How I Built A $3M Agency Helping SaaS Companies Nail Their Pricing

Marcos Rivera

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Published: October 8th, 2022

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Marcos Rivera

Founder, Pricing I/O

$375K

revenue/mo

Founders

Employees

Pricing I/O

pricingio.com

from La Jolla

started December 2019

$375,000

revenue/mo

Founders

Employees

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Hello! Who are you and what business did you start?🔗

It’s a pleasure to be here, and thank you for having me. I’m Marcos Rivera, founder, and CEO of Pricing I/O, a pricing consultancy helping B2B software companies capture the value and unlock growth. With over 20 years of experience, we effortlessly deliver complex ideas, leaving our clients confident and clear on scalable monetization models that simplify packages, remove friction, and increase expansion. I am also the author of the book, Street Pricing: A Pricing Playlist for Hip Leaders in B2B SaaS; a field guide for entrepreneurs who want to stop guessing when it comes to pricing.

In only our second full year in business, we doubled our team size, tripled our revenue, and helped 106 SaaS companies - All during a pandemic and without any marketing spend.

What's your backstory, and how did you come up with the idea?🔗

Interestingly, my expertise in pricing is a by-product of my deep experience in building and growing software products since the late 90s.

I launched my first tech product in the financial services space. Throughout my product management career, I’ve launched or managed over 40 software products and services, and I was tasked to price all of them based on value. And just like anything you practice, the more you do it, the more you tune your pattern recognition in your brain and figure out the nuances that others may not see.

After a fun career in product, I joined Vista Equity Partners as an operating executive and head of Pricing and Packaging across Vista’s portfolio of 60+ B2B software or SaaS (software as a service) companies. Working with so many different B2B SaaS businesses, such as Marketo, MindBody, and Ping Identity, turbocharged my ability to forge the right monetization strategy to meet an aggressive value creation plan - it was a fantastic experience! And It was during this time I learned that pricing is considered a black art to many leaders, resulting in mostly guesswork or copycat approaches to something as critical as your pricing strategy. It blew my mind!

So I wondered if I should be the one to help those leaders and entrepreneurs who are resorting to guesswork. The idea of leaving my coveted position with a well-respected firm looked crazy on paper; I had it made! To pile it on, at the time I just found out my wife was pregnant with our second child. All the signs pointed to staying the course with my career at Vista.

Entrepreneurship is not an easy path, but that’s the point! It’s supposed to be hard, uncomfortable, scary, nerve-racking, and all-consuming. You’re in a vulnerable position, from your feelings, to your finances, and your future.

But nope! I knew that the regret of not trying would haunt me forever. After three years at Vista, I started Pricing I/O to help software companies shift pricing from guesswork to framework - with an overarching belief that leaders need more confidence in pulling the pricing lever as part of their growth plans.

Take us through the process of designing, prototyping, and manufacturing your first product.🔗

First team outing

So now I needed to figure out how to help businesses with pricing, all while carrying the added backpack of running a business. I leaned heavily on my product management roots and sketched out the inputs and outputs of the most successful pricing engagements as well as the most disastrous. I needed to distill the activities down to the least common services that showed to work well consistently.

The big mistake to avoid is to try to solve too many problems out of the gate. When it came to designing an offer of value, whether it be products or services, I learned that you need to pretend you’re a chemist looking to experiment your way to the winning formula.

And yes, expect to be wrong about some of your assumptions; in fact, get comfortable with it. Every step in the journey will be less wrong and bring you closer to the magic formula.

Describe the process of launching the business.🔗

A lot of people don’t know this, but I signed my first client within a week of launching Pricing I/O. Some would chalk it up to dumb luck, but I don’t believe that was the case. About 6 months before launching the business, I started reaching out to my network of friends, family, and former colleagues; mostly through Facebook and LinkedIn. During the outreach, my main goal was to simply check in, say hello, or send well-wishes; that was it. The goal was not to ask for business, it was to build mindshare.

Then it came to the scary part - quitting my job and cutting off that guaranteed paycheck every two weeks! Yikes was right!

Financially, I had six months of reserves in the bank and no credit card debt; all by design. As a backup, I could also pull out of my retirement savings and investment accounts. Another lesser-known fact is that I also curtailed my expenses well before making the plunge to leap from a stable platform. I thought of it as eliminating the stress before it arrived. Another important step financially was to separate my personal and new business accounts so I can keep my nose clean when it came to taxes.

Then it was time to put it out there - vulnerable, scared, and ready to do whatever it takes. I whipped up a website using Wix for less than 50 bucks, then I showed up at numerous networking events and conferences (mostly for validating, not prospecting), and then I started writing about the most common struggles with setting a price or crafting a bundle; and that is when people started to notice.

Just for fun, here is a snippet of my home page from the 50-dollar website I mentioned back in 2019 - it was boring and terrible! But every entrepreneur I know is critical of their website, especially the first one. Don’t be afraid to just do your best and put something out there. As the proverb says, the journey of a thousand miles starts with a single step.

Home Page for Pricing I/O in 2019:

Since launch, what has worked to attract and retain customers?🔗

We were fortunate enough to serve 106 SaaS companies last year through various types of pricing engagements, and we owe it to a growing community of hundreds of SaaS entrepreneurs who love to hear tips and tricks to monetize their value better. When it comes to building such great momentum with our client base and community over the past few years, it’s come down to these three main tactics:

Tactic 1: We prefer that you don’t take our word for it

When we see a spike in community activity, new followers, or prospects reaching out, it has more to do with what other customers or members have shared versus our campaigns. People love to hear from their peers or others in the community/Their voice will carry farther than yours - make sure you give your users or subscribers a platform to share their minds, and the rest will follow. For example, when we post a useful checklist or scorecard to our members, we encourage them to share their results. It’s powerful stuff when real people share real results.

