Chris Lema is a software product strategist and daily blogger at ChrisLema.com. In this episode, we discuss value pricing in the enterprise market and creating membership sites. During the first segment, we explore selling software to large customers through story and value. In the second segment, Chris explains why a subscription service is actually a membership site and how to maximize revenue with pricing.
Selling to the Enterprise
What is the most important thing you can share about pricing?
Never put a price in front of a customer until you understand what is motivating them. The customer's perception of value is different than yours. You need to understand their back story.
Is selling software to the enterprise different than to small-medium business?
The length of the sales cycle is extended for the enterprise. There are more stakeholders. It takes longer to understand the complexity of the back story. Consequently, the dynamics of pricing are also different.
How do you handle a value conversation in the enterprise?
- When a customer asks for something, have a value conversation to understand why they need it.
- Next, create options to give the customer choices with various prices, timeframes, and outcomes.
- Then, develop a narrative from the perspective of the stakeholders and frame your product/service as an accelerator.
How is selling a product different from selling a service?
For Chris, selling a product is easier because you can create one narrative for each market segment instead for each customer. In the enterprise, bundling customization (services) with a product is a strategic advantage.
Pricing for Membership Sites
What are some pricing models for membership sites?
The most common is a monthly subscription. However, the average monthly revenue is $17 and the subscription term is 4-6 months. A yearly subscription can create a more sustainable business. Another model is a lower membership fee and higher prices for premium content.
What are some stand-out membership sites?
- MatterMark – Provides research data to salespeople for $500 per month.
- Subscription Insider – Provides research data for membership sites for $60 per month.
- ConvertKit or Drip – Email marketing automation starting under $100 per month.
Why is a subscription service really a membership site?
A subscription is a monthly financial transaction. Membership is being a part of something. The question is what does being a member mean? What is the narrative (or value) to which you belong?
What is one of your best stories about creating value for a customer?
Chris helped Roar create version 1.0 of their product using existing software. The company was able to prove there was a viable market for $20K. Later the company was sold for 7-figures.