Pricing IO Revenue (2024)

[00:00] Hey, folks. My guest today is Marcos Rivera. He's the Founder and CEO of pricingio, a B2B SaaS pricing expert who uses street smarts to help companies capture value and unlock growth. With over twenty years of experience, he has a knack for effortlessly delivering complex ideas, helping his clients out, leaving them feeling more confident. Again, now building pricingio.com. Marcos, you ready to take us to the top? [00:21] >> I am. Let's do this. [00:22] All right. So you've also got a book coming out, which we'll talk about in a second. But first, pricingio, when did you launch the business? What year? [00:30] >> 2019. I launched in the summer of twenty nineteen, so we're about three years old. [00:34] And I see verbiage related to sort of services on the website. Are you building? Are you flirting with sort of software on the back end yet or is it all people? [00:41] >> Yep. So today it's all people. Although I think the ultimate goal would be to start introducing some tech behind the scenes, to start introducing some other levels of scale. But at this stage, are full on services, all people, some of it, most of it being one time and some of it recurring. [00:57] The reason I love this is a lot of the most successful SaaS companies come out of agencies. So maybe a year, two, three years from now, you're sitting on a billion dollar SaaS company, right? And it started off here pre revenue with just an agency. So tell us about the agency. What what are you selling? [01:10] >> So right now we help SaaS companies figure out their monetization strategy, how to price for what they're building. And we do that through a combination of coaching and consulting, right? So the idea is to help them learn how to price as well. The big reason for that is their products are gonna be changing a lot. Their customers change, markets change, competitors change. So they need to stay on top of how they monetize their value, which is [01:34] >> the best way for them to get to their growth goals. [01:36] And so if someone wants to hire you to do this, are they like, are you committing, making the commit to five ks for three months sort of deal or what's the average retainer look like? [01:43] >> Yeah. So from our perspective, we do it in very focused sprint projects. And so I don't think folks need to pay $500,000 in six months to get their pricing right. So we have projects for four weeks that are eight weeks, twelve weeks. And we work with the companies who do the heavy lifting on getting the data. We'll coach them on here's what all this stuff means and how do we figure out your pricing and packaging. Then [02:05] >> we actually build it and then help them with how to figure out implementing it too. Like how do you design SKUs to, you know, do you figure out how to compensate your salespeople the right way? [02:14] So if I was gonna pay you for twelve weeks sort of engagement, I guess what might I pay for that? [02:18] >> Yeah, so if I had to think about our curve, the bell curve for our engagements can be anywhere, the majority pay between anywhere from 25 to 175 ks for higher engagement, some on the smaller end and some on the higher end, but that's the general, what we look at for what we do. [02:35] And what do price again? So someone paying you 25 ks for twelve weeks versus 175 ks for twelve weeks, is it just dependent on the number of seats or number of customers they have or their current MRR? [02:44] >> Yeah, there's really three things. The first one is how many products are we pricing here? Is it just one main application? Do you have like a bunch of products in a portfolio? The second thing is complexity in terms of your markets and models. Do you have channel partners versus direct versus PLG or something self serve? How many models are we dealing with here? And then the last one is how much help and support do you really [03:04] >> need? Like, do you need us to hold your hand as all the way through implementing or do you just want the data and the answers and then you run from there? [03:11] Okay, super interesting. By the way, you said $500,000 for an engagement, was that a shot shot at a price intelligently? [03:19] >> No. Just if you think about it, all the the Simon Kucher's out there, McKinsey's, Bain, if you ever run a project with them, it's gonna be in the very high 6 figures to even millions [03:29] Who are the other players that are specific to SaaS pricing? You, Yeah. Who [03:33] >> I would say price intelligently comes up a lot or profit well. I know that they may be shifting a little bit with the recent announcement with Paddle and everything that they're doing, but they do a great job of offering some good survey services to figure out willingness to pay and things like that, which a lot of folks take, run with and use, but they don't really get into how do you implement this stuff? Like how do [03:52] >> you actually figure out, how do you put implement a discounting matrix? How do you make sure that you can actually pull this off on the other end? How do you do execute a price increase, for example? All those things we get into and that comes from a lot of the value creation background that I have. [04:08] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually, Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [04:32] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:56] get a different valuation. A VC is gonna pay a different valuation, private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is [05:18] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're [05:44] going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if [06:06] you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath dot com forward slash products forward slash valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see [06:30] you there. Alright. Let's jump back into the interview. I wanna get into some those playbooks here in a second, but what what do you know? I mean, what is ProfitWell charging these days for these sorts of things? Is is it 500,000 and bigger? [06:41] >> No. So ProfitWell, you know, believe it not, I actually had someone