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SaaS Pricing Expert Dan Balcauski On Why You've Got It All Wrong And The Blueprint To Fix It (#452)

• Jeffrey Feldberg • Season 3 • Episode 452

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“Enjoy the journey.” - Dan Balcauski

Exclusive Insights from This Week's Episodes

Dan Balcauski, founder of Product Tranquility and pricing strategist for high-growth SaaS companies, exposes the silent killers inside your pricing strategy. He unpacks how most founders unknowingly sabotage their growth with guesswork, outdated assumptions, and self-doubt masquerading as humility. 

00:04:00 – Why SaaS founders are trapped by imposter syndrome and underpricing
00:10:00 – The power of framing pricing as an experiment, not a risk
00:12:00 – Dan’s origin story: from corporate comfort to entrepreneurial clarity
00:17:00 – The 80/20 rule of SaaS pricing failures (and how to spot them)
00:20:00 – What makes a great SaaS offer—and why most companies get it wrong
00:23:00 – How to price high-ticket vs mass-market SaaS
00:30:00 – How to test pricing discreetly without destroying customer trust
00:36:00 – The wrong way to price AI (and how to fix it fast)
00:41:00 – Why pricing should never be a one-time event

Click here for full show notes, transcript, and resources:

https://podcast.deepwealth.com/452

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452 Dan Balcauski

Jeffrey Feldberg: [00:00:00] What if the secret of scaling a business isn't about working harder, but pricing smarter? Dan McClowsky has quietly become the behind the scenes strategist for some of the fastest scaling SaaS companies in the world. As the founder of Product Tranquility, Dan helps high growth B2B SaaS leaders escape the pricing quicksand that traps so many promising ventures.

With a rare blend of engineering precision and business intuition, he transforms pricing from a guesswork gamble into a growth engine. But Dan's story isn't just about spreadsheets and pricing models. It's about wrestling the imposter syndrome, walking away from safe path.

It is about wrestling with imposter syndrome. Walking away from the safe path in search of a meaningful impact and discovering the way we price our product mirrors. And discovering the way we price our products mirrors how we value ourselves. He taught at Kellogg mentored startups at Accelerators and host the SaaS [00:01:00] Scaling Secrets podcast, where he dives deep into the art and science of sustainable growth.

If you've ever questioned what you're really worth or felt like your business is leaving money on the table, Dan's insights could be the missing piece. This conversation goes far beyond pricing. It's about clarity. I. Courage and building a business that thrives on both.

And before we start the episode, a quick word from our sponsor, Deep Wealth and the Deep Wealth Mastery Program. Here's Sanjay, a graduate of Deep Wealth Mastery, and he says, the investment I made in the Deep Wealth Mastery Program, it's a rounding error compared to the value created today and the future value I'll receive.

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Deep Wealth Nation welcome to another episode of the Deep Wealth Podcast, and for all you SaaS business owners, founders, and companies out there. Let me ask you a rhetorical question because I love those rhetorical questions. I. Do you wanna take your company to the next level? Are you just missing those big wins and you're not quite sure why or where to go, what to do, what to stop doing, what you should start doing?

And of course, you said yes to all of that. Well, I have a very special guest in the House of Depot today, A fellow entrepreneur, a fellow podcaster, thought leader. [00:04:00] Dan, welcome to the Deepak Podcast. An absolute pleasure to have you with us. There is always a story behind the story, so Dan. What's your story?

What got you from where you were to where you are today?

Dan Balcauski: Thank you for having me, Jeffrey. I'm excited for our conversation. And hello to all your Deep Wealth listeners. Yeah, so my name is Dan Bakowski, I, the founder and Chief pricing Officer at Product Tranquility. We help, high volume B2B SaaS CEOs and leaders define pricing and packaging for new products.

And I've spent 20 years in software starting on the builder side as an engineer in engineering management. Then in the product leadership. Early on I noticed something really fascinating. Most technology companies obsess over, building the product and then acquiring customers, but.

Usually neglect to a large part how they capture value. And this realization kinda hit me when I became responsible for product roadmaps and saw firsthand how a lot of these pricing and packaging decisions were often rushed afterthoughts, despite their massive impact on the company's success. And so today, you know, like I mentioned, I helped.[00:05:00]

You know, High volume B2B SaaS companies transform their pricing from a confusing liability into a strategic advantage. Whether that's helping clients, uncover, millions in revenue through revenue leakage analysis, or, helping others, establish pricing processes that could become their standard approach for all future product initiatives.

Jeffrey Feldberg: So Dan, lemme ask you this. I love your background because you're coming from the trenches. This is not some theory for a book or the classroom. This is stuff that actually works, or in some cases didn't work that you figured out. Now you once said, and I may be off a little bit on the wording here, I don't think I am though, you once said that pricing is a mirror of how we value ourselves, which I absolutely love.

