The First Customer - Decoding Value Creation Through Pricing Strategies with Founder Dan Balcauski

In this episode, I was lucky enough to interview Dan Balcauski, founder and CPO of Product Tranquility.

Dan shared his backstory, growing up in Chicago with no direct entrepreneurial influences but finding his path through engineering and the software industry. He moved to Austin, Texas, over 20 years ago, drawn by its warmer climate and tech opportunities. Initially influenced by the dot-com bubble, Dan's entrepreneurial dreams took shape later in life, especially after a year-long trip around the world. This travel period helped him realize it was the right time to start his own company, leading to the formation of Product Tranquility—a consultancy that helps B2B SaaS companies optimize pricing and packaging strategies.

Dan emphasized the importance of taking the leap into entrepreneurship and not fearing failure, noting that if it doesn’t work out, one can always find another job. We also discussed how his business evolved from a broad focus on product strategy to its current specialization in pricing, refined through market feedback and personal expertise. Dan shared that most of his clients come through his network or referrals, though he has increasingly leveraged content creation—such as podcasts, webinars, and thought leadership—to attract new customers. He highlighted the importance of partnerships in growing a consulting business, noting that providing value first to potential partners can open doors to fruitful collaborations down the road.

Listen in as Dan Balcauski uncovers the strategies that shaped his approach to pricing and consulting in this episode of The First Customer!

Guest Info:
Product Tranquility
https://www.producttranquility.com


Dan Balcauski's LinkedIn
https://www.linkedin.com/in/balcauski/

Connect with Jay on LinkedIn
https://www.linkedin.com/in/jayaigner/
The First Customer Youtube Channel
https://www.youtube.com/@thefirstcustomerpodcast
The First Customer podcast website
https://www.firstcustomerpodcast.com
Follow The First Customer on LinkedIn
http://www.linkedin.com/company/the-first-customer-podcast/

Transcript

[00:00:27] Jay: Hi everyone. Welcome to The First Customer podcast. My name is Jay Aigner today. I am lucky enough to be joined by Dan Balcauski, who by the way, has the coolest way of remembering how to say his name, which we'll cover at some point, founder and chief pricing officer at Product Tranquility. very nice to have you, Dan.

How are you, buddy?

[00:00:43] Dan: I'm excited to be here, Jay. I'm doing very well on this beautiful spring day.

[00:00:48] Jay: Is it a million degrees in Austin, Texas yet?

[00:00:51] Dan: Close, close. We're a fingers crossed. Don't jinx us.

[00:00:54] Jay: Okay. I was going to say it's beautiful here. It's in the seventies. So I, this is my favorite. did you grow up in all, where did you grow up? Did you grow up in Austin and did you have, did that have any impact on you being an entrepreneur later in life?

[00:01:04] Dan: no, I grew up in Chicago and, I moved to Texas as soon as I could. I realized that, you know, I did not want to live in the tundra the rest of my existence. And so, I was one of the early folks to flee to Austin about a little over 20 years ago now. So I've been here for a while, but, no plans to leave anytime soon.

[00:01:23] Jay: Beautiful. and did you have any entrepreneurial, kind of influence when you were growing up?

[00:01:29] Dan: Absolutely not. father was a electrician. mother was a school teacher, did not really know any entrepreneurs growing up. Didn't really think in that kind of lens was more focused on, well, when I went to Graduated high school. It was the height of the. com bubble. And so, you know, I guess the, there were dreams of, you know, go get my engineering degree and then, you know, become a sent a millionaire at 25.

After you make it a website that. Didn't have any customers or revenue. It seemed to be very popular, a dream in those days. but it never really got that far. I graduated from college into the dearth of the. com bust. so, those dreams didn't really pan out in that, in that flavor, but no, there was really no one else to look around to and it wasn't really on my radar then, got a little bit more of a taste of it.

As I started thinking about going to business school and then, you know, met some other folks there who were more entrepreneurial minded, but yeah, I was not, in the. Water, as we say in, growing up in Chicago,

[00:02:35] Jay: Got it. so what was the first business you started?