tell me, just a couple weeks ago, they said, yeah, ProfitWell today won't even get out of bed for 250 ks, quote what he Now I think their engagements do kind of range around that low 6 figures from what I've seen. They have a few different models out there, but yeah, that's what he told me as his last conversation with him. [07:03] Yep. Okay. So let's just, just so people can get really get in your heads. I want you to get sort of street cred with my audience. I don't want them to see you as just like a consultant. Right? So tell us about how you helped the SaaS company execute a price increase and what was the result? [07:14] >> Yeah, absolutely. So I'm actually not much of a consultant. I'm more of an operator cause cause I've built software and sold it my whole life, which is a funny story. But the real deal here is how do I help companies figure out how to price? So the first thing we do is we get into where is the growth coming from? Like, are you actually going down market, up market? Are you trying to increase your profit? Are [07:33] >> you trying to gain a bunch of market share or network effect? That's going to tell me, okay, which options are available to you from a model perspective. Then we get into your customer base. Who are you selling to? And no, small, medium and large is not good enough anymore. I actually help them figure out either on a maturity curve or complexity curve, what these customers really want. Then we design and craft an experience for each group. [07:56] >> So that means onboarding, implementation, of course, features, services, all those things. And then we price that. Once we get that granular, the pricing problem gets a lot easier after that. So what do we do? How do we get with the number? We actually then take the ROI accounts for that specific experience. We look at data we get from their customers in terms of what they find important and less important. And we apply factors there. We also [08:21] >> look at their historical data and see what kind of pushback they've done on their current price points or where there may be massively discounting. And we triangulate all that with the competitive Intel that we also do. We'll do like secret shopper and go out there and find like different price points out there in the marketplace. And we'll use that to come up with a price envelope. That's the secret here. And then based on that envelope, Nathan [08:43] Well, what does envelope mean? Is that a range or what does that mean? [08:45] >> It's just a range. It's just a range with all those inputs and say all these inputs point to $40 to $80 per user, for example, right? And if you look at that range, if you're trying to maximize profit, you go on the higher end. If you're trying to gain market share and get a lot of growth, you go on the lower end. And then from there you start applying what I call psychology tactics. So things like [09:05] >> making the pricing actually easy to absorb, easy to say, easy to sell. And that is the final piece of the puzzle is making sure that the pricing is super simple for some customer to understand. So that way you can break away from any confusion frame it the proper way. [09:21] Really interesting. Now, you know, guys, I was burying the lead here, but Marcos is the real deal. Right? He was with Vista, which is one of the most I would maybe argue this most successful software company in the world when you add up all of the combined businesses, maybe second largest in terms of revenue in the world these days. But you'd basically ran as part of their consulting arm, right? All their pricing and pricing optimization, correct? [09:42] >> That's correct. So a little over three years there, I did pricing across the whole portfolio. Think of, I worked in companies like Marketo, Ping Identity, Mindbody, TIBCO, you name it. I've worked with all those companies and you can imagine the pattern recognition engine really firing as I did the companies and also their add on acquisitions as well. So it was hyper speed. [10:03] Yep. No, we've had Andron many times in a bunch of Vista portfolio companies on, and I always ask them about pricing. And I mean, of things I'd be curious to ask you about is when you're looking at potential acquisition, now this is hypothetical obviously, but for say Ping Identity and you're saying, okay, they've got a thousand customers paying $10 a month. We think if we buy this company for this valuation on paper right now, it's expensive [10:22] at 15x. But when we cross sell the $2,000 average ACV, this is gonna be the pickup rate and actually now it's cheap. How do you run that modeling? And is that the thought process that someone should go through when they think about an acquisition in terms of pricing? [10:35] >> I think it's very important. I think once you start thinking about, the upside potential, For me PE is potential equity, not private equity, right? So you're really trying to capture that. And the way you frame that, and this is where it comes down also with the pricing models that I ask my team to make sure that we're building is how do we getting that net dollar or net revenue retention number higher, above 125, 130, 140, [10:59] >> as well as the ARR growth rate to keep that compelling, which gets you in the 20, 25X multiples, barring, you know, now that the current environment's a little bit more skeptical around valuations. But the point is, you have those two numbers, if your pricing model is driving that ARR top line growth and that NRR number up, your ability to get to command a higher multiple is gonna be a lot better. [11:23] I love this model obviously. And again, he's now now doing his own thing with the agency. Marcos, how many folks are you guys full time now? [11:29] >> Yeah. So started all by myself three years ago. We're about 10 people now. [11:33] Wow. And what's sort of the split? Like, any engineers or it's all sort of coaches, consultants, sales reps? [11:38] >> So I would say if I had to break down the teams, seven analysts, consultants, two folks on the on the admin operation side and one marketing. [11:46] And how many customers you think you'll work with this