It is so true. Walk me through what's going on with that quote with that's with that idea. How does pricing connect to our personal sense of worth? From your vantage point? What's going on there?

Dan Balcauski: Wow. I had to go deep in the vault to find that one. Let me see. I can't say I say that often but what I would say is look, we deal with pricing decisions all the time, whether we think of [00:06:00] them in that way or not. And so, I think one of the ways that this is most relevant, this phrase that you mentioned is most relevant is when we think about, for example, we're taking on a new job, and I know most of your.

Audience are entrepreneurs, and so they, have gone beyond the mantle of employee, but maybe there's a couple of employees listening or folks who, they could relate. When you get a job offer from a company, they say, Hey, here's the salary and the bonus percentage and the PTO, et cetera, et cetera, that we're gonna offer you.

And a lot of folks kind of look at that and feel like, a take it or leave it. I don't have any room to negotiate. And anyone who's, worked with a career coach, for example, they could be in your corner and help you realize that is an incorrect assumption. But a lot of that comes from really understanding like, hey, you're putting a price on yourself as an employee and.

If the company wants you, they have a desired value and they're making an offer based upon kind of an initial [00:07:00] assumption between what they're willing to pay, what they think the market will bear, and what you will accept. And then, do you have the fortitude, the belief in yourself to say, actually my value is worth more than that.

The fact that I. Ran the gauntlet successfully of your interview process. You should recognize that and so I'm gonna ask for more. Why is that relevant to today's conversation is 'cause we always have that as well with our products. As entrepreneurs, we build a product, even if you have, you're mature in the market.

I'm sure you have a roadmap. Your product's never finished. You haven't finished delivering all the value that could be possibly delivered to all the different customers you wanna satisfy, and so you know all the features that aren't there yet. You know all the bugs that customers have reported. So we do the same thing with our products.

We view our products as, oh my God. It's just, it's not the thing it could be yet. But you don't put yourself in the perspective of those customers who are desperate for a solution. That employer who has a. You [00:08:00] shaped whole in the organization and needs you to accept that offer. There's a company out there that has a, your product shaped whole in the organization and needs your product.

And so you looking at it through, kind of the inch to the mirror lens that we look at, think through it may not be the most valuable or appropriate lens to use.

Jeffrey Feldberg: Let me ask you this because as you're talking about that, Dan, I find those words really profound, and when I read that quote, I took a step back and I just. Went down memory lane for myself. I'm not alone with this. When I first got into business, you're absolutely right with what you're saying. I didn't realize it at the time.

I just didn't have that belief in myself, and the pricing showed that, and it took me a while to finally figure out, Hey, I'm giving away the farm. I'm offering so much value here that existing clients, future clients would gladly pay more because the value of what's there. Again, it's not the lowest cost, it's the best value that you can offer.

So what do you think it is in the entrepreneurial psyche that we just tend to undervalue [00:09:00] ourselves?

Dan Balcauski: I don't think it's. Isolated to just entrepreneurs. I think this is everyone. We all have a relationship to money. I would say 99% of humanity has a unhealthy relationship to money. Doesn't matter. You grow up in a rich, poor household, a poor household your relationship to money is probably twisted or biased in some way.

And I think we have this view, you know, I spend all my time with. B2B companies, the businesses, selling products to other businesses. And we have this view that, oh, when a bunch of individuals who have distorted views of money get together, all of a sudden they become completely rational actors. And that's just not the case.

So I wouldn't chalk this up to just entrepreneurs. I believe this is a human problem overall.

Jeffrey Feldberg: Interesting. The human condition. My goodness, that's not just an episode, that's a whole series. And even then, I don't think we would figure it out. So I gotta ask you though, speaking of the human condition, because once upon a time you had really the safety of [00:10:00] being in the corporate environment, but you left, you said, okay.

Enough of that starting a new chapter in my life. Product tranquility. So I'm wondering what was behind that and then one entrepreneur to another. When you started that, what were some of the fears or concerns that you had walking into that

Dan Balcauski: Oh man. Getting deep here on the podcast.

Jeffrey Feldberg: and not wasting any time or right at it?

Dan Balcauski: Exactly, man. Just the hardcore. Well, now that I'm on Jeffrey's couch, let me tell you so. Like I said, I've been in software my entire career had gone from builder into product leadership. And so in the back of my head, I got an MBA along the way, had this idea that yes, I'll start my own company at some point, always thinking it would be a product company.

But whether it's, I don't know what it is my deliberative nature, I could never decide on a product idea that I didn't immediately want to shoot a thousand holes into. So I went off on this journey about six years [00:11:00] ago and said, well, you know, I'll start consulting 'cause I do believe in myself.

Not sure what exactly services I'll offer or who would value those services. But I'll start this and if I go along far enough, I'm sure I'll find a problem in the market that will be a product size whole, but know, the consulting has worked out quite well, I think.