[00:02:39] Dan: well, this was the first business I started Product Tranquility. so I had kind of super quick background. So I've been in the software space my entire career, most heavily on your product management and, product strategy side of things. So I had it in my head, you know, that combined my engineering background, that I would start some sort of product company.

But either I'm too pragmatic, I would go pragmatic, not pessimistic. I feel like I never had an idea that I really felt to go whole hog and commit myself to. I would be able to poke a thousand reasons into any idea I came up with. That is why it wouldn't work. So that never really got off the ground.

And it wasn't really until I, I kind of gone different levels of, you know, experience different companies and did a. Year and a half traveling around the world, trying to figure out what the next phase of my career would be. And I was like, you know, never going to get better time than now to try to actually go start that company.

And still didn't think of, you know, products that I wanted to throw myself into, but I was like, well, I believe in myself, so let me go try to do a consulting services business. And so that was kind of the net of it and went off. And yeah, that was like, well, let me see if, you know, worst case, I know how to go get a job.

And so, you know, we'll give this little experiment a run. And, five years later, you know, still treating it as a somewhat of an experiment, but, you know, I am pleasantly surprised with how it's worked out.

[00:04:15] Jay: That's beautiful. And I think that's a You know, you glossed over it a little bit, but I think it's a really fair and, important point that people need to remember is like, if you're putting off starting a business forever, number one, you're never going to start it. And number two, you can find another job. You can go back in, like, you're, you know, you're not. This isn't like, this doesn't something where it's like a death sentence and you can never, you know, people are going to turn away from you with their nose, you know, held if you go start a business. So it's a really important point that you can fall back on what you've been doing and if you want to go take the risk to start a business, do it.

And you know, it may be the best thing you ever did. And if the worst thing to happen is, I mean, I've told myself the same thing, which is why I'm keen on it. I told myself, you know, I have six kids and I'm like, if. Heaven forbid this thing falls apart. Like I can go get another job. I don't have to do this forever and I can pay the bills and, you know, it won't be that big of a deal, but you know, it was the best thing I ever did.

So I think, I love that. And I think that's a great point. so tell me a little bit about, pricing tranquility or, Product Tranquility, I know it's around B2B pricing and, you know, you kind of mentioned doing a consultancy angle. how does somebody work with you today?

[00:05:25] Dan: Yeah. So a product re equality, the very short version, all we do is help a B2B software companies, B2B SaaS, as we say in the business, with the pricing and packaging for new and existing products. So. Okay. Cool. We work with, you know, mostly what I'd say, you know, growth stage scale up, companies who, you know, they've hit some sort of usually inflection point in their business.

So a couple of different things that, you know, we tend to see are common triggers or things like they've outgrown their original sort of business. You know, target market, they've now sort of their new segment they're going after. Does it, their value and pricing don't align as well. They have grown organically or inorganically with like a new product line.

So they have a burgeoning sort of portfolio. And so you can imagine if you, Do an acquisition of another company and they have an entire different way that they price and package all of a sudden, you're going to make your entire go to market team head spin, you know, the sales guy trying to cross sell another product and they have to explain, Oh, it works entirely differently.

Once you get to the pricing conversation, it becomes very difficult. So those tend to be, you know, triggers, obviously, you know, we had You know, decades high inflation that nobody in the software space has ever seen, before. And obviously you had much higher gross margins, there, but, just keeping pace with, you know, rising costs.

I mean, you know, at fixed costs, obviously engineer salaries went up tremendously over the last several years as well. you know, so folks were, you know, that's been a trigger as well. and so, yeah, we'll go in and do either a, you know, diagnostic to help kind of figure out, you know, where there's strengths and areas of opportunity.

We'll, do advisory coaching or, you know, go and help run along side by side, do, you know, external market research, help, you know, do data analysis to help them figure out, you know, which direction they should go. So those are a few of the ways that we work with clients today.

