Get in touchA case study about helping an online sleep school startup to explore alternative pricing models
“You can get everything in the product right but lose out on a huge swathe of customers if you get the pricing wrong. Andrew and Maia helped us to understand how our customers perceive our pricing and what would be the impact of changing it.”
Damian Kimmelman, CEO of Batelle
Batelle is a startup that has built a premium sleep solution for babies and young children. It operates fully remotely, with a combination of training, live support and devices that help parents to get problem sleepers into slumberland. There’s no “crying it out” and they aim to turn things around in a matter of weeks – it’s remarkable!
When we were brought in, the sleep solution had a single flat price and the team were keen to explore whether other types of pricing might open them up to a broader audience. They wanted to understand how current and prospective customers perceived their price, as well as to learn from lost-leads who had decided on a different solution.
Changing the pricing model whilst in mid-flight is a big decision. Batelle had some hunches about what might work, but wanted to take the time to speak to users to validate whether they were making the right move. It’s not always easy to tease out what people are willing to pay for a product or service, especially with current or potential customers, luckily we had a few tricks up our sleeves.
When it came to studying price and purchasing with recent parents, there were three main challenges:
We spoke to a mix of recent buyers and those who were churning midway through the buying process. We wanted to understand what kinds of families these different groups were and what role price played in their decision to buy or not.
We spent time with super sleepy parents across the US. We talked to one as they snatched a moment of quiet from their car or another while they bounced a restless babe beside them. We took care to make sure that we used their precious time to the fullest and made sure that they knew that if they needed to tend to their baby mid-call they absolutely could.
We eased them into talking about money by discussing the baby-gear they’d been buying. Then we delicately introduced exercises that allowed our interviewees to position Batelle’s product against alternative sleep solutions. By doing so we unpacked their perception of the price tag. An interesting angle we explored was how tiredness itself affects decision making and purchasing behaviour. There were also important dynamics which came up between parents, so in some cases we ran joint interviews.
“Based on Muir Wood & Co’s analysis, we were able to move forwards with our pricing strategy with confidence. Our $9MM run rate is a reflection that we’ve hit the sweet spot since then.”
Damian Kimmelman, CEO of Batelle
As key outputs for the project we built/adapted some cool frameworks to help Batelle think about pricing:
We were also able to provide detailed information about the circumstances and motivations of the different customer types we spoke to. These outputs together enabled the Batelle team to take the decision on how to evolve the pricing of their product.
Another important outcome was to contextualise the problem for the sales team. The detailed questioning done in the research calls provided shortcuts to understanding and communicating in a customer-centric way with future customers.
Since working with Batelle, we've done pricing work for a number of B2B and B2C clients and we'd be happy to run a project with you, or help you run your own. Email hello@muirwood.co.uk or contact Andrew on LinkedIn if you'd like to talk.
Or if you want to have a stab at it yourselves, here are some resources we wrote last year:
Research Trail Guide: Price research #1 – the pricing piano
Trying to build pricing research into your customer interviews? Here’s a useful framework to add to your tool belt.
Research Trail Guide: Price research #2 – Relative spend
Are you the bun or the pickle in your customer’s life? Analysing their spending is the best way to know for sure.
Research Trail Guide: Price research #3 – The Feature Sundae
The next tool to add to your price research belt: work out which of your features customers are most likely to pay for. Hopefully your product isn't all sprinkles and no ice cream!
Research Trail Guide: Price research #4 – Price thresholds
Just like eating spicy food, everyone has a different tolerance for spending money on things. Here’s how to get this info out of your customers and use it to find out their willingness to pay for your product.