So it just never materialized into the product side. But then as well, I guess the other part of the question you asked was, what were the concerns? What were the questions? I mean, I very much treated it as a six month experiment. Before I started the company, I did a year and a half sort of sabbatical.

I went backpack solo around the world, 22 countries, something like that. And so I was, of an age. I said, look, it's never gonna get easier to make this leap than it is now. I already know how to recruit and interview for a full-time job. So it's not like that opportunity is going away. Of course, I'm making this decision six months before.

Covid lockdowns. So, [00:12:00] maybe, I, there was definitely a period of hey, maybe you're not so smart during March of 2020, that, that hit me for sure. But you know, I was like, well, look, I'll treat this as a six month experiment and what's the worst that could happen? Every other sort of fear, insecurity that, every entrepreneur feels.

I probably felt, but that was kind of my overall mindset.

Jeffrey Feldberg: So interesting that you use the word experiment and I gotta share with you perhaps great minds think like, if I can throw that out there. When we were putting together the Deep Health Mastery Program, our 1980 flagship program, and we were looking into business culture and psychology, and how do we affect and effect change because it's easier said than done, going back to the human condition.

And what we found was when we used the word experiment, Dan, exactly what you did intuitively as opposed to, well, I'm gonna bet the farm. So can you imagine in your case, okay, I'm gonna quit my job, I'm gonna bet the farm. I'm gonna put everything on the line here with this one decision and with this one decision if it doesn't work.

Oh my goodness. You probably wouldn't have done it, but you said, you know what? [00:13:00] It's an experiment. I'm gonna give myself six months. You didn't know about Covid at the time. Interesting times. Let's see where this goes. But here you are today because of mindset, because of one word experiment, and absolutely love that.

Was that intuitive to you? How did you come about that? Was that just something that you've always done?

Dan Balcauski: I think part of that is a culture inside of tech, which is the. Industry I've been in my entire career, there's a lot of move fast and break things. Fail fast is a big mantra, right? So, to a certain extent, maybe it's more tolerated in that sort of industry. And so, sort of had bled over, right?

we build new things. We know they're not gonna be perfect. We put 'em out into the world. We pivot, we iterate. We listen to customers. We kind of, make the next step. So to a certain extent that may have just. Been part of the drinking water. In other words but, we didn't talk about part of the journey as well.

I mean, part of the reason my company's called Product Tranquility is I did go on a bit of a spiritual journey and took part, took it a couple of [00:14:00] meditation extended meditation retreats, and I really, I was able to sort of get over any of the. Gut level reactions that may have stopped me in my tracks previously was able to maybe shed some of that conditioning that might have otherwise gotten in my way.

Jeffrey Feldberg: You know what's interesting, Dan? I've had incredibly successful guests on the show and. Thought leaders, entrepreneurs, authors, coaches, executive coaches, life coaches, you name it. And what you just said is one of the traits that I've seen in all of them. And effectively you said, you know what, Jeffrey? I worked on myself first.

Took some time out, took a look within before I would go without, and take myself to the world and take the business. Okay, world, here I am. Here's my business. Really love that. And so in doing that then, if I could ask, did you discover some things there that perhaps were a bit of a surprise to you when you took some time out and you did that retreat?

Dan Balcauski: Oh man, I'm so much time on the couch. All right, so you know, I would say there's so many different directions this could go, but to make [00:15:00] it relatable, I. The number one realization is the things that you think are not you. And so this is a realization that of many, many hours on the couch cushion, where you're just sitting there doing nothing except monitoring your breath, monitoring your thoughts, and you have these, you sort of create this separation where you realize that, you know these things that tell you.

Hey, you're not ready yet. You're not enough. Have this thing and that thing. You just realize that those are just appearances and you really begin to sort of separate that. And then the idea is, can we separate what is normally a. Immediate reaction to those when normally we do not really understand that we even have a choice in that matter.

So it's inserting choice between that thought and our immediate reaction away from it. So you might think of like, uh. you put your hand on a hot stove, you're immediately pulling away from it. there's not a conscious thought. It's oh, this really hurts. I should take my hand away.

And [00:16:00] so we tend to do that with our thoughts. And so being able to see that separation and just understanding that a lot of the sort of patterns who we believe we are is a lot of our happenstance that happened to us as we were growing up that did not necessarily, if we were to do things over, it was not something we consciously chose, and so why should we consciously continue to bring that into the future?

Jeffrey Feldberg: Dan, thank you for sharing that. And yeah, it's been some interesting rabbit holes we've been going down, but there is a method to the madness and where I'm going with this. With what you're doing now with how you're helping SaaS businesses, how you're going behind the scenes to take them from where they are to not only where they want to be, but many cases even above and beyond that, to be able to do that.

If we zoom out and you look at the companies that you've worked with and the ones that you're working with right now. Are there some patterns that you're seeing? Is it the good old Pareto's Law, the 80 20 rule?

