A speaker recounts an early product/price decision that materially helped their company reach a $100M exit. They describe being behind competitors product-wise but having superior customer service, realizing they had been underpricing, and intentionally raising prices after validating value with a major client. In one anecdote the speaker renegotiated a renewal at about 8× the previous annual rate (quoted as $6,700/month), which convinced partners to increase prices broadly (roughly 2× to 2.5×) and provided crucial financial breathing room.
Questions this video answers
About 8× the previous annual rate (later quoted as $6,700 per month).
$6,700 per month.
Approximately 2× to 2.5×.
Chapters
Do you recall a product decision that helped a company to get to over 100 million and exit there? There is no, like, magic bullet. There was no one thing, but there was a combination of a bunch that really helped. One of the big things was in the early days when you start and you launch a product, you're way behind your customer, your competitors. Like, most of the time, you're not coming out with this fully polished product that is just obliterating the market. Like, you know, when OpenAI the chatgpt, and yeah, okay, it's just light years better. That doesn't happen regularly. So we were behind for a very long time, but the idea was that our customer service was just so much better than the competitors. But what happened after a while is we started to catch up and we started to get better at a bunch of things really, really fast. There's this mentality you have when you've just been obliterated by your customers. Well, you suck at this. Well, your thing's not good at this. Well, it's not good at this that you, you price yourselves way too low for the service that you are providing. And eventually, I remember having these really long, heated, I wouldn't call them like, are not argumentative, but we were against each other. We always, you know, we, we, we fought in conversation in order to make sure that we could actually get to the best output. And one of them was, we need to drive up our pricing. And the three partners were adamant, there is no way in hell anyone is going to pay what you're suggesting. They're going to pay for this product. So I took it upon myself. I called up one of our biggest clients, I looked at what they were paying, and I jumped on a call with them. I said, all right, we're at contract renewal. This is great. You guys got a really easy discount when, you know, when you guys started. But look, I want to show you all the metrics. And I lined up the metrics, I lined up the features that we were running, and I went to them and I, I ended up charging them about 8x what they were charging per year for the exact same functionality. And realistically, they got a ton of benefit up to that point. Came in the next morning, my CEO sitting at his desk, and I said, I want to call a meeting. We all went together and I just slammed down a contract and I said, here you guys go. I said, what the hell is this? Said, you're not raising the price to $6,700 a month. I said, we already did. They all signed it happily. And they all looked at me. And I. One of the partners, he looks at me and he goes, how the did you do that? And he says, what did you promise them? What did you screw up on a row map? Said, I didn't promise anything. Says, you're telling me that you got them to $6700 and you're not giving them one more feature? Said, yeah. He goes, guys, we got to raise our prices. So then we went on a bit of a rampage of actually driving up prices, you know, two 2x, two and a halfx. And that gave us so much breathing room.
