Orlando
“If you can start to either shorten that time, taking pre-orders, or if there’s something that you can do with your own supply chain, tough today, but if there’s something that you could do there, you could improve your odds of being able to use customer revenue to grow.” – Paul Orlando
People / Resources Mentioned:
- Growth Units: Learn to Calculate Customer Acquisition Cost, Lifetime Value, and Why Businesses Behave the Way They Do: https://www.amazon.com/dp/B08GJVV8RJ/
- Win Keep Grow: How to Price and Package to Accelerate Your Subscription Business: https://www.amazon.com/Win-Keep-Grow-Accelerate-Subscription/dp/1631954784
- MoviePass: https://www.moviepass.com/
- Uber: https://www.uber.com/
- Dollar Shave Club: https://www.dollarshaveclub.com/
- Amazon Web Services: https://aws.amazon.com
- Coke: https://us.coca-cola.com/
Connect with Paul Orlando:
- LinkedIn: https://www.linkedin.com/in/porlando/
- Email: [email protected]
- Twitter: https://twitter.com/porlando
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Paul Orlando
People are really afraid of raising prices. I think it was Marc Andreessen who said, ‘a lot of problems go away if you can raise your prices.’
[Intro]
Mark Stiving
Welcome to the Impact Pricing podcast, the podcast where we discuss pricing, value, and the lifelong relationship between them. I’m Mark Stiving and my mission is to help your company win more business at higher prices. And helping us do that today is our guest, Paul Orlando. Here are three things you’d want to learn about Paul before we start.
He is the Founder of Startups Unplugged that builds incubator programs inside companies. This is going to be fun to talk about. He recently wrote a book called “Growth Units: Learn to Calculate Customer Acquisition Cost, Lifetime Value, and Why Businesses Behave the Way They Do.” I don’t believe he answers that last question, I don’t think anybody does, but that’s okay. And he’s an adjunct professor and runs the incubator at USC.
Welcome, Paul.
Paul Orlando
Thanks, Mark. It’s really good to be here.
Mark Stiving
It’s going to be fun.
I normally start out with “how did you get into pricing?” but I wouldn’t say you’re in pricing. How did you get into incubators? I guess we’ll start there.
Paul Orlando
No fair question, and I will chime in on the pricing one a little later.
But I got into incubators because I had the experience of, first, early in my career, working in a big corporate environment, but then actually founding or co-founding a startup in New York that I ran for a couple of years, and I managed to make most of the mistakes possible in a couple of years that I was doing that. And as I was figuring things out, I was looking around and I had a lot of other friends who were starting startups back then, and I became really fascinated in that process that founders go through in figuring things out or usually not figuring things out.
So, I specifically got into running incubators and accelerators because I was running like a founder roundtable series in New York, something I was doing on the side. I enjoyed doing that and I wanted to make it a bigger part of what I did. So, I looked for a new market to go into where I thought I could build a startup accelerator of some type. That’s how I ended up going to Hong Kong and building the first startup accelerator there, which was a great experience. This is back 2012-2013. And since then, I’ve kind of made that my focus area.
So, I’ve done four external programs of this type and then a bunch of internal ones for corporates, but I really enjoy working with groups of entrepreneurs, whether they are external, independent, or in house, and kind of sharing my experiences with them and just building a community around that.
Mark Stiving
I think that’s pretty fascinating. Now, I’ve worked with several external incubators and accelerators, have advised them and it’s fun, but what I find really fascinating is the idea that you build incubators or accelerators inside companies. So, describe one for us, just so that we all get a feel for what this looks like.
Paul Orlando
Sure. I’ll talk about a CPG company – a consumer packaged goods company – that I was helping a while back.
So, big company. They have their thousands of products on store shelves or you could buy them online, many recognizable brands, and in house, a lot of talents, a lot of expertise on the R&D side, on the marketing side, sale side, logistics. And even so, their experience when it comes to a new product being launched is most of the time, it doesn’t really work out. It doesn’t live up to the expectations that they had or the business model that they had built for it, or business case, I should say.
So, the question then becomes, well, what can we try to play with to improve our odds of success?
