Impact Pricing Podcast

Bill Wilson is the co-founder and CEO of SalesRight. Over his two decades of working in the Canadian software industry, he has closed millions of dollars in deals — all driven by his dedication to enhancing Canada’s software industry. Bill’s thoughtful and team-centric approach to leadership builds environments that promote innovative thinking and passionate problem-solving.  Previous to SalesRight, Bill was the CEO of app-agency MindSea, which has developed some of the top rating apps in North America, often featured by Apple. 

How does an expert in developing apps found his way to be an industry thought leader in pricing?  And how he effectively channeled his knowledge in complex SaaS pricing to offering intelligent and interactive pricing solutions?  Bill Wilson will answer all these questions in today’s episode.  Tune in and learn more about the SaaS pricing structure and metrics, how sales enablement tool works, and his concept on sales compensation plans. 

 

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Full Interview Transcript

(Note: This transcript was created using Temi, an AI transcription service.  Please forgive any transcription or grammatical errors.  We probably sounded better in real life.)

Bill Wilson: I think the biggest thing for me, and I’ve talked about it a lot today, is choice and being able to give people a few options that make sense for them and allow them to participate in that pricing conversation and surface it as early as you can.

[Intro]:  Welcome to Impact Pricing, the podcast where we discuss pricing, value and the unbreakable relationship between them. I’m Mark Stiving and today our guest is Bill Wilson. Here are three things you want to know about Bill before we start. He is co-founder and CEO of SalesRight, a company that’s focused on B2B SaaS pricing. Boy, that feels good. He spent most of his career in software development and management. And in 2007 he founded MindSea development, an app creation company that’s created very popular apps and the company’s still running today with Bill as chairman of the board. Welcome, Bill.

Bill Wilson: Hi Mark. Super great to be here. Happy to chat about pricing. Let’s do it.

Mark Stiving: Me Too. Me Too. How did you get into pricing? You went from apps to pricing?

Bill Wilson: Well, yeah, it’s a, it was kind of a natural progression. So when I first started, you know, like, it’s funny cause like, you know, if you’ve got to sell something, you’ve got to figure out pricing and packaging, right? So when I first started MindSea, it was an agency and it still is and we sold services kind of on a cost of goods sold basis, right? So we figured out how much it would cost us to do it. We’d mark it up and we’d sell it, right? The classic, you know consulting kind of model. And you know, we put a lot of time into figuring out how much projects should cost and you know, how to present it to our prospects and all the rest of it. But what we found was, is that we’d get into these late-stage deals and we just, we weren’t closing them. Right? And so I started to think about how we were actually presenting and pricing things and switched to… And did a bunch of reading and research as a typical technical guy I am. And we switched to a more value-based, you know, model around our pricing and, you know, started giving people more options and a few more choices, but started taking away the conversation about hours and you know, how long is that gonna take and all the rest of it. And we started selling things more in a packaged way. And that, that was sort of my real introduction into the pricing space because I realize now that it’s basically the core of pretty much everything. You know, one of the surefire ways you want to raise your revenue, you want to increase your revenue, raise your prices. Like, you know, and then how do you go about doing that? You know, like all of the pricing and context around that. So that’s how I got into it. So it was sort of a requirement as I grew the business,

Bill Wilson: I have to say that I did not expect that answer, but I absolutely loved it. That was fabulous. Companies who struggle or people who have that epiphany that says, oh, we can go from cost-plus to charging how much value we deliver to our customers. Whoa, what an epiphany. That is awesome. So if I were to ask you your biggest mistake in pricing, would it be all of the cost plus time or do you have a bigger mistake?

Bill Wilson: There are two things. So I often say, I’ve often been raised with this idea, like do whatever it takes, right? To get the job done. And oftentimes that, that leaked into my business. So I would, and it’s not bad, but I would get into conversations around pricing with myself and I would talk myself down, right? So we’d sit down and do a cost-plus model on a big app build, and we’d come up with a number and we’re like, you know, it’s X dollars. And we’d go, we’d look at each other. Me and a couple of us at the beginning and we look at each other and it goes like, it can’t be this much. Like there’s just no way. Right? Why is it going to cost this much? So then we would, we would trim it down. We go look, the prospect’s never like, they’re never going to go for this.

