How Pricing IO CEO Marcos Rivera grew to $5M revenue with a 10 person team in 2024.

hey folks my guest today is marcos rivera he's the founder and ceo of pricing io a b2b sas pricing expert who uses street smarts to help companies capture value and unlock growth with over 20 years of experience he has a knack for effortlessly delivering complex ideas helping his clients out leaving them feeling more confident again now building pricing io.com marcos you're ready to the top i am let's do this all right so you've also got a book coming out which i'll talk about in a second but first uh pricing um io when did you launch the business what year 2019 i launched in the summer of 2019's for about three years old and i see verbiage related 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 yep so today it's all people although i think the ultimate goal would be to start introducing some tech behind the scenes uh to start introducing some other levels of scale uh but at this stage we are full on services all people some of it uh most of it being one time and some of it recurring the reason i love this is a lot of the most successful sas companies come out of agencies so maybe a year two year three years from now you're sitting on a billion dollar sas company right and it started off here free revenue with just an agency so tell us about the agency what what are you selling so right now we help sas companies figure out their monetization strategy how to price for what they're building um and we do that through uh combination of coaching and consulting right so the idea is to help them learn how to price as well and the big reason for that is their their products could be changing a lot their customers change markets change competitors change so they need to stay on top of how they monetize their value uh which is the best way for them to get to their growth goals and so if someone wants to hire you to do this are they like are you committing making the commit to a 5k for three months sort of deal or what's the average retainer look like yeah so from our perspective we do it in very focused uh sprint projects and so i don't think folks need to pay half a million dollars in six months to get their pricing right so we have uh projects for four weeks that are eight weeks 12 weeks and we work with the companies we 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 and then we actually uh build it and then help them with how to figure out implementing it too like how do you design skus to you know how do you figure out how to compensate your sales people uh the right way so if i was going to pay you for a 12 week sort of engagement i guess what might i pay for that yeah so our if i had to think about our curve the the bell curve for our engagements can be anywhere uh the majority paid between anywhere from 25 to 175 k higher engagement some on the smaller end and some on the higher end but that's the general uh what we look at for what we uh what and what do you price again so someone paying you 25k for 12 weeks versus 275k for 12 weeks it just depends on the number of seats or number of customers they have or their current mrr yeah there's really 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 um the second thing is uh 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 need like do you need us to hold your hand as all the way you're through implementing or do you just want the data and the answers and then you run from there okay super interesting um by the way you said half a million bucks for an engagement was that a shot at a price intelligently no just uh if you think about it uh all the the simon couchers out there mckenzie's bane if you ever run a project with them it's going to be in the very high six figures to even millions and minutes are the other players are specific to sas pricing you who else yeah i would say price intelligently comes up a lot or profit well uh i know that they may be shifting a little bit with the recent announcement with paddle and everything they're doing but uh but they do a great job of offering some good survey services to figure out willingness to pay 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 you actually figure out uh how do you put implemented discounting matrix how do you make sure that you can actually uh pull this off on the other end how do you do execute a price increase for example all those things uh we get into uh and that comes from you know a lot of the value creation background that i have oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 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 founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to 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 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 1.2 million seed round 3.7 raised they sold 22 of their business go in here and filter by the event maybe you only want to 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 going out right now and you're raising your seed round well 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 data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your evaluation 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 you there all right let's jump back into the interview i want to get into some of those playbooks here in a second but what do you know i mean what is profit while charging these days for these sorts of things is it half a million and bigger no so profitwell you know believe it or not i actually had someone tell me uh just a couple weeks ago they said yeah profit well today won't even get out of bed for 250k quote what he said now i i think their engagements do kind of range around that low six figures uh from what i've seen and they have different models out there but yeah that's that's what he told me as his last conversation with him yep okay so let's just just so people can get really getting 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 sas company executed price increase and what was the result yeah absolutely so i'm actually not much of a consultant i'm more of an operator because i've built software and sold it my whole life uh which is a funny story but the wheel 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 you trying to gain a bunch of you know market share or network effect that's going to tell me okay which uh 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 so that means onboarding implementation of course features services all those things and then we price that once we get that uh 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 uh the roi calcs for that specific experience we look at uh data we get from their customers in terms of what they find important and less important can we apply factors there we also look at their historical data and see what kind of pushback they've done on their current price points or where they're maybe 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 well what does envelope mean is that a range or what does that mean it's just a range but it's just arranged 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 making the pricing actually easy to absorb easy to say easy to sell and that is the final piece of the puzzles making sure that the pricing is super simple for some customer to understand so that way you can break away from any confusion um and frame it the proper really interesting now 