In our experience, there are several barriers to pre-IPO companies optimizing their pricing, and one of the most prevalent is the lack of firm evidence that pricing is not already optimized. The reason? Successful startups typically exhibit huge growth rates, and nothing hides opportunity better than success. Even if you suspect your pricing isn’t perfect, how would you know? And if your results are great anyway, why should you even care?
The truth is that a detailed look at customer level sales data can often expose not only whether you have a pricing issue, but also what kind of pricing issue you have. The trick is knowing what to look for – what analyses to run and how to interpret the results. And you should care, because we have shown that improving your strategic and tactical pricing execution typically adds an extra 10-15 percentage points of revenue growth to even rapidly growing pre-IPO companies. Capturing this opportunity requires you to first know there is an opportunity to capture, but many startups do not have the time or experience necessary to run the necessary diagnostics.
Get Better Pricing
Are you getting the most out of your pricing? Take our Pricing Fuel 5 Checkup to find out.
Try It OutTo help the startup community capture value through pricing, we at Fuel by McKinsey are offering pre-IPO companies an opportunity to get a Pricing Quick Diagnostic for free for a limited time period. If you provide us with 2 years of monthly sanitized customer-level revenue data1, we will provide you with 3 key charts that will help identify opportunities for you to inflect your business with pricing improvements. You’ll also receive a guide to interpreting your results.
As an example, we recently conducted a similar analysis for a SaaS company growing at >130% per year. We determined that the company’s packaging scheme was preventing upsells, and that the company was ineffectively monetizing different customer segments. Having realized these shortcomings, the company has pledged to address these issues and capture the value they are missing.
Learn more about our Pricing Quick Diagnostic here or Register Now.
Questions? Email us at fuelpricingqd@mckinsey.com. We look forward to meeting you and identifying your pricing opportunity.
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Price metrics are not a new concept. Defined simply as a scalable quantity to which one ties the price of a sale, they have been around in one form or another for as long as products have been sold.
Price metrics are not a new concept. Defined simply as a scalable quantity to which one ties the price of a sale, they have been around in one form or another for as long as products have been sold.
The Rise of Tiered Packaging Several years ago, much of the guidance with packaging was just…