And so, the model that I worked with them that I typically work with existing organizations on is taking that in house expertise that you have, but kind of changing the way that you work. So rather than going from a concept to customer with a timeline of 18-24 months, which might be typical for that type of product company, trying to shorten that down a lot but run multiple iterations or like trying to spit out multiple products, whereas in the past, you might be working on just one with that same team.
So as an example, I worked with a team that was working on a new cleaning product in one situation or they had a bunch of those that they were working on and they had expertise in that area. Not at all my expertise, but they had done all sorts of R&D in that area and had their labs, they really understood what people were using their products for, and they were trying to work on another product. And so rather than go through that legacy model where concept, spin up the team, at 24 months later you’re on store shelves; instead, we ended up working on multiple iterations of that type of a problem set.
So, they came up with a few different potential products. We then tested them in the market, off brand, so they didn’t want to take that brand risk, but we ended up testing them. And from that, they ended up understanding, okay, what are people really doing? Or what are our customers doing that’s maybe outside of our knowledge today? Are they looking for other ways to solve a cleaning specific problem? If so, how can we solve that for them? If so, how should we be reaching them? You know, in other words, what’s the distribution like? How should that product be formulated? How should we express it? Like, all of those things that kind of go into that, you can test those things before you have spun up the entire team and spent two years working on it.
So that’s the kind of thing that I end up doing.
Mark Stiving
Yeah. The thing that keeps running through my mind as you were describing all these were fail fast, right? I want to get rid of those bad ideas quickly. And I’d love to go back and just for kicks, because it makes me think, why is it that if I’m going to spend two years developing a product of really smart people, it still fails? And I find that fascinating. And my gut says it’s because people are afraid to let go once they made the commitment. It’s like, we got to see this through. Is there something else that you see?
Paul Orlando
That is a big part of it, because imagine, you’ve already gotten the budget, you’ve spun up the team. And so, if this is what you expect to be a two-year process, in month six, if you start having this feeling of I think maybe we’re on the wrong track, now, what do you do? Do you really shut everything down early? You’ve already hired people. You’ve pulled people in from other parts of the organization. So, it’s really difficult once you’ve already committed those resources.
So, when it comes to that term, fail fast, I actually don’t want people to fail fast. I don’t want them to fail slow, either. But I’d rather that they succeed fast, or second best – succeed slow. So, I’d like to say, learn early learn often rather than fail fast, because that’s what I’m trying to do. I’m trying to get people to learn early. In other words, encounter the customer upfront rather than downstream. And learn often. Keep that process going like you really probably have not figured everything out just yet. You need to keep iterating. There’s so much that you could test before you have committed serious resources.
Mark Stiving
Yup. I think that’s a fair statement. But by the way, you just insulted the host. I just want to point that out. No, I think it’s fine.
Paul Orlando
Edit that part out. Edit that part out. Yeah.
Mark Stiving
No, never.
Okay. So, you originally sent me an email saying, hey, I think your listeners want to hear about lifetime value. And I’ve got to say, I don’t think anybody wants to hear about lifetime value.
Paul Orlando
Are you kidding me? What?
Mark Stiving
But actually, in my newest book – Win Keep Grow – I had a whole page on how to calculate lifetime value. Now, you wrote a whole book on how to calculate lifetime value, so I’m guessing I missed a few things. Tell me what it is you think I missed or give me the high level of lifetime value and why you find this so fascinating.
Paul Orlando
Well, I’m probably just a wordier writer, that’s all.
So, in this book, Growth Units, this is something that I actually put together for a class that I teach at the University of Southern California. This class is focused on lifetime value and customer acquisition cost, and I bring startups into the class and the students in teams work with these startups on one element of their growth. Now, I used to do all of this live at the whiteboard and we would kind of derive formulas, you know, together, live, and look at a conversion funnel and try to figure out what lifetime value is or what a payback period is and on and on for different companies. When everything went remote, that stopped working so well for me, because I kind of had that really interactive in person style of teaching. So, when it all went remote, I decided, let me just try to write all this stuff down. And what I ended up discovering was, at least hearing from other people, I had put together something that was useful to them in figuring things out.
