 Always like to enter with a dramatic music. It makes things better. I was asked to speak about pricing a product And I actually decided not to because I want to talk about t-shirts So I'm sure quite a lot of you here are Owning one or at least you have been able to see one be it on the internet or in some sort of a shop If you think about a t-shirt Sometimes the value is quite important if you're going on a trip somewhere far away And your luggage gets lost this t-shirt that is on your back becomes your only rescue to be able to stay on the other hand you have potentially a lot of t-shirts and you change them according to your mood color But how do you price that what is actually the value of this? so I decided to go on one of my favorite places the internet and checked what was The thinking of the internet about the cost of a price for a t-shirt What I was able to find out is that you have the possibility to buy a t-shirt for $1,250 clearly there's some gold embedded in it or something special I Decided to also check if there was a possibility to not pay that much and The outcome was fantastic $2, I don't even know what I can buy for $2 in Helsinki, but I'm sure that you know with a 67% discount this t-shirt that kicked off at 599 You've made a bargain and you're able to go through this airport situation in a successful way probably In a good kind of manner well The truth is is this this t-shirt symbolizes every single product that every single one of you is building here We have the necessity to use t-shirts, but we also have the necessity to use software. That's why we're building it That's why investors put money behind us the problem that we have though now is that we're living in an economic situation where GDP is not growing significantly globally There's an economically unstable set up which is allowing for businesses to question the cost expenditure to question the size of their teams and Ultimately the only thing that saves you is the idea that you can put a cost for your price That is able to justify all the efforts that you've put In a reality where maybe it's not particularly allowed to charge a lot because people are not willing to spend a lot well If you start thinking within this context of what is particularly useful to you like how do I go about on Phasing out maybe obesity out of my pricing. How do I actually create value? For the businesses that I'm working with or for the consumers that I'm working with The internet is yet another place that can confuse you significantly because the truth is any startup playbook is actually allowing For us to look at different tactics that are not always maybe the most appropriate for your business To start off with we'll talk about the freemium model This is the idea that someone sends you the link to their app and asks you please download this Oh, by the way, probably like in 24 hours. I'm gonna charge you something You've seen some value and then you've gone out probably because you don't want to pay for it because they didn't convince you that much There's of course the retainer model someone tells you I'm going to come I'm gonna deliver and Based on the outcome. I'm actually gonna be charging you a percentage This model is interesting because it has been used across the board There's a lot of companies that have built up a lot of revenue out of that but in today's reality it is probably one that you should remember because Most likely the cost is associated also to the value that you're bringing to the clients We know of course in sauce like you have also per feature pricing. You're talking about I'm gonna add a module to the platform and then you're gonna be able to cover even more data points There you go but if you want to go into that tangent where you are assessing maybe further your Data or you're inviting further clients then you really are talking about More money that potentially you make in this person will be charged why this model is particularly confusing is because Before the customers checked and tested this particular feature They don't really know if you're bringing this value to them, right? They probably only understand the value that you've been able to bring beforehand This discounts there's vouchers if you think about this t-shirt it was 67% discounted and It was also one where I don't even want to talk about the environmental footprint associated to it. Sorry guilty climate tech founder and on top of that like there's been a set of steps that have been taken one after the other for this business to be Maybe successful marketing and so on but the ultimate connection that you have to the particular brand is this t-shirt That is of this quality that is coming at a lower cost, but at the cost of what? Regardless of the model that we're talking about the pricing setup that you're gonna go for the tactics the vouchers the discounts We're really talking about the destiny of a t-shirt, which is going into three particular tangents You have sales after we've gone through the whole production of the t-shirt transportation the water consumption the marketing you are looking into a reality where Maybe the t-shirt gets sold Yay, we know the margins. It's gonna work out Maybe the t-shirt doesn't get sold so we come to the end of the season And there's an outlet or some sort of a setup where someone tells you black Friday or whatever it is Maybe there's a case where the t-shirt doesn't even get sold And this means that all of the efforts for a business that has taken the steps beforehand The marketing campaign the materials the value that has gone into the creative process of creating this particular product Is gone and it's wasted Because maybe the t-shirt is going to sit on a shelf in the office of the company Maybe it's going to go on a landfill Maybe it will be thrown away and kind of not even properly recycled You might wonder like why does this really matter? Why are we talking about t-shirts when it comes to a software hardware tech conference For six years, I've been building plan a and what has been particularly interesting is that