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When Initial Product Pricing Goes Wrong - Part 2

Posted by: Nate Bauer on 4/6/2012

Guest Post from Big Bang Sales Director - Kelley Burian

...cont'd from Part 1

What we hadn’t properly examined was our massively diverse current and potential customer base. This sounds like an impossibly dumb oversight, so I will explain. Most small businesses serve a specific industry, be it manufacturing, healthcare, retail, education or government. From there many get even more granular and cater to a specific gender, age group, financial status, etc. Our customers and potential customers, on the other hand, include any and all organizations with more than 100 computers running a Microsoft operating system. That’s it. Your company needs 100 computers, something most of us can’t perform our jobs without, and the most popular operating system in the world. So while our customers come in all shapes and sizes, the things that qualify them as our customer are really simple.

My critical mistake was not accounting for how differently those customers use those 100+ computers. We knew there would be special circumstances, because there always are, and we planned to work those out one-on-one. As we got going, we realized those special circumstances were less special than we thought. In fact, most have reported a scenario that was the complete opposite of what we anticipated. Education is a primary example and a large part of our current customer base. In general, each student is not going to have a school-issued computer in their possession, but rather use one in a smaller pool of shared PCs. We determined very quickly that requiring a license per user where a student is considered a user (not just staff and teachers) was maybe easy but not necessarily fair.

We did find that other customers loved the idea of the per-user model. Barring a rapid growth in employees (which rarely bothers anyone) or a merger, corporate licensing per-user is both easy and relatively predictable from year-to-year. It was also attractive because corporate environments are going to be far more likely to support multiple computers per user.

Lesson: One size does not, as advertised, fit all.

It was the kind of mistake that was good in many ways. While we are back to a per-computer licensing model as the default offering for both products, we now also have a plan for those UIUSD customers that a per-user model is more attractive. It isn’t as simple as I wanted, but at least it remains simple for the customer—As for the sales staff, well, that’s what we’re here for. We also learned a lot about some of our customers’ challenges this week, and that is always a good thing.

All things considered, I think we have achieved both mutually fair and as simple as possible, though it took us a few extra days more than planned. I lived, I learned, and now I just need to find a way to keep this from the boss.

I’ve made a huge mistake.

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About Adam Murphy -  

Adam is the President and Owner of Big Bang LLC and espouses a pretty progressive small business philosophy based primarily around hiring the right people and getting the hell out of their way.
 

About Nate Bauer -
@nbauer

Nate is the Marketing Director for Big Bang LLC and pretty much spends his days tip-toeing on the pinnacle of how to most effectively implement strategy given the wide open cookie jar of small business marketing possibilities.
 

About Kelley Burian - @kelleyburian

Kelley is the Sales Director for Big Bang LLC. Responsible for everything from GSA contracts, resellers and international customers, she has her hands full doing whatever she can to make sure our valued clients are thrilled with our fantastic products.
 

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