[00:07:15] Jay: I like that. no, it's an interesting and I honestly never heard of a service, like that before, which is the same sentiment I get a lot with our company considering all we do is Q. A. And people go, Yep, that's all you do. That's all we do. so, but I love that hyper focus. and it lets you kind of, you know, really just become the master of that domain.

And I love the fact that you're really diving in there. So who was your first customer?

[00:07:39] Dan: Yeah. Well, it didn't start so focused, so I don't want to give the sheen of, you know, on,on,just positivity the whole way along. It was, 

[00:07:49] Jay: Sure. 

[00:07:49] Dan: started much more general. the idea before was I'd been in sort of the product management product strategy space again, had been in software the whole time.

And there was a lot of, you know, especially as you look at kind of startups, earlier stage companies, there's a lot of folks that do fractional work, so fractional. Chief financial officer, fractional legal counsel, or fractional chief marketing officer. So I'd kind of looked at that as like, well, there's not really anyone doing anything in the product space like that.

So either there's a golden opportunity or it's a terrible idea. It turns out it's a terrible idea. so, happy to elaborate, if anyone's interested on, why that is, but, you know, over time, refined it based upon, what we're doing. You know, a blend of the experience I could bring to the table of problems I'd solved and, you know, most importantly, market need.

And so, worked on, you know, it was actually quite a extensive process of iterating over time to figure out, you know, what exactly, that, you know, focus should be. So, Don't want to give any sense that it, you know, this was handed down on high and it was predestined from the get go. there was a lot of sort of wandering in the wilderness for a while to figure that out.

the first customer though, you know, that was early in the journey. so, as I mentioned before, I was. Starting this business. I decided I was going to make this a, well, we'll give it a six months. You know, if it doesn't happen, yeah, we'll let it go. The first customer, like many folks who go off and try to do more of a services type business came through reaching out to my network.

there was, you know, ex colleagues I'd work with. I will give a recommendation to folks. I made it a lot harder on myself than need be. I don't regret my year and a half backpacking adventure around the world. but let me just say, I was not doing a whole lot of business networking when I was on that trip.

And so a good chunk of my network had, you know, it wasn't, You know, it wasn't in the deep freeze, but it was definitely not warm. so had to do a lot of just, Hey, reintroducing myself to a lot of folks and saying, Hey, this is kind of what I'm thinking now. And, you actually wasn't that long. I think within like probably 30, 60 days, if I remember back, you know, it was against five years ago.

So I think it was at one or two months, I had my first customer and or clients and, you know, they needed some. looking at some retention problem and a customer retention issue. And so I was able to make that acquaintance through, you know, again, my network who was, they had a couple of investors in that space as well, and then one of those investors introduced me to one of their portfolio company CEOs and had a conversation.

It was kind of off to the races from there.

[00:10:37] Jay: No, I love that honesty that it's not all sunshine and rainbows because it's not. and you know, there's the scary figures of like, you know, whatever, 90 percent of businesses fail and everybody hears those things and they go, well, I guess this is it. I'm not gonna, you know, I'm gonna try it. Have you dipped your toe into partnerships and working with, you know, multiple organizations through kind of connections through partnerships?

have you done any of that work, or has it just been kind of one on one, you know, finding people that might be a fit, pitching at them with what you can do, or have you kind of broadened that out a little bit to maybe work with a group of like, cause you mentioned the venture guy or, you know, that, or, you know, there's investor groups have a bunch of companies in their portfolio. is that an angle that you've kind of looked at or taken at all?

[00:11:21] Dan: Yeah, no, it's a great question and there's. So obviously this advice is going to be different for different folks because, software is kind of a weird industry. calling software and industry is almost a misnomer. Mark Andreessen of Andreessen Horowitz fame. You know, he had the famous phrase software is eating the world.

And it's true. It's like the software businesses span every single kind of industry. And so there's very little in terms of a software industry, as it were. And one of the few sort of connection points is investor groups, whether it's private equity or venture capital. There's some more loose sort of affiliations of software groupings, but it's not like, you know, I imagine if you're in your automotive, right.