Yeah. Jeffrey, 20% of these same issues, they keep on popping up and that's causing 80% of the headaches that my clients are going [00:17:00] through. And when I identify those and I help 'em with that's where the magic happens. Is it's something like that. What and if it is, what are you seeing? What's going on there?

Dan Balcauski: First of all I'm really big in, I'm a math nerd as well. And so, in the world of statistics, always have to be aware of our sampling bias. So you gotta remember that the companies that give a consultant a call are not necessarily the ones who are, have all their problems solved and are just rocking along.

That being said, I see this from good and bad companies alike from conversations with people who, work in side companies, direct clients. I think kind of when I look at the pricing problem, I'd say the way I would summarize a few key issues. I'd say the number one is treating pricing is simply putting a number on a tag.

We have this idea that. We were talking about pricing. We're just talking about, oh, should our prices end in fives or nines? Should we talk about the most expensive option first? Those are all fun conversations. I'm [00:18:00] happy to have extensive conversations about that. But, when it comes to especially B2B SaaS pricing, most people think that what you charge determines your success.

In fact, it's who and how you charge that determines your success. And so, it's a lot about making. Critical decisions around how we actually. Determine what the price tag goes on. So what is the offers that we're bringing to market? How do we have scalable price metrics that scale with the value that customers receive?

How do we create price fences that make sense, that allow us to segment our market correctly? How do we make decisions around our price model subscription, or pay as you go or perpetual? Those decisions tend to be. Much more impactful than the final number. And so I think, it's really where we get into those decisions and help people realize that, hey, there could be different ways to look at those, but there's, it's not just this black and white like single dimension around a number that maybe people have thought of before.

I.

Jeffrey Feldberg: Intuitively. You, what you're saying makes a whole lot of sense. That said, [00:19:00] I know when it comes time, and it's often personal for us when we're looking at our business model, and no luck is not a business model. Hope is not a business model, as I'm sure you'll tell us all about. But I'm wondering, is there a particular client that's coming to mind where after looking at their business model, you're changing their pricing strategy?

It just made a huge difference for them. Anything that you can share with us?

Dan Balcauski: Let's see. I have a case study teed up in mind. Look, I think, when we think about, things like a offer, right? So, in many like non-software businesses, you would be, let's just say like you're in the automobile business. You don't see many car manufacturers trying to sell five wheeled cars, just not done.

Over and over again this is what we try to do in the software space though, because it's so easy to just take we add another capability, we add another feature, right? You think about sprint after sprint, quarter after quarter, year after year, the number of [00:20:00] capabilities just get larger and larger on the things that we're offering.

And so The work that we do specifically, around helping companies when they're launching innovative products is what are the underlying customers segments that exist in the market, and then how do we create offers that resonate with them? And so this is the repeated pattern over and over again that we're working through is.

Starting with the customer in mind and then working backwards to the technology versus what most people try to do is especially a lot of technical teams, will start with the features, the functionality, speeds and feeds, and then be like, well, this feature was very expensive for us to create or to build, or, this feature costs a lot for us to deliver.

But. Your customer doesn't care about that. I've never once bought a piece of software or a product where I've been like, how many engineering hours does it take to create this capability? Like, This is not in my, wheelhouse, not in my [00:21:00] perspective. And so, with those capabilities, we could see the increases to a RR annual recurring revenue we see increases on, annual revenue per customer. And we see increases on things like net revenue retention quite dramatically across clients.

Jeffrey Feldberg: So having said all that, you said a few interesting things there. Let's really go back and peel back the curtain, if you will with that. So you're right, beauty is in the eye of the beholder as the saying goes, and I'm wondering, okay, I have a SaaS company. I've come up with a really innovative service.

Perhaps it's more at the high end, perhaps it's gonna be more for the general masses. So how do I determine, depending on who the audience is. How that's gonna go into the psyche, if you will, of my future buyer, of how I'm gonna be pricing that, because I can share stories, and I'm sure you can share stories with me as well.

Okay. If it's too high, that's one thing, but also if it's too low, oftentimes that can be just as negative as if it's too high. We're funny, that [00:22:00] human condition that we spoke about earlier. So how do we find that Goldilocks situation? Not too high, not too low. It is just right. In whatever market we happen to be in high end, low end, in the middle.

What does

that look like? 

Dan Balcauski: there's a few different sort of things around your question that may be helpful to differentiate. So let's just say for all, I'll make the statement, 'cause to kind of build it up from ground up may take too long. Let's say for, any given product, there is price and willingness to pay is always a range.

And even for an individual, if I say, Hey, Jeffrey, I've got a nice Yeti mug here. much would you pay for it? You might say, I don't know that maybe between five and $10, and so. Is we have to take that as understanding, first of all, that even for personal decisions we hold prices as a range.

So there are methods that we can collect that data from [00:23:00] our market. Very common one that we use is, it's called the Van Wendor Pricing Sensitivity Meters named after a Dutch economist last name, van Westendorp developed this in the seventies and allows us to understand, okay, what do people believe are.