year? [11:49] >> So last year we worked with a 106 SaaS companies. [11:52] Oh, wow. [11:53] >> This year we're gonna do more than that. We'll we'll do around That's incredible. [11:57] I mean, you mentioned your cheapest price is like 25 k times 106. I mean, was that that's three a minimum $3,000,000 of revenue last year. [12:03] >> The bell curve, yeah, $20, $25 k, but we also worked with some smaller, like the startups. Even startups have a tough time scraping up 25 k to do pricing. So Okay. I advise and invest in a lot of smaller companies. So we'll do like mini engagements to help them out. [12:19] I see. I mean, can you build a million dollar agency doing this? Can you break a million bucks this year? [12:24] >> We actually have Okay. There you go. At this stage, and, yeah, we're we're doing pretty good. We're doing pretty good. [12:30] Alright. So why write a book? You know, a book you know, I wrote a book. It's a lot of freaking work. It takes a ton of time. It's painful. Why why write a book? [12:37] >> Oh man, you said it, I really underestimated the effort to write a book, but there are couple of things that went behind this. One is, I really wanted to give a tool or a playbook for a lot of those hardworking SaaS entrepreneurs out there to demystify pricing. A lot of folks, Nathan are they're guessing, they're copying and they're sort of leaving it to the wind. And I think that's leaving a lot of their growth potential on [13:01] >> the table. So if you give them this playbook, which sort of makes it a little bit more approachable, gives them some really hard hitting quick tactics to implement. I wanna help these staff fleets, I call them, they out there, you know, working hard every day to really capture their value. [13:17] That makes a lot of sense. So when does the book come out and where can people find it? [13:20] >> Yeah, so it drops August 16. It is available for pre purchase right now on Amazon, on Barnes and Noble, anywhere books are sold. And yep, super excited about it and can't wait to come out. It's a lot of me poured into that. Twenty three years of pricing just poured into my book. I put a fun spin on it because I grew up with hip hop in my early days growing up in The Bronx. So I infuse [13:45] >> a lot of these hip hop lyrics into the chapters just to make it a lot more fun to read. [13:49] I love this. Okay. And so what's the URL? [13:52] >> So the URL is streetpricingbook.com or just go to pricingio.com and you can visit and hit it either way. [13:58] Guys, street pricing book. There you have it. Now I have to ask you, Marcos, you're a pricing guy. You negotiate. So obviously, when you take a book thing out, you wanna negotiate, talk to all the publishers, get the best advance you can. If you have a small advance under 50 k, no one works hard to promote you because if it flops, no one loses their job. It's more than a 200 k advance. Somebody's getting fired if [14:15] it flops. Were you able to push your advance up high to make sure make sure these these publishers work for you? [14:21] >> So I I did go in on the high end. What I ended up doing is actually pulling the plug and independently publishing it myself with an agency. [14:29] There you go. Okay, that's another way to do it. You keep way more margin that way, you have way more control. So we're rooting for you, man. Let's drop up here with the famous five. Number one, besides your own, obviously, what's your favorite business book? [14:39] >> Favorite business book? I'd have to say, it's really a business book. I read a book called On Writing Well by William Zinser. It teaches you how to communicate more effectively, which we all do every single day. So that's been a real big help. [14:53] Number two, is there a CEO you're following or studying today? [14:57] >> You know, I like I like Satya Nadella's style. I I think he's really smart and humble and it's a type of style I like to emulate. [15:04] Number three, what's your favorite online tool for building the agency? [15:08] >> We use Slack really heavily. So I'll say Slack number one. [15:12] Yeah. [15:13] Number four, how many hours of sleep do you get every night? [15:14] >> Seven to eight. [15:16] Seven. By the way, Vista didn't look at Slack, right? Not the right style of company for them, [15:22] >> They looked at a lot. I can't comment on that, but looking at the recent investments, it's it's let's just say it's not out of the category. [15:31] There you go. Fair enough. I don't feel like anything is out of Robert Smith's category these days when you have, what is it now, 20,000,000,000, 25,000,000,000, something like that of dry powder? [15:39] >> Yes. Yeah. He's he's a smart guy. [15:42] Number what's your situation today? Married, single kids? [15:46] >> Married, two kids. [15:47] Two kids. And how old are you? [15:49] >> I am gonna be 45 on Saturday. [15:51] Well, happy early birthday. That's great. Last question. Something you wish you knew when you were 20. [15:56] >> Man, so many things. I would say the number one thing I wish I knew I was 20 was I spent so much time building the networks. I'd rather build trust than networks, meaning meaningful relationships where you do something for others. So trust over networks. [16:13] Guys, you have it. Spent three years at Vista Equity doing all kinds of pricing optimization. Said, you know what? I'm gonna strike out and do this on my own. Launched his own agency pricingio.com. This was several years ago. Now 10 people full time there. He helped over 100 B2B SaaS companies last year optimize their pricing. He does more than a million bucks of run rate just on the agency, but now has a book coming [16:29] out. Book coming out, streetpricingbook.com. Check it out. Drops August 15, presale now. Marcos, thanks for taking us to the top. [16:37] >> Thanks for having me, Nathan. [16:40] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM [17:05] Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [17:27] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up [17:49] for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. We [18:09] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.