Sam Ostrom's Work Portfolio
Pricing Analysis and Implementation
Summary: I analyzed our competitors pricing and our internal costs of operation to implement new pricing strategies for all of Autify's products
Why did we undertake this initiative?
A simple question I asked along with competitor analysis sparked the need for new pricing strategies. I asked what our infrastructure costs were per test run (our primary method of charging at the time). Not a single person including the CFO could give me an answer. Again, to say I was shocked was an understatement. I spoke with my CEO about it and he admitted that we had been so successful that analysis had never needed to be done in depth. When I looked at the competitor analysis I did, we were charging FAR more than everyone else and we did not have the same level of features that our competitors did. You can't charge more for less. Pricing needed to change.
What did I do to complete this initiative?
1) After the competitor analysis, I dove in with engineering and directed them to analyze our costs for every single piece of infrastructure. IP whitelisting, test runs, Cloud costs, data storage costs. It took them a long time to get behind the initiative until I presented them with my findings and data analysis.
2) After I got a cost analysis from our operational costs from engineering, I calculated the minimum amount we could charge and still make a 40% profit margin (terrible margin btw).
3) During that time, I also started to pay attention to the fact that some leads were leaving us with no reasons as to why and connected the dots that it was right after we mentioned our pricing. We did not have our pricing displayed on website.
4) I realized that we had to have a different way of charging as customers complained that our pricing model was too limiting. They wanted to be able to run as many tests as they wanted for a flat cost. We charged in bulk for tests ran.
5) We also had very little way to upsell our product. Either customers needed tests or not.
5) I came up with a new pricing strategy that was more flexible, satisfied users by giving them unlimited test runs, and could make the product have more upsell opportunities. We charged for features that weren't need to haves but would increase testing capabilities and speeds.
7) I made sure that our pricing was transparently displayed on our website.
8) Later, I adopted this strategy for our new line of products.
Results of the initiative?
1) Leads stopped leaving us due to our pricing being transparent and displayed. Clients were much more willing to have an open dialog with us about pricing and what they could get for specific prices.
2) Operational cost analysis found that we had a lot of unnecessary costs that we could optimize to increase our profits while still charging a reasonable amount.
3) We started to get more deals done after the pricing changes. We were much more in line with market rates.
4) Leadership could now really tell how much profit we were bringing in from deals and Sales could negotiate prices with confidence that they wouldn't be signing on a customer for a loss (we realized that was happening with a few of our customers after the analysis).