Bill Wilson: And then so we would cut it down and then we’d go back and we’d present it again or present it for the first time and they would have sticker shock even on our already reduced price. And then we found ourselves like reducing it more and you know, it’s sort of that confidence in your pricing and knowing what you’re worth and so, you know, know what you’re worth and charge it is a really big, you know, that’s a big thing in that space. Like you’ve got to be confident that what you’re doing is worth the money. So that is probably my biggest mistake. I remember doing a deal, I’m gonna embarrass myself here. I think it was, I think it was $150,000 deal. We took it down to like 110 or something and we went to them and then we ended up doing for like 70 and then we get into it and realized that it’s way bigger than it ever should have been anyways. And I think we ended up spending like we were so underwater on that deal. It wasn’t, it wasn’t funny. So that’s probably one of my biggest mistakes. So it is that that time period of doing the cost of goods sold.

Mark Stiving: Yeah. And the two lessons I would pull out of that, which I think you just express was number one, we often don’t have confidence in our prices and in our ability to close the deal. But the second lesson, which I really like is once you shift to value-based pricing, now all of a sudden I understand the value to the client and I can communicate that in the sales process when I’m delivering whatever that price is, it could have been a 150 k when I’m delivered $500,000 worth of value, why wouldn’t you pay that?

Bill Wilson: Right. And, and we found that as we went along and also switching to that value-based model really let us experiment with some of that pricing. Like, cause then we could really easily just say, well this package that we’ve been selling for, I don’t know, 8,500 bucks for all this time, let’s try and sell it for 12,500. You know, like, are we giving that much value? Cause everybody says like they look at it and I’m like, wow, that’s a lot of value for 8,500 bucks. First clue, captain obvious, captain obvious over here. But you know, like those kinds of conversations. So it’s been an amazing vehicle for us to… I mean it’s doubled our deal sizes like at MindSea, you know before I started sales right at MindSea like that was the effect of switching to a value-based pricing model.

Mark Stiving: Nice. Okay. So tell us about SalesRight. What do you guys do there?

Bill Wilson: So we focus on late-stage deals in SaaS. So specifically around pricing conversations.

Mark Stiving: Wait, what’s a late-stage deal?

Bill Wilson: So from that time when you’ve already had your conversation. So a typical sales SaaS sales process looks something like most companies will have two or three tiers on their website that you can pick from, you know, punch in your credit card and get started. But there’s often, you know like 70% of those companies or some metric like that have a customer enterprise tier. So you have to talk to sales and that process looks like, you know, you’re talking to a BDR, the BDRs doing some minor qualification, you get handed to an account executive and from there you do a demo and then eventually you get to this pricing conversation. So by the time you get to that pricing conversation, you’re pretty well like you know where you are from a… From the prospect’s point of view, you know that you’re interested from the sales person’s point of view, you know you’ve communicated value and now you’re in that stage where you’re doing some negotiation.

Bill Wilson: You usually put a proposal together at this stage and then you go through this whole back and forth. And that’s where I think things are busted. Like that’s, for me, that’s where I thought things were really broken was what was end up happening is that people would get sent a PDF or an email with one price in it, like one option. It’s like this is what you told me, this is what I think you need and here’s how much it costs. So now I’m left wanting, right? As a prospect I’m sitting there going, well what if I wanted to do this? Or what if I wanted to do that? Like I want to be able to explore some options. It’s crazy, right? Cause like we all want to choose our own destiny, right? Like we all want to participate in that. We’re savvy buyers. People have been buying on the Internet now for a couple of decades.

Bill Wilson: We’re all used to it. We buy based on trust and all the rest of these things and yet here I’m dealing with a salesperson that’s, we’ve switched away from a model where you’ve given me tons of choice on your website to this model where I feel like I’m buying a used car. That’s where I was seeing a problem and that’s where I thought what we had been doing at MindSea, it could be really applicable for that SaaS space cause they already understand value-based pricing and packaging, right? They are, they’re already there. But inside that late-stage deal, instead of sending off, you know, a PDF or you know, recycled PowerPoint presentations, you’re sending off an interactive pricing guide that’s been configured for them. It’s got their name on it, it’s using their language, it presents a package for them that makes sense for them, but also allows them to explore other options.

Mark Stiving: So this is sounding really interesting. First off, is this a software package that you’ve written or is this a process that you teach?

Bill Wilson: It’s a software as a service model and there is elements of teaching in it, but generally it’s, it is a software as a service. It’s a sales enablement tool for those late stage deals. So when you’re at that stage and you’re ready to talk about pricing, you use this instead of sort of proposals or quotes.

Mark Stiving: Okay. So we go through the 20 different features or a hundred different features that are possible. And I could give you different quantities of different features and different capabilities. In the old days, I would’ve said, oh, here’s how much of which feature you need. Here’s your price, here’s your PDF file.