The relevant price ranges for a given product with a given value proposition. And then we can collate all that together and sort of understand, hey, this is kind of what we think the market views. But you'll even see within there that, yeah, I mean your view for what is a viable range make disappear for my or may be different than my view, versus different than Elon Musk's view, which is different than, the.

Prime Minister of Frances View, right? Those people will have different perspectives. And so then we have to make a decision around, okay, what are our goals and what do we want our, what I might refer to as our pricing strategy to be. And so generally we talk about pricing strategy in sort of three ways where there's a premium pricing strategy, there's premium or or skimming strategy, a sort of market level strategy or a penetration [00:24:00] strategy.

And so if we have the idea that, hey, we want to go and like. Get as much, adoption as possible. We might view as. Tilting to the lower end of that consolidated range. If we want to attract sort of the most premium part of that market, we may go with more of a skimming approach and both can be wild or say, Hey, we're not really looking at trying to make that a strategic driver.

We wanna just kind of go right down the middle of that. And so it really depends upon what our strategy goals are, right? If you think about, a skimming goal. Well, one of the most successful companies in the world is Apple, right? They've very much made that play. They've have the ability to launch a new phone, have people line up for days when they're at the highest price in the market, right?

And then they sort of decrease the price of the older models, sort of on the backend. Also super successful company. Someone like Amazon, right? We're like, Hey, we're gonna be a low cost provider at volume. And make sure everyone uses, like whenever they're buying online, they're gonna come to us.

Both incredibly successful companies different strategies, and so really depends upon how do we [00:25:00] wanna align that with our overall objectives and goals? you could be very successful with any of those. It just matters is have you aligned what your core capabilities are with the market that you want to go after with the strategy that's gonna help get you there.

Jeffrey Feldberg: And having someone like yourself, you and the team you come in, obviously it makes it easier. You know what to do. You've been there, you've done that as a saying goes. That said though. When I'm out there and I'm testing, and hopefully I'm testing, hopefully I'm doing the experiments that we talked about earlier, and I'm looking at different price points.

How do I know? Are there telltale signs? Okay, I've reached the limit. Well, obviously nobody buying is, perhaps I've reached the limit, but are there telltale signs as I get there? It's either too high or it's too low.

Dan Balcauski: Yeah, well, I mean, there's gonna be signs for sure. So you know the first is that. If you never get any objections on price, and again, I'm if we're a B2B versus a B2C market. One of the big distinctions in B2B is that we usually have sales involvement in at least a percentage of our deals.

It's usually non economical in B2C to [00:26:00] have salespeople. So you'd be looking at there are other methods that are applicable in B2C that you cannot apply B2B, but, so I'll limit my answer there to B2B. If sales folks never run into pricing objections, like that'd be a problem that you're priced.

Too low, customers rave that you are how cheap you are. Or, constantly are telling you how much either ROI or how valuable you are, right? Those would, those could be signals. I feel like it's like the Jeff Foxworthy, like there's your sign there's your sign that you are underpriced.

If you haven't touched your pricing in probably more than two years. It might be a sign that it's time to go, make an adjustment, make a swing. The other thing to look at is, just on the, either the front or the back end. I deal a lot with SaaS, which is by definition subscription.

And so you not only have the initial process. So I'd wanna look at, things like my conversion rates. And my win rates against customers to tell, what's going on. If I, for example, start to see my biggest competitors start, hammering me on win rates I may have a [00:27:00] value discrepancy as, well as a price discrepancy.

As well as on my retention rates because as well, we could see like the customers. Maybe you have a really good sales team and they could sell with say ketchup, popsicles to women and white gloves. And, but you know, when it comes time to write that second check for the renewal on, on the annual renewal, okay we got sold a vision, has it matched, our expectations and, you know, our understanding of what we were trying to accomplish with this.

And looking at that, either gross and net revenue retention metric on the backend.

Jeffrey Feldberg: So really what I'm hearing you say is there's no one tried and true. Be open. Pay attention to details, listen for the feedback, and sometimes the feedback. It's a silent feedback. You never get one price objection. Okay. We are probably too low in the marketplace. Let's start trying and experimenting. So with your SaaS clients, how do we experiment in a way that number one doesn't tip off other prospective clients or existing clients that they're paying more or they're paying less?

How do we do that in a way that we can experiment, test it out, but not be like [00:28:00] the airlines where every seat is at a different price and the whole world seems to know about that. So how do we keep this really above board, but at the same time somewhat behind the scenes?

Dan Balcauski: Yeah, so, it's a great question. I highly recommend in B2B AB testing which is big in the consumer space for other things, but as well as in pricing. I do not recommend it work well in, B2B for a whole bunch of reasons. So the one way I would think about it is. When I'm thinking about pricing and packaging together, it's really much more of a design process.

