You built a new feature. What should it cost?

No pressure, but the success or failure of launching new software capabilities can determine the financial health of your company. After months of investment in development, testing, and marketing, the potential payoff from landing new logos and expanding current client subscriptions is what you need to demonstrate growth to your current (and future) investors. Like everything else in life, packaging and pricing decisions are about making tradeoffs: in this case between the priorities of Product, Sales, Client, and Finance personas.

What do these personas care about? With apologies to Tolstoy, each unhappy team is unhappy in its own way, but it’s safe to believe the following motivations are true:

  • Sales wants to get paid
  • Clients want it for free
  • Product wants adoption
  • Finance wants accretive growth

Of course we could add complexity to these incentives, and you will likely face some of these complexities (and others) in your business. Does top line growth or profitability matter more to your investors in the pursuit of Rule of 40 growth? Does new logo acquisition or current client expansion matter more to your industry analysts? Does your Sales comp plan pay the same commission rate on expansion sales as new sales (i.e., is the cost of sales equivalent)? Is your product team incented on feature adoption, or build quality? Is the new feature a strong positive differentiator vs competitors, or ‘table stakes?’ And more. For now, let’s keep a simplified view and compare a few practical options to launch your new feature.

Bundle it in

In this scenario, include the new feature at no additional charge with an existing product or edition without changing the list price. Current clients already using the edition that contains the new feature will ‘just get it’ when they receive the new release. Sales will get paid when new clients purchase this edition, or when existing clients upgrade from a lower-tier edition. Finance will likely yawn unless the new feature generates significant market share growth.

This option is best suited for situations when the feature is ‘table stakes’ and restores parity to competitors’ equivalent offerings, or when adding the feature to a top-tier edition increases the perceived value and drives upsell among the existing client base. If your competitive intelligence has shown low win rates and poor perceived value of an existing edition, and your test clients showed relatively low willingness to pay for the new feature on a standalone basis, this option might be your best choice.

Raise the price

When the new feature is highly differentiating and sample buyers demonstrate a high willingness to pay, set a higher price for bundles/editions that include it. Current clients will likely be ‘grandfathered in’ to start using the new feature before a higher price kicks in at renewal. Client Success and Product Marketing teams will use this preview period to gather feedback and testimonials to validate the expected value of the new feature. These proof points will help to diffuse any resistance to the increased price from new buyers. Both Sales and Finance teams will be thrilled by the higher transaction value, assuming that win rate and deal cycle length (key variables in the Sales Velocity Equation) don’t drop concurrently.

Give them the option

A middle-ground option makes the new feature a paid add-on to existing products or bundles. This configuration can get Sales teams excited to sell something new to existing customers who are mid-term in their contract (and retire some quota in the process). Be careful that the new feature, with a value prop of its own, doesn’t get “thrown in” at a discount to close deals — undermining the Product Marketing team’s ability to validate the market’s willingness to pay, trashing the Finance team’s margin forecasts, or artificially depressing the Product team’s adoption trends (if the feature is ignored by buyers who were indifferent to it in the first place). A paid add-on will require a new “SKU” in your catalog and add complexity to provisioning/shipment and run-books for your Ops teams. If your organization has immature Product Launch processes, make sure to give these teams 4-8 weeks notice so they can review, modify, and test their procedures to support the new feature as a paid add-on.

But wait, there’s more

Launch planning can feel like a tug-of-war between numerous groups with competing priorities and often misaligned incentives. While it’s impossible to predict how your clients, prospects, and competitors will react to your launch, the concepts above might help you make a more informed decision on how to package and price the new feature.

For more information about packaging, pricing, and product launch, try these resources:

I spend most of my days thinking about packaging, pricing, monetization, and the lead-to-cash cycle for a B2B SaaS business. I’m open to questions, feedback, challenges, and new ideas from people in the same situation – please leave a comment or contact me directly.

This post first appeared at leadertainment.com. Image credit: schoolspecialty.com

Four Components of a Market-Beating Product Machine

Whether you a bootstrapping a new app or looking for faster growth in an enterprise segment, your team wants to build a market-beating product machine. Defeating your competitors in the race to gain market share isn’t a matter of luck, or charismatic leadership, or pure technological innovation…although having a bit of any of those three wouldn’t hurt.

You need to establish four distinct yet tightly integrated disciplines that span the traditional functional boundaries of Sales, Marketing, Product Management, and Engineering. This post will define the components, and leave space for future posts to expand the descriptions and discuss how to boost proficiency in each.

Market Eating Product Machine

Build, Ship, and Test in Rapid Cycles

This component encompasses not only agile (you decide little “a” or big “A,” I’m not going there right now!) software development, but also DevOps and user experience testing.

  • software development: scope, develop, and release high-quality code that delivers meaningful value to buyers and users.
  • DevOps: test, deploy, and support the product to achieve high availability and high performance, at scale.
  • User Experience: study how users interact with and experience the product to reduce friction (the bad kind) and increase stickiness (the good kind). This information can be obtained from users who are aware (in scheduled in-person sessions) and unaware (in anonymous A/B tests) of their participation.

Launch to Increase Sales Velocity

This component encompasses not only marketing (again you choose the case of the initial consonant, while I watch from the sideline), but also training and communication.

  • Product Launch: time-bound campaigns with narrowly defined audiences, objectives, and tactics designed to increase sales velocity (opportunity count times average deal size times win rate, divided by average sales cycle length). Retrospectives from launch campaigns can inform the next product development cycle as well as advancing the launch practice across products.
  • Training: ensuring that sales, demo, and commercial staff, both within your company and your channel partners, understand how to differentiate the product in order to win and close deals bigger, faster, and more often (see sales velocity above).
  • Communication: internal recognition and awareness of the latest product version might not directly impact sales, but certainly helps to build engagement.

Inform the Roadmap with Competitive Intelligence

Feedback from the market comes in many forms. An effective competitive intelligence component can both discern broad trends and extract precise insights to help expand, refine, and prioritize the product roadmap elements.

  • Analysts: as the subject matter experts who help to arbitrate between the supply and demand sides of the market, analysts’ rankings can help you prioritize strengths and weaknesses relative to your competitors. Analysts can also help to tilt the playing field in your favor through relationships shaped by strong briefings.
  • Customers: advisory boards, implementation/installation projects, customer success ans support interactions all provide meaningful data points as to how your product lines up with their aspirations and afflictions.
  • Win/loss: understanding specifically why your product drops out at each stage of the sales cycle, and surfacing gaps in perception between your buyers and sellers, can provide clarity on your competitive position both head-to-head with named opponents and compared to market expectations in general.
  • Market mapping: segmenting and quantifying the addressable markets can answer “where to play” and inform “how to win.”

Invest to Close Gaps and Widen Moats

Collecting and coalescing all the feedback from user testing, launch retrospectives, and various sources of competitive intelligence, it’s time to prioritize and assign resources to the next set of goals for development.

  • Build: based on the velocity and capabilities of your scrum teams, assign the goals internally. Hire, train, and develop as needed to grow this branch of investment.
  • Buy: fire up the M&A machine to acquire your competitors for their technology, for their customers, or to take them out of the market.
  • Partner: secure technology or services partnerships that give you access to markets and/or capabilities that your buyers value, faster than you could achieve them organically.

Each of these components will need to follow its own path of process maturity. Regardless, the largest benefits for your business will arrive as these components work better together. So, no matter where you are on the spectrum of crawling, walking, or running, start to establish the close integration between these four components and watch your product machine eat the market.

This post appeared originally on leadertainment.com