So, the reason that I think it took a whole book – it’s a short book but it took more than a few pages for me, anyway – was there are so many ways to look at this question of what lifetime value is or what customer acquisition cost is. So, I break it into the components. So, for me, LTV, there’s a pricing component, there’s a cost component, and there’s a retention component. You can play with any of those things, but if you play with one of them, it’s probably going to impact the other two in some way.
So, the reason that I actually reached out to you even though I’m not a pricing expert is thinking about pricing is so important and I see so few people actually do it. In fact, one of the things that I love doing and I do on a regular basis, in my incubators or even in my classes, I will bring a pricing expert in to talk about the way that they have researched a demand curve, or they’ve done like your pricing sensitivity meter for clients of theirs, or the ways that they test pricing.
Because what I typically see startups do, anyway, not necessarily bigger organizations, but startups, I typically see them use some type of cost-plus kind of a model. Well, you know, here’s how much our costs are and we mark it up, you know, whatever percent. Or they just look around, they see, okay, our competitor is pricing $10 a month. Let’s also do that. That seems to be the right answer. Or, of course, they are guided into the model of well, it has to be free because you need to get the biggest market possible, you’ve got to grow really fast so, of course, it has to be free, and that’s the right answer. Now, something magical has to happen, so that in the future, you do end up making money in some way.
So, in this Growth Units book, I’d like kind of picking apart those different models and seeing how companies either did figure things out or did not figure things out, and how they get skewed in different directions, maybe unintentionally for them.
So, one of the examples that I give, and this is probably something that like all of your listeners know about, is a few years ago, we had that big news from that company, MoviePass. They had been around; I think they started maybe 2011. But around 2018, they had this new offer. $9.95 per month, you could go see a movie a day in a theater. And it got a ton of press, because it was a ridiculous type of offer. Like, how could it possibly be so cheap? And people were speculating, oh, there must be some deal with the theaters. They’re getting some commission from concession sales, something like that.
Well, the reality was the management of that company had an agreement, where if they were able to sign up 150,000 additional subscribers, they got this sizable bonus. Well, they got the bonus, because they hit that 150,000 new subscriber number in two days. They thought it was going to take a year. They got it in two days. That’s having a customer acquisition cost of zero. It’s all word of mouth. It’s just too good to be true. I better sign up for this and start watching movies every day.
And what they had used was some assumptions around pricing that didn’t really make sense for the average population. So, they thought, hey, in general, people only see four or five movies a year. Even if we’re paying full price – which they were, back to the movie theaters – we more than cover our costs. Even if people doubled the number of movies they see a year, we cover our costs. And of course, what ends up happening is with $9.95 a month, you attract the people who are the movie fanatics, like they are seeing five movies a month or 10 movies a month, or you would now encourage people to see even more. So as a result, that’s an example I think, where, you know, if they were thinking of lifetime value, the whole thing falls apart. Their assumptions really held no water. And that was something where, you know, they went so aggressive on price, that yes, they did sign up a ton of people, but it also drove the business wonder.
Mark Stiving
Let me push back on something for just a second. I love the entire story until at the very end, when you said if they were focused on lifetime value, they wouldn’t have made these decisions, and I’m not sure that’s true. What I think the real mistake was what you pointed out earlier and that was they didn’t understand what their costs really were going to be. So, if it was true that people only saw four or five movies a year, they were charging 10 bucks a month, lifetime value looks great, with zero customer acquisition cost, hey, this is a phenomenal business. So, it was really the misunderstanding of the cost.
Paul Orlando
True, but that’s one part of lifetime value. So, in other words, if from the perspective of MoviePass, they have 95 of revenue coming in, but their costs going out are multiples of that. Because in their model, as it was set up, they had to pay full ticket price back to the theater for having one of their guests show up.
Mark Stiving
And so, the implication of the story that you’re sharing is they should have calculated this lifetime value before they launch their business. And what I see lots and lots of companies doing is launching products and then using churn rates to calculate expected lifetime values. Is that incorrect? Or how do you look at this?
