The B2B Sale: Do the Math
This post originally appeared on blog.up.co
I have some 20+ mentoring calls with founders each week. Many of them pitch me B2B ideas. Many of those ideas don’t work for one simple reason.
I think there are three B2B products that make sense.
1. Single decision maker
A single individual makes the purchasing decision. For example to use Buffer to manage social media. Typically these purchase decision are made by swiping a card and expensing it later. The price point here is $10s -$100s per month.
2. Department decision
You sell to a department. Say you are selling HR software. Or IT software. Or finance software. Several people can be involved a senior person / the department head will make the decision. You will send them an invoice and they will pay. The price point here is typically $100s — $1000s per month
3. Company wide decision
Multiple department heads are involved. The MD / CEO will make the purchasing decision. Long drawn out sales cycle and implementation processes are typical. Price point is typically $10,000s — $100,000s per month.
A good B2B business is typically priced in these bands, because the effort to market, sell and integrate the product with the customer means that unless products are priced at this level, they cannot be sold profitably.
So, when founder comes to me and pitches me a product that a CEO needs to approve that costs hundreds per month, then this leads to a short mentoring call where I would advise the founder to rethink what they do.
Do the math -- your business is driven by it.