And what does that entail? That entails having conversations with your customers. And those conversations are understanding of their particular context, their needs, their situation the problems that they're trying to solve, why your solution works better or not than other solutions in the space.

But then also. Getting those type of feedbacks, like we mentioned with the Van WeDo pricing sensitivity meter, where I'm able to, after I have a value conversation, after I have a conversation about the jobs they're trying to get [00:29:00] done being able to validate price ranges. And when I'm having those conversations, something I left outta the response to your previous question if I'm actually talking to a customer using those, that methodology.

So, for example, one of the questions is, at what price would this product be too cheap, such that you would doubt its quality wouldn't buy? You hinted at that in your previous questions. So they may gimme a number, right? There'd be like anything under $10, whatever they say. One of the most important questions is ask why.

Because then they'll start to unravel, Hey, this is my mental model. Well, it's because, I know that, whatever. I could do it myself for that. I could hire a person in the Philippines to do that if it really, got more expensive than that and, that would have this other benefits.

Or there's, you know, you got a direct competitor and I know that, they're not quite as good on quality, but you know, I could switch over to them without too much problem. Right. Whatever they say. That is, we're really trying to get that insight. Such that I would really wanna have multiple of those conversations to buttress that [00:30:00] hypothesis.

The truth is, is that you could never know with a hundred percent certainty how customers will react to a price change. And so then it reflects onto, okay, well now we have an idea of what we want to do. How do we roll that out? And there are different ways you could do that, right? You could roll it out to a hundred percent of people on day one.

You can view okay, for new customers. We're gonna update all the price books on the website, right? Existing customers. We, most, most existing customers are not checking your pricing page every day. They're probably not even aware. And then when they come up for renewal, unless you tell them otherwise, they'll assume they're getting the same price.

And so then you could figure out how to separate, both of those. So there are multiple ways to think through the, through a de-risked sort of rollout process on the backend as well.

Jeffrey Feldberg: And so we have this, and what I'm hearing you say is, okay, we can do AB testing on the pricing. There's different ways that we can do to keep it discreet, but see what's working, what's not working. And it sounds like you're a numbers guy. So this is an interesting question for a numbers guy. Would love to hear your thoughts on this.

In addition to the business model, Dan, where does the narrative, the [00:31:00] story behind the service, does that rate for you? How important is that? Or is it just not important at all? Where are you on that?

Dan Balcauski: So we have to be able to create value, but we also have to be able to communicate value because the only thing that drives customers willings to pay is the perceived value of the customer. There is a reason why a Timex you could buy for $20 and a Rolex you pay $20,000 for is because Rolex has done a incredible job communicating to us how much more impressive we'll be to everyone if we have a Rolex on our wrist.

Now, whether or not, I don't believe that I, wear a Fitbit on my wrist. So the perceived value of a Rolex to be is not $20, but the people who believe it, really believe it, such that they pay. So we have to be able to communicate that story and we see this. Kind of across the board, not only in consumer but also in B2B where we need to, oftentimes most people are not busting out the spreadsheets and looking at every single [00:32:00] feature that you and your competitors have, and running the calculations of how much you're gonna help, how much money you're gonna save the company, or how much revenue.

Sometimes you need those, and especially if there's a larger enterprise sale where maybe you have a buying committee and a CFO, you've gotta justify a significant purchase to for budget. People will go to those lengths and we could do a lot of work to help make it easy for our customers to do those calculations in ways that favor us.

But also we see things like company logo gardens, customer testimonials, Hey, other customers like you have been successful. Therefore, you'll probably also be successful. These are ways that we communicate and increase the perceived value. So very important that we do that. And if, marketers in your audience are probably like Dan, just, you just said the most obvious thing in the world.

But yes, a hundred percent related.

Jeffrey Feldberg: Absolutely. Yeah. For us here at Deep Wealth, the story, the narrative, it is everything. Because to your point, well, some people are valuing picket. It could be a Rolex, it could be an iPhone, it could be whatever flavor of the [00:33:00] day it happens to be, and they're putting it in the premium category because of the lore, because of the story, because of what's there.

Even though if you well put intellectual property aside, if you looked at the components component for component, there's probably not that big of a difference between a lot of the products that are out there. But we're buying into the myth, the legend. We seem to like that. And so for me it's a little bit of art and a little bit of science combined into when we have a terrific story and narrative with a business model that works.

And so let me ask you this, and I'm gonna keep it general 'cause I wanna see where it goes. So when we're talking about SaaS companies, we're talking about business models, pricing, the human psyche. We now have artificial intelligence, AI that's been on the scene and it's come on in a very big way, even though it's been around for decades.

How is that impacting or is it impacting what you and the team are doing? What are you seeing out there?

Dan Balcauski: Yeah, well, it's impacting things tremendously. I would say there's no software company on the planet. There's no board of those companies that isn't hammering the CEO to ship [00:34:00] AI capabilities. There's no CEO founder of a Seed or series A startup who's not trying to work AI into their pitch deck to raise funding.