Paul Orlando
No, you are right in the sense that lifetime value is not something that you can really get a full picture of until you’ve been out for a while. I guess my point on MoviePass was that their assumptions just had to be off like a tiny bit for the entire thing to fall apart. If you’re building instead, say, also a subscription business where even if we have this expected rate of churn and those drop off, we know that we’re paying back on the customer acquisition costs in a few months, as long as we can keep people that length of time, we’re good. And we can probably improve on that rate of churn, so we can shorten the payback period.
This MoviePass example is one where they would need to only attract the people who did not see movies in order for it to work, which was the strange thing about that, like you provide value but you want the people who actually don’t want the value as customers. I guess that was my comparison there. Yeah.
Mark Stiving
I think that was spot on. And they messed up their pricing metric, they were charging for the wrong things, so I think you’re absolutely right with that.
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Mark Stiving
Let’s talk a little bit about pricing and lifetime value, because it looks like you see this a lot. And one of the things that I see in many, many super successful companies is they come out with a low price. And I don’t know that they do that because they think they’re trying to penetrate the market or they just think that’s how much value they have in their product. And then over the course, as they become more successful over the course of several years, the price is 10x. I mean, it’s hugely higher than it was when they first launched. And so, do you see that as a mistake, a strategy, or just the way the business evolves?
Paul Orlando
Maybe all three of those.
Mark Stiving
Yes.
Paul Orlando
I mean, there are certainly many examples of companies – even if it is intentional – that think, oh, this is the model that we’ll use, we’ll go out free or very close to free, and then we’ll inch the prices up. But do they actually survive that long?
If price is some metric of value or some measure of value, you want to be able to charge something. You don’t necessarily want a business that has to push prices as low as possible.
I always think of some of the pricing experts I’ve gotten to know over the years, showing me how if you move prices low in some situations, you actually have less demand because you’re now basically telling people this thing is not very good. And mentally, I always think of the image of, say, you want to buy a car, some nice type of car or whatever, Mercedes, Tesla, and somebody says, I have something that’s, you know, it’s that kind of a quality, and it only costs $100. You would think this is ridiculous. Like, it’s a lemon, like, stay away from me.
So, we’re trying to do these two different things. We’ve both trained people that they should be thinking about the lowest price possible, at least in a startup mentality, but their customers might interpret this very differently. Also becomes very different if you’re doing something that’s more consumer facing versus enterprise facing. But you can learn a lot by running an experiment.
Like, I’m not sure if you’ve talked about this or looked at this, but a couple of economists a few years back got access to Uber’s pricing data, and Uber will basically change its price based on certainly location but also time of day. If there is bad weather, you know, they have that surge pricing, and on and on. So many variations. They got access to Uber’s pricing data and they were able to actually draw the demand curve for them, which is something you don’t actually normally see. Like, you might see that in a textbook, but you don’t actually typically see that for a company. And even then, they discovered Uber is underpricing. Like, they could be charging a lot more during these surge pricing events, they underprice.
So, here’s a question. Why would a big company like that do that? In theory, they see people are willing to pay more. Why are they paying less? And so, this is the other piece of pricing which kind of ties back to some of these other examples. You have this public opinion effect. Uber had a lot of bad press about, you know, charging whatever, 5x, 10x during big storms that happened around the country in past years.
Maybe you don’t actually want to push it as far as you could go. Maybe you actually want to back off in some cases.
That’s another extreme example. For the most part, the startups, I think, tend to underprice.
Mark Stiving
Yeah, I think that’s a fair statement.
One of the things that I found pretty fascinating as I started diving into studying subscriptions and thinking about lifetime value is these concepts that we emphasize, because we’re doing subscriptions, actually make a lot of sense in non-subscription businesses. So, when you start thinking of lifetime value, Uber is not a subscription, right? Uber is truly I’m going to buy something and use it, and so if they upset me, if they make me mad, I’ll punish them by not using them again.
Paul Orlando
Yup.
Mark Stiving
And so, the lifetime value could still be that, hey, it’s better for them to underprice, because they keep me as a customer all the time, as opposed to getting the most from me in that during that storm.