Bill Wilson: Yup. So now you do the same thing. You listen to them, you understand their pain and you try and put together a package that makes sense for them. But instead of you typing a number and saying you need 25 users, you set the slider to be 25 users and then let them play some what-if analysis with that? They can slide it up and down. They can pick different user amounts they could pick or whatever the variability is in your deals. And that’s the challenge, right? Often in SaaS, you’re selling platforms, right? You’re selling platforms and platforms have different features. So you’ve got a platform fee. You often have a per-user fee or some other variable fee. You’ve got ad-ons and other things that they need to be able to configure. So you’re just trying to make that a bit more interactive, right?

Bill Wilson: So that they can actually see how the pricing’s derived and ultimately what I’m trying to do is change the question from, you know, given that sort of single option aversion approach, you know, where you’ve got, here’s your single option. I’m probably not going to buy from you at all. My question now is yes or no. So if I can give you a few options, then I’m changing that conversation from, you know, am I going to buy from you so what am I going to buy from you? And I think like a seller, I’m in a much better position if I can do that. You know, it was like walking into the car dealership and you’re to the point where you’re picking out the leather color… the trim, you know, on that little configurator. They know that you’re pretty far down the process. So it’s the same type of thing. We want them to be compared with them to be comparing us against ourselves. Right? We don’t want them off comparing against other competitors and things like that.

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Mark Stiving: I love this concept. But you’ve heard of the paradox of choice before.

Bill Wilson: Yes. Yeah.

Mark Stiving: Let me tell a quick little story, if I may. I have a custom made titanium bicycle from a company called Seven. Before I bought the bike, they sent me this questionnaire of, you know, there are three or four pages of how do you ride and how stiff do you want it and how well, and I was scared to death that I was going to buy the wrong bicycle because I didn’t know what I needed. I was like, just tell me what I need and send me that. Would you please? And I could see if you gave me too many choices. I couldn’t decide.

Bill Wilson: Yeah. And that’s really where the education piece comes in a road. How to actually structure your pricing. I’ve seen people with like five or six variables and it’s too much. Right. I think the best way you can do it, you’ve got to pick your value metric, right? In SaaS, like what does it people are going to pay you for? What is the biggest value they get from it and charge them as they use more of it? In some cases, and a lot of enterprise software that’s per seat, so how many noses are using the software? That’s how you charge because that seems to be where they’re getting the most value. So that means they’re growing and therefore you’re growing and you know, they can figure out how to allocate that cost. But it might be something else. But if you have too many of those, it can get very complicated, necessarily complicated in some instances.

Bill Wilson: You know, you may need to have some of that complexity, but yes, it is about trying to simplify those models down to a point where you don’t have so much variability. And the same thing with, you know, people putting out five tiers of service. Seriously, I have to make a decision between five things. Like, I can’t do that. I can do three. Right? Or you can do that whole extremeness aversion approach where you put, you know, you set up guardrails of like a really ridiculous package on the low end and a really outlandish package on the high end and you just know nobody’s going to be in there and they’re just sort of funneling themselves towards the middle. Um, and you see that a lot on B2C SaaS sites, you know, where there’s like, yeah, the $0 plan, but you’re super limited. You can’t do anything like no one’s really gonna use that. That’s basically a trial. So you know that extremist aversion approach.

Mark Stiving: Yeah. So I could see this working well. It by way, when I read some of your literature, I looked at some of what you did. I didn’t get that impression. I can see that if you gave me two pricing metrics, right? So it’s going to be users and it’s going to be downloaded or it’s going to be users and it’s going to click or, or there are two pricing metrics I’m playing with. I could see that making a lot of sense. But I also see customers saying, oh, but I don’t want to pay for that feature because I’m not going to use it. And then the client or the salesperson said, okay, we’ll take that out and give you a discount. And, and so it’s that cut. It’s not an easy problem that you’re trying.

Bill Wilson: No, it really isn’t. And I think that’s why it’s so interesting. Like I think at that stage like if you have the custom, or I should say the self-serve options, you know like that’s going to fit a big chunk of your users. But the reason someone’s picked this custom tiers because they do need something special, right? Or they are big enough that they’re going to have to have some kind of incentive-based pricing. They know that when they, they click that button, you know, and that’s why SaaS companies have inside sales teams that are there to service those and they have to figure out how best to package those things. And we’ve heard from customers where I was talking to someone today and he said, I have five proposals out to the same person. You know, it’s, it’s these things where people are like, well, what if I want the full Cadillac of things and Oh, what if I want this and what if I want that and that and the medium they’re using to communicate.