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 uh software company in the world when you add up all the combined businesses maybe second largest in terms of revenue in the world these days but you basically ran as part of their consulting arm right all their pricing and pricing optimization correct that's correct so a little over three years there i did pricing across the whole portfolio think of i work with companies marketo ping identity mind body tibco you name it i've worked with all those companies and you can imagine the pattern recognition engine really firing as i uh did the companies and also their add-on acquisitions as well so that was hyperspeed yep no we've had andrea on many times in a bunch of vista portfolio companies on and i always ask them about pricing and i mean one of the one of the things i i i'm 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 bucks a month we think if we buy this company for this valuation on paper right now it's expensive at 15x but when we cross-sell the you know 2000 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 i i think it's very important i think once you start thinking about um when you think about the the upside potential right 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 i asked my my team to make sure that we're building is how do we getting that net dollar or net revenue retention number highest above 125 130 140 as well as the ar growth rate to keep that compelling which gets you in the the 20 25 x multiples no no barring you know now that the current environment's a little bit more skeptical and uh around valuations but the point is if you have those two numbers if your pricing model is driving that ar top line growth and that nrr number up your ability to get to command a higher uh multiple is going to be a lot a lot better 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 yeah so start all by myself uh three years ago we're about 10 people now wow and what's sort of a split like are any engineers or it's all sort of coaches consultants sales reps um so i would say i've had to break down the team seven um analyst consultants uh two folks on the on the admin operations side and one marketing and how many customers you think you work with this year so last year we worked with 106 sas companies oh wow this year we're going to do more than that we'll we'll do that that's incredible i mean you mentioned your cheapest price is like 25k times 106. i mean was that that's three a million a minimum three million bucks of revenue last year the bell curve yeah 2025k but we also uh worked with uh some smaller like the startups even startups have a tough time scraping up 25k to do pricing so okay i advise and invest in a lot of smaller companies and so we'll use mini engagements to help them out i see i mean can you build a million dollar agency doing this can you break a million bucks this year um we actually have uh we're okay there we go at this stage yeah we're we're doing pretty good all right so why write a book you know a book you know i wrote a book it's a lot of freaking work takes a ton of time it's painful why write a book oh man you said it i really underestimated the effort to write a book but but there are a couple things uh that went behind us one is um i really wanted to give a tool or a playbook for a lot of those hard-working sas entrepreneurs out there to demystify pricing a lot of folks nathan are they're guessing they're copying and and they're sort of leaving it to the wind and i think that's that's leaving a lot of their growth potential on the table so if you give them this this playbook which sort of makes it a little bit more approachable gives them some really hard-hitting quick tactics to implement uh i want to help these uh these uh athletes i call them they out there you know working hard every day uh to really capture their value that makes a lot of sense so when does the book come out and where can people find it yeah so it drops august 16th it is available for pre-purchase right now on amazon on barnes and nobles anywhere books are sold and uh yep super excited about it and and can you wait to come out it's uh it's it's it's a lot of me poured into that 23 years of pricing just poured into uh my book i put a fun spin on it because i i grew up with hip-hop in my early days growing up in the bronx so i uh infused a lot of these hip-hop lyrics into the chapters just to make it a lot more fun to read i love this okay and so what's the url so the url is uh streetpricingbook.com or just go to pricingio.com and you can visit uh and hit it either way guys street pricing book there you have it now i have to ask you marcus you're a pricing guy you negotiate so obviously when you take a book thing out you want to negotiate talk to all the publishers get the best advance you can if you have a small advance under 50k no one works hard to promote you because if it flops no one loses their job it's more than a 200k advance somebody's getting fired if it flops uh were you able to push your advance up high to make sure make sure these these publishers work for you so i i did go in on the high end what i ended up doing is actually uh pulling the plug and independently publishing it myself with an agent 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 yeah let's uh let's wrap up here with the famous five number one besides your own obviously what's your favorite business book uh favorite business book i'd have to say um this is 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 number two is there a ceo you're following or studying today um you know i like i like satya nadella style i i think he's really smart and humble and uh that's the type of stuff i like to emulate number three what's your favorite online tool for building uh the agency we use slack really heavily so i'll say slack number one number four how many hours of sleep do you get every night seven eight seven or eight by the way did uh did this vista didn't look at slack right not the not the right style of company for them huh they've looked at a lot i can't i can't comment on that but uh looking at the recent investments it's it's let's just say it's not uh out of the category 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 billion 25 billion something like that dry powder yes yeah does he's a smart guy number uh uh what's your situation today married single kids married two kids two kids and how old are you i am gonna be 45 on saturday happy early birthday that's great last question something you wishing you when you were 20. ah well 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 networks i'd rather build trust than networks meaning meaningful relationships where you do something for others so yeah guys there you have it spent three years of vista equity doing all kinds of pricing optimization said you know what i'm going to strike out do this on my own launches own agency pricing io.com this was several years ago now 10 people full time there he helped over 106 companies set b2b sas companies last year optimizer pricing he does more than a million bucks a run right just on the agency but now has a book coming out book coming out street pricing book.com check it out drops august 15th pre-sale now marcos thanks for taking us to the top thanks for having me one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube 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