Paul Orlando
No, that’s a great point. You’re right. Uber is not a subscription. And so based on the type of business you have, you have to take that into consideration. And I guess I’d even say, subscription businesses themselves are different. Like, there are some subscriptions that are about you’re trying to maximize customer retention. So that might be Dollar Shave Club, right? Which started out to me like, why on earth would I want to get this delivered? This is something that’s, you know, I know how to buy razors and shaving cream. Why on earth would this be something I wanted to get delivered? Now all of a sudden, I have predictability, you know. I get you on a monthly delivery. I can estimate how long you’re going to be, like an estimate, how long you’re going to be a customer of mine. I have predictability rather than, you know, one month, I might have more people coming in and buying my products versus the next. But there’s also subscription businesses or I’ll say they function like subscription businesses but they really do something else, and that’s the ones that are about removing fixed cost or turning fixed costs into variable costs, I’ll say. So, this might be something like Amazon Web Services.
Previously, for my hosting or other computing services, I buy the servers, I set them up in racks, position, cool and keep them in a data center, and I have that upfront fixed costs, the team that operates that. I use something like AWS and I turn all that upfront fixed costs into a variable cost that goes month to month. And there again, you get plugged into something like that, you don’t want to go back to the old days. That would be like, pretty painful, making a change. So, yeah.
Mark Stiving
I would think of those as frequent recurring revenue type businesses, right? I think anytime you have this recurring revenue, you could treat it like a subscription.
Paul Orlando
Yep.
Mark Stiving
But now, I’ll play another one by you that’s the exact same thing but it doesn’t feel the same. I used to drink a ton of Diet Coke. Is that a massively recurring revenue stream, and could they have treated that like a subscription even though it wasn’t a subscription?
Paul Orlando
Yeah. So, in other words, could they have treated that like a subscription as in they just send you a case every month?
Mark Stiving
Sure. Or they find some way to track my usage so they could actually figure out what’s my customer lifetime value, and all the things we talked about when we think of subscriptions and recurring revenue businesses.
Paul Orlando
Yeah, that’s a great example, because I’ve been wondering the same thing. Like, as in. If there was some way to track who does buy that unit of coke, or even like, did they finish the can or bottle? Did they give it to somebody else? Are they the one drinking it? That might be a failure of just being able to track something like that, but I could see, you know, a company like Coke, trying to figure something like that out in the future. It’s also an example of a company that has, like, the true margins on a can of Coke are really high, right? It costs water, some sugar, “secret formula stuff”, and you know, the cost of the can is actually greater than the cost of the ingredients in there. And that’s why a business like that can spend so much on marketing. Like they spend like, I don’t know the numbers, but a crazy amount, just on reminding people about these products. And they can do that because the margins on each can are so big.
Mark Stiving
Yeah. So, I love having these conversations because they cause me to think of things I never thought of before. So, I love Diet Coke, as in. I used to buy it all the time. It really was recurring revenue. Uber, I could buy all the time, or AWS, I could buy all the time. But the difference is Uber and AWS can track me. They know what decisions I’m making, how much I’m buying, what I’m doing, and Coke can’t today. And it may be that’s why they never said, hey, let’s treat this like a subscription or like a recurring revenue or what’s Mark’s lifetime value for buying Diet Coke. Pretty interesting.
Paul Orlando
Yeah.
Mark Stiving
Okay, so what else am I missing in lifetime value?
Paul Orlando
When I talk to people about it, I often just try to understand how they are thinking about it. So, the typical issue that I have is often when I ask people like what their lifetime value is for their startup, their company, and they actually tell me a number. So, the reason I have an issue with that is, once you really dig in, it’s never one number, first of all. If you give me one number, that’s like the average of all your customer segments and how different users are actually using your product. So once you dig in a bit, you probably can segment out and you can say, well, this segment, it’s $100. This other one is, you know, like $500. This one is only $10. You can actually go into some specificity about that. You can also then talk about how those segments or how you might be able to grow each of those segments. Some might be able to grow by word of mouth, some might be paid acquisition, some you might need like a sales team to actually bring customers on.