As much as we might want to be this cool tech startup community that is always with the most innovative ideas The moment when you're actually starting to scale and you're starting to play the big money game where you are really looking into How do I actually support a corporate? How do I actually bring value to my clients? You are looking into the reality check that The tech cool startup game is not anymore allowed because you need to deliver value That is not just for the next quarter But with the thinking that your company is there to IPO your company is there To get to a growth level that is allowing for success And all of a sudden when you're in an economic situation like the one that we have now and I'm sure quite a few of you here Are looking into fundraising are looking into getting more clients Clients and investors simultaneously question at this particular point If the value that you're putting out to the world Is really making enough of a difference for you to be able to withstand any of the challenges that are coming up for the next economic situation Because the startup might seem like something that you're building for a few years And then you move on to the next thing or you work in it and you move on to the next thing But the successes that we are looking for and the successes that we follow Are the ones that have made it on to the next stage and they've turned themselves into big companies Which I'm sure is the ambition that all of you have So all of a sudden this visual that you see here becomes a lot more relevant Because at the end of the day like we've assessed the steps that come Into making this t-shirt or making this software But where do we make the money? With the margins, right? You can sell at the highest price You've calculated according to your financial model. What is the revenue that you'll be making? What is the ROI on all of these efforts? Boom, you're able to sell and maybe even with the premium or at a larger quantity If it's the t-shirt or you're able to sell to even more users your product What happens if your product is maybe not doing so well? But you need to kind of get to this milestone That is getting you to get the next fundraise done or get the next big client because You've been able to validate that you can work with that many people You discount and you're like I'm going to do a poc The poc is going to cost maybe to the corporate 3k 5k 20k But it will allow me to demonstrate to the world that I validated my product, right? This is when you go into kind of selling at the lower cost, but with the hope that the return on investment for that to be your next milestone that allows you to go and Excite these investors and next clients and any kind of employee that maybe doesn't yet believe in the company But you truly believe in them Companies goes bust as well. Like we've had quite a lot of cases. There's been a lot of news as well about companies and When this happens, this is because the sales didn't work and that there was nothing sold. So there's not even margins to be made Well Margins are particularly important for a business that is for example in the food industry There the margins are tiny If you look into automotive same story, you're building something that is super complex We have clients like BMW They're building cars of the future and of today that are Absolutely mind-blowing like with 50% less material But there's been years of work that have gone beforehand When you talk about startups when you talk about software, you're really talking about the opportunity for you to define your own reality Where your model can be the premium your model can be charge per feature, but the beauty is that There's no allowance for anyone to kind of give up on Testing if one model works or another doesn't And with this essentially for you to define as a startup founder the pathway That gets you to this highest level of margin highest level of revenue That's why we start up and not corporates because we can test right and we can do MVPs and we can allow ourselves to experiment so What does a margin mean? Well, actually nothing We in plan A have been working now with 1500 companies companies like the Chloes, Deutsche banks, BNP, Apex, Gany, Philippa Kaa And what we do for them is the south platform a decarbonization solution that allows them to understand the return on investment on sustainability But with all of the hype around sustainability you can also imagine that probably the names that i'm listing are A notch more excited than others So we've needed to tell them, you know, we're opening up a new industry. We're digitizing sustainability What are your margins the investor asks you are well actually I don't know yet because I don't even know how to price my product When we started working with companies and corporates, I remember the first POC that we did with Société Générale They paid us 6,000 euros for us to develop a full module on our platform That was for 20 people worth of work in time Which is essentially allowing us to enter for the first time into this massive corporate Did we do it? Yes. Was it an amazing opportunity? Of course Was this a lot of money that we were able to make? No Did were there any margins? No, we were actually the loss of what we ended up putting effort and Allowance and resources and time into So when I say nothing is what a margin means is because We as a tech community have the best opportunity to experiment a lot But also understand that the only allowance that we're ever going to be given To have visibility as a company that is three people But you know that you want the whole world to know about you Will be when we allow ourselves To only fixate on one thing and this is Turning price into value So through this history and I can tell you a lot of sad stories happy stories there's been a lot of learnings and Alongside of course the practical learning of being a founder that goes on to understanding From the day to day from the operational side what the sustainability mean for these businesses I've also read a lot of books and I'm