If you were Ford or GM or whatever, right. They, you know, conferences and everyone there is building cars and they're all about, you know, cars. You don't really have the same sort of effect. So there's not really as much of a, you know, there's not trade magazines for software, et cetera. So I would say that.

Of course, my customer acquisition and marketing and visibility building has evolved over time. I kind of look at it in a couple of different pillars. So the first is, I think you just have to do standard business development. so you're, you have to kind of maintain relationships with people, especially with the type of work that I do, it's really built upon a level of trust.

And intimacy, because there's a large amount of vulnerability involved in somebody hiring a external party to come in and solve a pretty hairy strategic issue. And so there's, you know, those relationships need to get built over a very long time. And so you just kind of need to be there, you know, nurturing those, relationships.

The, I would lay, I've layered that on over time because you do need to think about. Ways that you can leverage, especially if you're running a smaller firm, you know, you could only make so much noise. Like if I write a blog post or I do a piece of social media content, I mean, yeah, that has, has some reach, but you know, or you have a newsletter that has some reach, but it's always going to be limited by the amount that you can kind of do on your own.

And so this idea of partnerships, is something that I've added to the repertoire over time. But not, I don't think it displaces sort of the one on one, but you look for ways to sort of figure out who else is playing in my pond, in adjacencies that I can add value to them. I think that's one of the, I think it's maybe one of the biggest.

Missteps that people make. And when I say people, I also mean me when they go out on this journey, because it, you know, the thing that turns everyone off the most is when it feels highly transactional, when it's like, Hey, like, you know, If you know anybody who's looking for, you know, pricing work, for example, like, you know, reach out to me and I'll be happy, you know, versus I think what's worked a lot better is not indifferent from what you're doing, which is like, Hey, how do I find other folks who are doing interesting things?

Make them happy. You know, look good so that, you know, we can mutually create, you know, a piece of thought leadership, a piece of content that, you know, highlights them in their, capability and their firm's capabilities or their company's capabilities, where we're talking around shared market problems, right.

It's ultimately valuable to both of our, audiences, and therefore, you know, that can, you know, I think again, those sort of you're nurturing over time as well. So, you know, it's hard to say in this business that there's, You know, there's no easy answers. There's no like, you know, you know consulting agencies hate this one weird trick to find customers

[00:15:19] Jay: Right. Yeah, no, I think that's a really great point. yeah, I mean, I think the way to people, you know, kind of like you illuminated with the pond, comment, there's who else serves my customers. Who else is working with the same people that I want to work with? I want to talk to that guy or that girl.

I want to talk to the people that are working with my customers, because they're probably going to have some crossover or something over that. I can probably send them business. And that's the other thing I would say that I've learned about partnerships over 10 years is you got to bring value, like nobody wants to partner with somebody that's a one way street, nobody really cares that much about a 10 percent referral fee on like a hundred dollar job, right?

I mean, what, I mean, but. What is that going to get me? Right. but.

if you're talking big ticket items or you're talking, you know, two way streets, people's ears perk up. But I've, the one thing I really have learned is if I can send somebody a hot lead, or I can send somebody to somebody that needs their services tomorrow, It opens up a lot more doors with the partnership where they go.

Oh, yeah. You know what? We do have a couple of people, you know, that we work with that may want to work with you. And it's definitely gotten me a lot more business, providing value 1st. Right? And just coming out of the gate saying, here's somebody that I think would

fit what you just told me is your and your customer.

Love to make an introduction. And if nothing else, you stay in the network and then, you know, maybe down the line, they do have somebody that's a fit for you and you can kind of grow that partnership that way. So I love this, you know, playing in the same pond,metaphor there. that's very much the way that I approach things with partnerships now too.

and that, so let's lead that into the next question. How also you doing sales? Do you outbound stuff? Is it all content based inbound? Like, what's, is it a mix? Like, what are you doing to get new customers today?