Bill Wilson: It doesn’t allow them to express the complexity that they need to express, or at least I should say that’s the wrong approach, I should say. It’s not the complexity, it’s that it is complex and then you just present it in a simplified manner and their tools don’t support that. So how do you present those complex models in a more simplistic way? You can visually take in, it’s like you’re on Apple’s website and you’re comparing Macbook Pros, right? And you do the comparison thing and you get the side by side comparison. It’s like, oh, this one weighs a quarter of a pound less. And this one, you know, like you can start to make your decisions because you’re looking at it visually as opposed to jumping back and forth between the different specs. So I think there’s a lot to be done in that space and it is a complicated problem.

Bill Wilson: And the more we can help people simplify that, that custom piece, the more we can really understand the things that drive our buyers to buy, right? Because we have those metrics about what worked and what didn’t and we can really start to experiment and see where our pricing can go.

Mark Stiving: What do you mean we have those metrics, what metrics are we talking about?

Bill Wilson: So on the back end of sales, right? Every time you send one of our guides, our pricing guides to a prospect, we’re tracking what they click on and what they look at. So you can see what the value of the deal going up and down. You can actually see what tiers they’re picking and what they’re not, which features they’re sort of trying to dig into and get more information about. So you can actually have a bit more of a sense of what’s important to them. Because during discovery and during qualification, we get as much information as we can and we should know what’s important to our prospects. But there’s nothing like them telling you by actually interacting with the pricing and they’re looking at some scenarios that you didn’t think of. And that’s the kind of metrics I’m talking about. Understanding how they buy.

Mark Stiving: Oh, that’s really fascinating. Yeah, I’m playing this through in my mind. If you were to send me one of those, probably what I would do is I know I would go look at things I didn’t know anything about and so those may be things I don’t care about, but I look at it anyway. But I would probably end on the thing that I think is best for me even if I don’t call you and tell you that I think that’s best for me.

Bill Wilson: Yeah, and I agree. And that’s what we see. People leave it in the state that they think is the right place for them because they put some cognitive load into thinking about this problem and they want a bit of ROI on that. Subconsciously want some ROI on anything that we put thought into. As soon as they start playing with a slider and they see those numbers going up and down like they’re in control, that feels pretty great. They can really put together the package they want. Like you said, like for you, if someone said to you from seven they’re like, look, based on your writing style and what I know about you, here’s the bike I think that’s right for you. But you’re like, no, you know I get that you want me to have a stiff suspension, but I think I want a bit of a softer ride. You know? Then you could play with that, but most everything is already set for you and then that probably would have been a much better buying experience for you and probably better for them…

Mark Stiving: We are taking the angst style of this.

Bill Wilson: Right. This is it. And so take the angst, build some trust, lets you be in control, but you feel like the person on the other end has your back and understands what you need.

Mark Stiving:I want to push back just a little bit on some things you talked about. You were saying the extreme low, the extreme high, and then the one in the middle. I often think good, better, best. And I think good and best both have a really good purpose. More than just putting in guardrails. It’s because I’ve thought about what would really price-sensitive people need to be somewhat productive, but it’s not what most people want. And the best is the same thing. Right? What would people who aren’t price-sensitive, what would they really like to have if they could, but most people aren’t going to buy that.

Bill Wilson: Right.

Mark Stiving:And so it’s me understanding my buyers, my users, which is not hugely different than what you’re just talking about here.

Bill Wilson: No. Yeah. And I can see that and that is probably a better way of putting that, you know, ’cause you’re not going to put together a package that doesn’t give someone zero value and you’re not going to put together a package that puts such a high price tag on little value. Right. So yes, I think, yeah, that’s probably a better way of articulating that.

Mark Stiving:Okay. We’re coming up on time and there’s still a topic I really want to talk to you about. I understand you have an opinion on sales compensation plans. A at one point in my life I was a salesperson. This concept of moving from on-prem or a traditional business model where I get all my money upfront and I can pay my salesperson a commission on that deal to selling SaaS. How do we compensate salespeople for SaaS sales?

Bill Wilson: Yeah, this is a really interesting topic and something that I’ve done a bunch of reading on and it’s, it’s really complicated and really tough. The current thing I’m looking at the most is about the tip of the spear type salespeople and how to compensate those people. So there’s a couple of models you can use. The ones I’ve seen are, you know, there’s lots of variables you can use inside a compensation plan, but some of the best advice I received was like… There are probably a dozen that you could use, but pick two. Like again, almost like the thing we were talking about, the whole, you know, a paradox of choice, right? Giving people too many options inside their comp plan is too many things to focus on. Right? So I think the two big things are alignment. So we want to align our salespeople with what matches their goals and what matches the business goals.