sure that all of you have relied a lot on the startup bibles that have given us an angle to fill The pain of someone without maybe experiencing it ourselves A few lessons that I've learned or at least I've highlighted from all the books that I've read I think more goes into the practice rather than in the bible setup is actually To sell value not features First lesson and probably the most important one if you don't remember anything of this presentation remember this one As a startup founder you are standing in front of a big vision In front of an exciting opportunity that you're building together with your friends with your co-founders with your um co-workers in the company that you currently in but you're moving on to another one and What you need to understand is that the contracts that you're going to be able to sign Are not going to be based on the three buttons that are missing on your product But it's going to be based on the fact that in front of you a corporate even an individual Someone is sitting with the wish to be able to solve a problem for themselves When we talk about this situation that I mentioned in the beginning with the airport where you've lost your luggage You have one t-shirt I can pinpoint probably like 10 of you and we'll get 10 different options of how we solve this problem Someone is going to buy another t-shirt another person is going to wait at the airport Maybe someone's going to cry there's going to be some people that are going to call a friend to get a t-shirt And what this is here to show you is that for every single feature that you build for a client You need to have validated it with a lot of data points That it really is worth the time and effort of your tiny or huge development team To turn this value or problem solving capacity Into something that is allowing for the client to solve its problem I remember the first time when a client called us gani is one of our first fashion clients They signed up with us when we were six seven people in the company And they chose us over like these big software companies That were doing not similar stuff But at that time something that could be potentially overlapping related to data collection and so on And I remember getting the phone call of actually us being selected as a partner And loren said well, we chose you because you have the value alignment Because you are the only ones that have talked to us about decarbonization rather than only about data gathering Carbon accounting and so on But also because we see within you someone that can solve long-term our problem And we're signing a one-year contract. So if you don't deliver, you know, we see you later Still one of our most exciting and most innovative fashion clients Something that I love to do and I think for anyone that knows me it is not Secret that I truly believe in the concept of breaking the rules When I started plan a there was no one on the green tech field 2016 there was barely anyone talking about that in the investment community All the vcs were actually a little bit still Is this an NGO kind of a company? Is this actually a company that can make money? And what Ended up happening was that for two years I had to go on a phone call with A client potential client an investor and always check in with two questions If there was a level of knowledge about the topic That would allow me to explain what we were doing or I actually needed to go a step back and be this person that is dedicating this half an hour to The opportunity to give a chance to a partner to go on this sustainability journey for themselves The regular of the rules in this kind of case is that usually we as people get a little bit Obsessed with kpi is a little bit obsessed with day-to-day kind of analysis of the effectiveness of the operations of our businesses But if you and I'm assuming Many of you are working in new fields like AI or anything in sustainability You might be building something that does not exist yet. You might be offering something to someone that is Not even in their minds yet defined as a product that has a shape and a form What this means is that you need to understand that if someone tells you well Look, we don't invest in fintech because now these are not good times for fintech At the end of the day, this is just the opportunity for you to define Am I a fintech? Am I a prop tech? Am I a climate tech? And what are the connecting points that I have between the different industries that I am connecting my solution to because Maybe it is actually allowing for multiple problems to be solved for multiple types of industries or tech approaches When you get in a conversation with someone that is not understanding what you're building And there may be questioning the validity of it or whether you've been able to spend enough time to Justify that this product needs to exist. It needs funding You actually need to take a step back and always ask them. Okay, which rule do I need to break? Do I become a little bit fixated on educating them? Or do I become a little bit fixated on understanding that this conversation is maybe not worth my time And I'm going to go somewhere else and find the next partner that is going to trust me And my company pricing is quite interesting when it comes to actually asking for money I remember the first times that I would go in front of a business and I would be asking for By the way, this is the invoice. Maybe you can sign the contract Sales is elegance sales is actually being able to go in front of someone Explain to them how you're going to solve a problem for them, but also allow them to understand that They might not feel at this point that they want to pay you Because they don't know that you really are going to be able to solve them the problem And this is where the freemium model maybe comes in This is maybe where the opportunity to work with a retainer come in This is where you also have the possibility to focus on first learning and studying One two five ten use cases to then essentially Start understanding how much do I price Do I even price am I allowed