[00:16:55] Dan: so the, I don't believe that in my line of work, It really makes sense to do any sort of cold outbound. I just don't think that's, workable for the type of, you know, services that, You know, I offer, I'm willing to get proven wrong, but you know, in, when you're running a business, you've got to choose the, you know, go to market approaches that you think are the highest probability to win.

and nobody, that I've seen sort of doing similar type consulting has, you know, real, you know, Been real successful with that. And again, like, I think it's just a level of trust that is, makes cold kind of very difficult to pull off in practice. so, you know, in terms of the, you know, in terms of how, like, I or prospects, who could become clients end up, you know, in a conversationit's definitely turned a corner from, I would say those, I say it started five years ago, probably at about the two year mark, the, it flipped from folks who kind of knew me directly from my network or a direct introduction for my network into folks who had come across.

You know, my content, you know, either appearing on podcasts or I host my own podcast or, you know, I'd done a partner, you know, event webinar. and then they were like, Hey, like I've got this problem, you know, you, like, I like what you said, you know, let's have a conversation. so that flipped probably, you know, two years in.

And I think that's a big thing too, for. You know, a lot of folks I see going into this because whether or not it's, you know, one year for you, it's two years or it's eight years, like at some point, you know, everyone's network dries up. There's only a lot of people go into it and they have like massive success.

Like year one, they just go on LinkedIn and say, Hey, I'm out there for to help. And. like the shiny new penny, everyone's like, Oh yeah, I know Bob. He was great. I know Jay. He was great. Let's yeah, I've got this project. Could you help us out? at some point that sort of runs out and then you're like, okay, what do I do now?

so, I think my number one piece of advice who are folks who are in that first year and are like, man, just, I haven't had to do anything. Like things are just falling in my lap. I said, Enjoy it. I'm very happy for you. Take all your money and save it up and start working on how you fill the pipe when that stuff ends, because it will end.

so, so yeah, in terms of the, how folks find me now, I mean, it's, you know, I wish there was rhyme or reason it's a lot of, you know, just being public, being on social media, being on, you know, podcasts, doing my podcast stuff, because, you know, folks would be like, Oh, so and so said you're Good with this.

And then I don't know who so and so is. So it's like, it's got so far removed from my initial network that, you know, there's, it's very little to, you know, trace that, trace that back. it's a niche enough industry as well. I think that's, you know, it goes part and parcel, right?

If you don't have a strong definitive area that you're sort of known for. Those type of introductions don't happen because, you know, it's like, oh, I help with strategy. Well, it's like, I don't know, like that. That's not memorable, right? Or the other problem people run to is they try to be, oh, I could do strategy and operations and whatever.

Well, the problem is as soon as you got to the second and like the person already forgot what the first thing was. So, you know, it only really works if you really sort of hone in on that kind of first step on what you were, you know, what you're gonna do. but like I said, I really do, you know, the partnerships gotta bring value.

I think that the mindset that has been the most helpful is those activities you're gonna do. Whether it's a podcast, you know, or a, you know, partner webinar or a piece of thought leadership content. I think you really need to make the investment. That you're making about the relationship with that person because the return is going to be so foggy, distant in the future.

If you don't, you know, I think you could just, you could become jaded of like, well, why am I pouring all this effort into it? I'm not seeing a return onto it. But if you're really are invested in the relationship with that partner or, you know, that other. party, then I think that gives you the incentive and the, you know, mission to keep going.

Cause you know, that like incrementally you're still adding value to, you know, that person and, you know, to the world, even if it's not appearing on, you know, this quarter's income statement.

[00:21:21] Jay: No, that makes a lot of sense. I love all of that. And I think.being visible, you know, you get beaten over the head and, you know, in college and young career about networking. And like you said, you kind of soak that pool up pretty quickly. And if you don't, you don't prepare for those days that are coming ahead.

you're going to be kind of up to up the river with no paddle,when all of that dries up. So I think it's

a, there's a really good,

yeah, 

[00:21:44] Dan: will give a little bit of a tactical piece of advice. Cause, cause I, I made the negative comment before that I've made it harder on myself by letting my network go cold while I was traveling. If you want to be an entrepreneur. So if you're aspiring, entrepreneur and you're working in a corporate job right now.