Bill Wilson: And I don’t think you can do that with one number. Some of the models I’ve seen are, you know, you’ve got a base of course, and then you move to, you know, if it’s a BDR for example, you know, you’re looking at paying them a kicker for every meeting that’s booked. So that incents them to book more meetings, right? Which is great. And on its own would be terrible for the business because if I’m getting just paid on booking more meetings, I’m just going to book meetings all day that you don’t care about. And then…

Mark Stiving: The mom wants a meeting.

Bill Wilson: Exactly. So then on the other side of that equation is how you align the business. And that would be with, for example, a percentage of ACV, right? So you give them a percentage of the deals that they’re closing so that incense them to make sure that those meetings they’re setting up are actually ICP, you know, their ideal customer profiles of the people that you should be talking to. So that’s one compensation plan that I’ve seen advertised and working, you know, in various organizations. And it’s really simple for everybody to understand.

Mark Stiving: So let me ask you about that. Cause ACV – Average Customer Value, that’s what you meant, right?

Bill Wilson: Sorry. Yeah, Average Contract Value.

Mark Stiving: Average Contract Value. So to deal with a contract.

Bill Wilson: For Annual Contract Value if you like. So basically if I sell a SaaS deal and it’s an annualized basis, it’s a 6000 deal, maybe I get 5% of that deal. I think the big one in SaaS that you talked about, I think about getting your commission upfront is the same way I approach SaaS commissions. If someone sells a deal, like don’t dribble in their commission every month as you get paid, pay them the commission upfront. They’ve got to eat and they’ve got to see the upside. And if there’s a deal that is sliding sideways and they churn out in six months, well you just clot back off a future deal. Like you don’t, you know, it requires a bit of, you know, accounting magic, but you can make it work. And I think it gives the upside in the right place for the salesperson incentivizes them correctly and also incentivizes them to not bring in people who are going to churn out good clients that see the value.

Mark Stiving:So the one year I’ve seen clients compensate based on, we’re assuming it’s a three-year contract even though you only booked a one year contract. And that’s because we’ve got great customer success people, we know the lifetime value of the customer is going to be beyond three years, at least most customers. And so we still give them a good chunk. What do you think of something like that?

Bill Wilson: I mean, I guess it really depends on how, how you feel about your churn. You know, if you’re selling enterprise deals and you’re expecting three years out of the minimum and you’ve got negative churn, seems like a pretty good gamble. But if you’re not and you still have 5% churn, like over three years, that’s a lot of customers out the door. So, you know, I don’t know. I wouldn’t do it.

Mark Stiving: Yeah. I think the real problem with this whole compensation is the fact that we have revenue over time. We have a lifetime value of a customer and it just isn’t, oh I got the sale, here’s the chunk of the revenue that we just pulled in.

Bill Wilson: Yeah I mean every renewal times, maybe there’s also a kicker there. You know, every renewal, you know, you could do some compensation there. I mean that’s where customer success comes in as well. Cause I mean, customer success teams these days are, you know, a bit of a hybrid of, you know, solution experts and salespeople, you know, their job is to make sure you’re growing with the software, which really results in expansion revenue for you, which is much cheaper than going off and getting new revenue. So you know, those people need to be compensated on that level on that as well, so…

Mark Stiving: Absolutely. Bill, this has just been fascinating, but I have to end with the most important question I ask all day. What’s one piece of pricing advice you would give our listeners that you think would have a big impact on their business?

Bill Wilson: I think the biggest thing for me, and I’ve talked about it a lot today, is choice and being able to give people a few options that make sense for them and allow them to participate in that pricing conversation and surface it as early as you can.

Mark Stiving: That was, that was fascinating or fabulous, right? I think everybody should have a choice. Bill, you so much for your time today. If anyone wants to contact you, how can they do that?

Bill Wilson: Get me on Twitter at WDRWilson or SalesRightCo.

Mark Stiving: SalesRightCo?

Bill Wilson: Yeah, SalesRightCo. Yup.

Mark Stiving: Episode 34 in the can. Let’s see, my favorite part today had to be talking about sales compensation because I’ve just been so lost and confused on that topic. What was your favorite part? Please let us know in the comments or wherever you downloaded and listen, and while you’re at it, would you please give us a five-star review. They’re very helpful to us. If you have any questions or comments about the podcast or about pricing in general, feel free to email me at [email protected]. Now go make an impact.

**Note: Mark Stiving has an active LinkedIn community, where he participates in conversations and answers questions. Each week, he creates a blog post for the top question. If you have a question, head over to LinkedIn to communicate directly with Mark.

Tags: pricing, value-based pricing