Tactic 2 - Papa doesn’t preach, but teach

We worked hard to build up an authority position on pricing; a topic that can be awfully intimidating to some and delightfully intriguing to others, which makes it tricky to craft content that will resonate with the group. Aside from breaking down your community into subgroups with like minds and interests, we always make it a point to be uber clear on the why behind any article we post or template we publish, even if it means admitting what we don’t know and what we had to learn ourselves. People appreciate the brutal honesty and how we figured things out on our own. We learned that being an expert does not mean you need to know everything.

Tactic 3 - For them to chew, you have to keep it bite-sized

Carrying over from the previous point, you want to ensure not to overwhelm your users or members with too much information - you have to let them take small bites so they can chew quickly and take another bite. People tend to absorb information in increments, typically within a short window between two tasks. Make sure to break down any large body of knowledge into smaller bits of information to avoid indigestion with your audience. For example, don’t publish a 3000-word blog, but rather a series of 10 x 300-word blogs that build on each other and give the reader a reason to follow you.

How are you doing today and what does the future look like?🔗

Website today

I am so grateful and proud of the progress we’ve made in less than 3 years in business. We’ve grown to 10 full-time employees and 5 contractors, with an open headcount in sales. Our economics are strong and profitable, with each project bringing in 25% to 50% margins and a low cost of acquisition through our community and referral network. Rather than spending on advertising or marketing, we invest in our 3000-member community to nurture both new deals and repeat business.

Pricing I/O helps hard-working software entrepreneurs tackle one of the most demanding challenges in business - pricing. Our firm is unique in solving this problem because we focus on helping our clients build their pricing muscle so they’re set up for success long after our engagement. We keep it simple, and we keep it real.

As an example, one client in Healthtech struggled to understand how to charge hospitals for their platform and resorted to a flat all-inclusive price that left tremendous value on the table. After working with us, they learned how to identify better value metrics, such as the number of operating rooms and volume of facilities, to serve as the basis for their monetization and in turn, capture more value. Our hybrid consulting and coaching model teaches clients how to fish by working side by side to cast a fishing rod and make their first catch. The lesson here - people love to get the answer but love it more when they understand what led to the answer.

Through starting the business, have you learned anything particularly helpful or advantageous?🔗

Burnout is a real problem for entrepreneurs, and most won’t see it coming!

My first tip is to build recovery time into your daily and weekly routine. Like any professional athlete that undergoes intense training and situations, you must build in recovery time to rest, reflect, and reset. It could be as simple as setting aside 15 minutes of quiet time to meditate or scheduling a weekly massage to work out the kinks and relax.

My second tip is to delegate tasks that don’t require your superpowers. I warned about offloading critical tasks to contractors, but when it comes to tasks that don’t require your special sauce, like bookkeeping, I suggest moving these time nibblers off your plate to help you focus on the bigger picture.

What platform/tools do you use for your business?🔗

Our most heavily used tool is Slack. We use it for internal communication among our team members and external communication with our clients and community. We split out conversations and themes into different channels to maintain focus on the topics at hand.

Another great tool we use is Calendly, the scheduling software. Calendly eliminates the awkward back and forth when scheduling meetings with clients, community members, and prospects. It makes our lives easier.

And of course, we use Zoom every day. The world is more flat and virtual than ever before. We use Zoom to communicate and connect with clients all over the world.

What have been the most influential books, podcasts, or other resources?🔗

I love books that help me to better frame a problem or make trade-offs more thoughtfully. An oldie, but goodie is the classic management book, Execution: The Art of Getting Things Done, by Larry Bossidy and Ram Charam. This book is a straightforward, no BS, approach to running a business and cutting through the noise.

I’m also a big fan of The Lean Startup , by Eric Ries. This one is known as the bible for any software entrepreneur looking to start a business and is jam-packed with great advice.

Advice for other entrepreneurs who want to get started or are just starting out?🔗

Entrepreneurship is not an easy path, but that’s the point! It’s supposed to be hard, uncomfortable, scary, nerve-racking, and all-consuming. You’re in a vulnerable position, from your feelings, to your finances, and your future.

There are no shortcuts, no red pills, and no easy button. I’ve learned more than my fair share in the past few years trying to grow during a pandemic, so I hope these top three lessons will help others get started:

Lesson 1: You can’t afford “perfect” out of the gate; you have to earn it by starting with “good enough”. A mentor of mine told me that if I’m not ashamed of my version 1.0 within 6 months, then I’m not experimenting enough. He was right.

Lesson 2: Water is useless without seeds. If you want sales next June, you need to plan out the things you want to do in January that will get you there. So many entrepreneurs spend countless hours watering a pot of dirt when they should be planting seeds first. Get out there and talk to people, be genuinely interested, and offer help without asking for anything in return.

Lesson 3: You will go a lot farther in a well-maintained ride than in a beat-up clunker. Entrepreneurs commonly adopt the fallacy that you need to work 20 hours a day to be successful, leading to burnout and bad decision-making. The mindset should be like you’re taking a long-distance trip in your well-maintained Honda Accord. You need to change your oil, rotate your tires, and keep plenty of gas in the tank. Build in the right amount of rest and recovery in your week to keep your brain a lean, mean, thinking machine.

And remember that chemist looking for the winning formula. The missing ingredients are always the same - an interactive approach, an open hand, and a healthy brain.

Are you looking to hire for certain positions right now?🔗

Yes, we are currently hiring for a Growth Consultant to join our team, this is a full-time, remote position that will work closely with our operations team. We welcome applications from innovative thought-leaders with at least 3 years of experience in sales development or sales operations in the software space. You can apply by clicking here .