Take advantage of your current position to network because it's way easier when you have a full time job, you've got a VP title or director title, whatever it might be, make as many good connections like you set yourself a target of. I want to have three conversations with new people a week. Do that for a year.

By the time you leave your position to go start your company, you're, we'll be in such a better place. Do not wait until you're out on your own and then try to start. It will be way harder. So, so if that's something you're dreaming about and you're like, well, I can't do it right now. I gotta make it to my next bonus check or whatever, but I'm going to do it.

Like that would be something that I would say, go do right now. Cause that is something that 

[00:22:44] Jay: that's beautiful advice. And I mean, you're dead on, right? I mean, it's like, it's like looking for a job when you already have 1, right? It's so much harder when you don't have a job, but when you have 1, it seems like everybody wants to hire you. So, I think that's a really great. I love that idea.

3 a week. get out there and meet people. Yeah. I mean, use the use it to advance. I mean, even the people in your. In your company, right? I mean, you can network in company. You have a bunch of resources right there. You don't have to go out and do a bunch of crazy stuff. Just meet people and be a personable human being.

And it goes a long way. all right, we'll have one more question for you. non business related. if you could do anything on earth and you knew you wouldn't fail, what would it be?

[00:23:22] Dan: Oh, man,

that is a good question. I hate to say it. I mean, I kind of feel like I'm doing it. I feel like I, I had the, I had this conversation with myself on a mountaintop when I was traveling around the world for a year and a half and I 

[00:23:39] Jay: you could travel around the world. So, I mean, that's, you know, you've done some things.

[00:23:43] Dan: yeah, you know, I would say a thing that maybe, you know, a thing that really sort of. Scares me. I would say is, you know, I've done a set of, I've done probably, I think at this point, four, 10 day meditation retreats and, I will be eligible to do after my next one to do a 20 day. And then you can do a 30 day and do a 45 day.

I think, you know, and I guess you, you really can't fail. but, you know, if I had the confidence that, you know, that I do, I would, I could make it through. I would probably say the 30 day version of that, because.

[00:24:16] Jay: That's the first time I've ever heard that. it's beautiful. I'm a huge meditation, junkie, you know, I'm all about it. at least 10 minutes a day. All right. well, cool, man, if you want to find you, Dan, we'll find more about Product Tranquility. How do they do that? How do they find you?

[00:24:30] Dan: Yeah. So, Product Tranquility. com. I try to blog fairly regularly there. Folks can contact me there. I'm happy to connect with folks on LinkedIn at Dan Balcauski. just let me know. You heard me on the podcast. I could separate it from the rest of the LinkedIn spam. If you're in the SaaS world or you want to think.

Learn how SaaS CEOs grow and scale their businesses. I've got also got a podcast called SaaS scaling secrets where you interview,scale up B2B SaaS CEOs. So these are all CEOs who have grown their businesses, sometimes multiple to, you know, 20 million plus. and so, you know, we talk about all of the challenges that they have.

When they're, you know, scaling, because I think a lot of people really focus on, you know, that sort of zero to one story, the entrepreneur in a garage, well, okay, that's great. But what happens when you've got, you know, 50 employees and you're trying to get to a hundred employees and you've never managed a hundred employees before, you know, and then everything starts breaking or, you know, you go into a COVID pandemic lockdown and like, have to figure out how to maintain your culture as you're trying to double head count, you know, year on year, so it's, so, you know, Definitely trying to spread the love insight on that side as well.

[00:25:36] Jay: Love it, brother. All right. Well, Dan, you're great, man. stay cool down there in Austin, Texas, and we'll catch up again soon. All right. Thanks for your time, buddy.

[00:25:42] Dan: Thank you, Jay. 

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