It's definitely changing quite a bit. One of the, I would say there's, we separate kind of what's real from what's hype. I think what a lot of companies are dealing with right now is that many software companies for a long time got to make a simplifying assumption in their business math, which was that our cost of goods sold.

To, to an additional incremental customer was effectively infinitesimally small. It was basically a rounding error, like somewhere, like a millionth of a penny because the cost of compute network and storage on AWS for a CRUD database is not that intense. But where folks are starting to see pressures that they add these capabilities from foundation model providers, like an open AI or philanthropic or Google, whoever it might be.

And all of a sudden you've got a significant variable cost that you're now going out the door. And so companies are needing to take that into account, both [00:35:00] in terms of how they think about, okay, where's the value? In what we're delivering, do we understand that is there value? Is this just an experiment into many companies that are just like we, we don't know which is a very, I think, healthy to, in a platform shift, I don't know is a perfectly acceptable answer.

For period of time at least. But then, okay, how do we think about what does this mean as we look at things like our margin? Compression. And so one thing that I will caution folks against, 'cause there's somewhat of a knee jerk reaction when you see these software companies adding AI capabilities is they say, well.

Open ai, for example, we're, they're powering this underlying feature and they charge us per token. And so we are building a CRM. And so now we have some AI capability. So now we are gonna charge per user plus some variable amount of tokens, rate I think this is a, a giant mistake the companies are making.

So going back to. The, what I was [00:36:00] saying before, really those underlying elements of packaging, like your pricing metric, what is the unit of value you're charging customers for, are very critical. So if you have any sort of like high volume transactional business, your customers don't want to know what a token is, and now every sales conversation is having to explain what a token is.

I've never at once asked how many engineering hours it took to develop a feature I'm interested in. Those are your personal business. Don't show your customers your underpants. other words because that's just an impolite thing to do.

They don't wanna know about it. But instead. Does this thing provide value? How can we make sure that, we get commensurate value without adding friction to every single sales conversation, making all of our customers understand the inner workings of our architecture et cetera, that you want to try to avoid.

So I would say that's one of the bigger things that's going on right now. There's many, many flavors of AI conversation. So, depends on happy to talk about others, but that's one of the big ones right now.

Jeffrey Feldberg: So even the AI aside, [00:37:00] Dan, what I'm hearing from you is, hey, keep the magic, magic. Make it easy for the customer. They don't. Need to get all geeky and technical. We've got this bit or this token, or whatever the case may be. Here's how it is. Here you go. It's the magic carpet ride. It just works. That's all you need to know, and this is in this case of a SaaS business.

This is gonna be your weekly, monthly, quarterly, whatever, yearly subscription. Here you go. Enjoy and just keep it very high level.

Dan Balcauski: You want to try to find something that scales with the value that you provide to customers. And if you can also scales with the costs that you incur to serve that. And when you can marry those two things together into one metric all the best. Sometimes you have to make some trade offs around the edges because those things don't always line up perfectly.

But that would be ideal, right? And obviously you want it, along with that, you want something that. Customers can understand because the world's very complicated. And if I have to explain it over 20 minutes of what this thing is and how it's measured and the different [00:38:00] corner cases, maybe someone nods along on the phone with you during a sales calls like, oh, okay.

But 10 minutes later they're gonna go on with their day, be like I don't remember. I thought I understood it. And then that person's not gonna buy. 'cause we all know confusion blocks, deals.

Jeffrey Feldberg: Got it. And big. As we look at ai, again, very generally speaking, if I could, I mean nobody really can, but best guess, a year, two years, three years, five years down the road, where do you see AI in SaaS with what you're doing from a consumer end, how it's going to impact us? What's going on there?

Dan Balcauski: Oh. Man. Well, the leaders of the big AI labs say we're gonna hit a GI in two years. I don't know if I believe that, but I think will we live in a period unlike any we've seen in human history? If we look out five years what does that mean for the software industry? I think we'll have technology in places that we don't even understand how ubiquitous it will be.

Is there a threat to the kind of current. Business models perhaps, but I think [00:39:00] there's, multiple order effects that will happen in terms of, the ubiquity of software in our lives to do things that we never thought possible.

And so, man, I think it will affect and change every area of life.

Jeffrey Feldberg: Big, broad statement, bold statement. Love it. And you know what? There's a lot of truth to that. We'll have to just wait and see to see where that goes. And so then let me ask you this. I know there are so many questions I haven't had a chance to ask. Is there one question I haven't asked that you wanna put out there for the Deep Nation?

Something that you'd like to share?

Dan Balcauski: Oh, such a big question, man. You got the tough questions. Jeffrey. I would say Going back to something we were talking about at the beginning, what are common causes of problems that the people run into. I would say, the other big one is just, treating pricing as this discreet event versus a process in your business.

