Why your pricing might inhibit PLG
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The point below in my 13 reasons PLG will fail (or at least be much more difficult) came under some criticism.
If your pricing is above credit card limits (hard spending limits and willingness to spend limits), then a pure PLG model with self-serve monetisation will not work.
You'll need to rely on sellers to convince the buyer of sufficient value of your product to their company and negotiate contracted billing.
Note the emphasis on 'pure PLG with self-serve monetisation'.
In other words, zero touch.
I wanted to write a little more to expand on this, so here are 3 'limits' that you might see inhibit any zero-touch PLG motions and mean you'll need to lean on product-led sales to escalate to larger deals.
1. Soft credit card limits (willingness to pay)
People have a built-in level of apprehension when it comes to spending any significant amount on a card.
This is more true today than it ever has been.
Even if people are confident their expense claim will be reimbursed, they're thinking more than twice before making a committed spend on subscription software.
2. Hard credit card limits (ability to pay)
In the US, a generous personal credit card limit is ~$30K.
That's a lot, but for many products, it won't buy you enterprise-scale volume.
Company card limits are usually higher, but they're still there, and to spend big on company cards, you're usually going to need some approval which leads to...
3. Company guidelines
The critique of my post referred to a McKinsey survey published in November 2021:
"35% of B2B buyers are now ready to swipe their cards without any involvement from sales for purchases of over $500k"
My experience is that this just doesn't reflect reality for most products in most markets, and while it may have had more truth in 2021 when that survey was being run, good luck having any purchases anywhere close to those numbers happen today without going through procurement teams and price negotiation.
Any CFO who's letting that happen without diligence and negotiation in todays economic climate is (to jovially quote CJ Gustafson of
) probably soon going to jail!It’s just a reality (for many reasons - pricing is just one of them) that moving to enterprise-level deals is almost always better facilitated with human involvement.
Until next time!
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