And then I also like to go into rather than just one number, even if you have one number for each of those segments, what are the sequence of flows that happen? In the book, I talk of LTV as a river. So, you don’t get it all upfront typically, anyway. You’re getting this through repeat customer interactions over time. So, I like to model that out. Typically, just a simple way of doing that is in a spreadsheet format. So, you can see, okay, in some cases, do I have to commit to some amount of time of I’m giving stuff away for free? And so, this might be a premium model, maybe I have free products or free option that people can use, there might be some cost to me. But I’m willing to eat that cost for a while, because I know some percent of people will upgrade to the premium version and then the payback period is, you know, such and such a time.
But actually model that out. And the reason is, you could have what seems to be a favorable LTV or favorable LTV to CAC ratio, but if you don’t model it out, you might have a situation like this one, say, oh, it costs us $10 to acquire customer. Lifetime value is $50. It’s great. But you model out with the timing that you discover that, well, we only actually collect all that $50 after three years. Maybe you’re out of business. You pay the $10 upfront and it takes you three years to get $50 back. You might have already shut down by that point or it’s constricting how you can grow.
So that’s another way I like to work with startups or at least like to dive in and help them understand these ratios that you hear about or like the numbers that you hear about. They can be misleading unless you actually like start digging in a bit.
Mark Stiving
Nice. I get annoyed by saying LTV/CAC all the time. And so, I actually named it the viability metric. So, are you a viable as a company or not? And so, what number do you use to indicate viability?
Paul Orlando
So, I’ve ended up kind of staying away from those numbers. So, there are these rules of thumb, and you typically see that 3:1, 4:1 kind of ratio for LTV to CAC. That all goes out the window, if it’s a timing issue, in other words, if it takes a really long time to get the payback.
So, to me, the better way is actually once you have the data, try to model out that sequence of flows. As in every month, this is what we’re spending on serving that customer. We know what we spend upfront to acquire them if it was anything, and then we eventually know how much margin we’re getting back in return. But it takes some time to get to that point.
Mark Stiving
It sounds like you almost prefer the payback time as the metric to use as opposed to the LTV/CAC
Paul Orlando
I would prefer that. Yeah, right. Exactly. Because that tells you a bit more. For example, related to this is hardware companies, traditionally, they’ve been constricted in how they can grow because they have to buy components, they have to do assembly, they build inventory, and only then they can sell the thing, and then somebody buys it, and then finally, they get paid based on whatever the terms with their payment processing are. And months can go by. Like easily, four months can go by between when they actually spent on building an inventory to when they get paid. And that’s a reason that traditionally constricts the growth of hardware companies. So, if you can start to either shorten that time, taking pre orders, for example, or if there’s something that you can do with your own supply chain, tough today, but if there’s something that you could do there, you could improve your odds of being able to use customer revenue to grow. But payback period when it comes to the CAC and LTV, I do like better. It’s getting to, I think, a little closer to something that’s actionable. In general, I just like modeling out the whole thing.
Mark Stiving
Nice. Paul, I think we could talk for another hour but we are out of time. I have to ask you the final question though. What’s one piece of pricing advice you would give our listeners that you think could have a big impact on their business?
Paul Orlando
Raise prices.
Mark Stiving
Oh my god. How true is that? Gosh. So, few people realize it and they’re terrified of it.
Paul Orlando
It’s true. No, people are really afraid of raising prices. And I think it was Marc Andreessen who said a lot of problems go away if you can raise your prices. So, I hope between listening to your podcasts and reading your work, that people can sort that out and figure out how to raise prices.
Mark Stiving
I think that’s possibly the best answer to that question I’ve ever gotten.
Paul Orlando
Alright.
Mark Stiving
Paul, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Paul Orlando
You can find me on LinkedIn. I’m porlando. I believe it’s my ID. But Paul Orlando. You can look me up on Twitter, porlando also. And if you like, check out that book, Growth Units about lifetime value and customer acquisition cost.
Mark Stiving
All right. Episode 159 is all done. Thank you for listening. If you enjoyed this, would you please leave us a rating and a review? They’re very valuable to us. And if you have any questions or comments about the podcast or pricing in general, feel free to email me [email protected]. Now, go make an impact.