It's iterative. You're, it's a, monetization as a whole is a major lever for growth. Maybe you don't have. An expert in the building. But you know, I'm sure at one point a lot of [00:40:00] founders they were having to wear all the hats and so, you're gonna get better at it the more you do it.

And, the value is always changing and whether you're, competitors or launching new products or competitors are exiting the market. You have major macroeconomic shifts like a unexpected political trade, war or high record, high inflation.

So we need to constantly be reevaluating our relative value that we provide and not just treating pricing as a one-off event.

Jeffrey Feldberg: Some words to the wise. Again, deep Wealth Nation, your business model, your pricing, hope. Luck. It's not a strategy, an so get something in there because your business model is everything. So Dan, with that said, we're gonna go into wrap up mode, and it's a tradition here on the Deep Podcast where I have the privilege and honor for every guest to ask the same question.

It's a really fun question. Let me set this up for you. When you think of the movie Back to the Future, you have that magical DeLorean car that will take you to any point in time. So imagine now [00:41:00] it's tomorrow morning. You look outside your window, not only is the Lian car curbside, the door is open, it's waiting for you to hop on in what you do, and you're now gonna go to any point in time, perhaps Dan, as a young child, a teenager, whatever point in time it would be.

Dan, what would you tell your younger self in terms of life lessons or life wisdom or, Hey Dan, do this, but don't do that. What would it sound like?

Dan Balcauski: Oh man. Well, is Marty there with me? Does, did he say I been along for a ride or is it just me?

Jeffrey Feldberg: You know what? It's whatever. This is your ride. This is your gig. It's whatever you want it to be.

Dan Balcauski: always struggle with this type of question because I just feel like I wouldn't listen to any advice from future me. I would think, Hey, Dan you need to lay off the mushrooms. This has gone too far. So whatever that crazy person said don't believe them.

Jeffrey Feldberg: Fair enough. Fair enough. Again, your storyline here and in many ways I was joking aside with what you're getting at so many guests, it's probably the most common theme to this question, Jeffrey. I don't think I would change a thing. I don't know if I would listen to it to your point, or if I did change something I.

Man, I like my life. I don't [00:42:00] think I want to change anything because if I did, I wouldn't be where I am today. And so I tend to hear that a lot. And there's a lot to be said of enjoy the journey in the present moment. Just make the most of it. And you're exactly where you really need to be. So much in that.

And as we wrap things up here, Dan, if a listener, they have a question, they wanna speak with you, they wanna learn about their pricing, how they can take it to the next level, how you can help them, where would be the best place online to reach you?

Dan Balcauski: Yeah, so, happy to connect with folks on LinkedIn Dan Bakowski, and I also have a website, product tranquility.com. I try to keep up to date and blog there semi-regularly. And I also I have a podcast myself called Sask Galing Secrets. We wrapped up season two not too long ago, so interview scale up B2B sas.

CEOs. So folks who are pretty far along in the journey, most of those CEOs are all, north of 20 million in revenue. So trying to peel off their sort of secrets, it's not just enough to sort of build and get to that, 1 million mark. You think one to 2 million still doubling and then you go two to five.

There's all sorts of challenges along the way. So, [00:43:00] interview them to pick out their secrets and challenges as they grew their companies as well.

Jeffrey Feldberg: Deep Nation, it doesn't get any better or easier. Go to the show notes. It's all there. It's a point and click, and you can reach out to Dan across all the channels. His podcast, the website is all there for you. Well, Dan, it's official. Congratulations. This is a wrap, and as we love to say here at Deep Wealth, may you continue to thrive and prosper while you remain healthy and safe.

Thank you so much.

Dan Balcauski: Thank you. 

Jeffrey Feldberg: So there you have it, Deep Wealth Nation. What did you think? 

So with all that said and as we wrap it up, I have another question for you.

Actually, it's more of a personal favor. 

Did you find this episode helpful? 

Have you found other episodes of the Deep Wealth Podcast empowering and a game changer for your journey? 

And if you said yes, and I really hope you did, I have a small but really meaningful way that you can actually help us out and keep these episodes coming to you.

Are you ready for it? 

The dramatic pause. I'll just wait a moment. Drumroll, please. Subscribe. Please subscribe to the Deep Wealth podcast on your favorite podcast channel. When you subscribe to the Deep Wealth [00:44:00] Podcast, you're saving yourself time. Every episode automatically comes to you, and I want you to know that we meticulously craft Every one of our episodes to have impactful strategies, stories, expert insights that are designed to help you grow your profits, increase the value of your business, and yes, even optimize your post exit life and your life right now, whatever you want that to look like.

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So all that said. Thank you so much for listening. And remember your wealth isn't just about the money in the bank. It's about the depth of your journey and the impact that you're creating. So let's continue this journey together. And from the bottom of my heart, thank you so much for listening to this episode.

And as we love to say here at Deep Wealth, may you continue to thrive and prosper while you remain healthy and safe. 

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God bless.


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Jeffrey Feldberg

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