to And also is this product that I'm building something that is truly understandable for the clients So that they can go out and justify for the budget holder to really go on and Sign this contract that might feel a little bit awkward to ask to sign in the beginning When you come into slush, I'm sure many of you have been here many times How many of you have been to slush before? Oh, wow new audience. That's interesting Good kudos to them for being able to, uh, invite not only the usual suspects You come in this place and you just don't know even what like to expect it feels like a club You're listening to all these like interesting people You're chatting to a lot of different investors. You're chatting to a lot of different potential partners and You're thinking wow, I'm gonna remember that right When you go out and you start thinking well, how much do I price how much do I actually put as a number and money for my product The first thing that you need to do Is actually after you validated that your product exists and someone wants to buy it wants to give some money for You go through the same user experience And you actually see where maybe it's not going so well Maybe things need to be fixed I've seen a lot of companies go out and ask for Like price increase against the same value that they're bringing to the clients or They are asking for a renewal of a contract when they didn't deliver because there's kpis. There's like, you know Numbers we need to achieve our targets The most important bit when it comes to reliving your clients experiences to allow yourself to really fix any of these user experience issues That are related to potentially you're not always being perfect as a company that is 10 15 300 or thousands of people And then comes the bit where I obviously have my biggest responsibility I can talk a lot about pricing. I can talk a lot about Money about value about customer experiences, but as a climate founder I also have an additional reality check that I live by on daily basis In the last few years, there's been a few hundred percent increase in climate risk related costs These are costs that are not allocated anywhere On the bill of any institution only If you take like an infrastructure that is being destroyed by a flood This is the insurance company the finance company. This is so many different stakeholders that will be impacted by that So if we go back to this t-shirt There's quite a lot of stakeholders that potentially could be In one way or another losing value And not making money Why do these costs increase? Well, I'm sure that many of you here Are aware of the increase in emissions that we have. This is essentially this T-shirts being produced and not being sold scenario where the landfill of You know fast fashion or any kind of Products that are not maybe made to be turned into One that goes into a circular model To be visualized it's industries transportation. It's a lot So if we go back to the t-shirt, uh, the two dollars versus the 1200 And this is with a lot of question marks as you can see Becomes a bit more of a different game. So when you talk about these margins, you really need to understand that There's materials There's the environment There's factory workers. There's also the distribution the marketing and a lot of other things so For anyone that is not even working on climate This calculation is incredibly relevant because at the end of the day the equation for you would be How much of my team this time went into that? How much of our marketing budget went into getting this client? Actually, how much effort did we put from the sales team? To be able to sell this t-shirt or this software subscription So How much does this t-shirt cost is probably an equation where you have uh now Hopefully a lot of ideas of understanding that There's a bunch of things that do not fall within any of these premium discount or whatever models Because the true value lies within you with the knowledge that you have for your business within your team members Within your clients happiness And within the possibility for you to increase margins But only when you've delivered and only when you've checked if these clients have been happy ones and I wanted to kind of finish off with a few examples of what does it really mean to be a happy Software founder that is delivering value that is able to make the biggest margins All of these rules that I mentioned apply across industries and what is important to learn about that is that a happy user is this The willingness to pay of this user is zero because There's no baby wallets yet. Maybe But the willingness to pay by the buyer is really high And this is another equation that you need to add into your pricing model Who's paying who's buying and who's using? There's other happy users where when you see your bank account and you open up the app you look into the amount of money that should be there And of course, maybe in the beginning when you signed up with this company You're like, yeah show i'm going to test this new fintech solution But when your salary goes at the end of the month You know that this is the place which you're super loyal to because this allows you to live your life So all of a sudden both the buyer and the user which is in this case the same person Are aligned on the higher Contribution that this product is doing to your life This is also a happy user. I actually was yesterday questioned on The necessity to put football fans from Helsinki Apparently that's contradiction when it comes to which team are you supposed to support? I can explain that I do not know if i'm on the good on the bad side But if you look at this calf given we started with t-shirts, you're actually looking at someone that At the moment when they go to this football game, they're probably like super excited to allow themselves to be Standing for their team with this probably overpriced high margin scarf that Has made them happy The final happy user is the one which goes back to this airport case I remember there was a few months ago a situation where I was flying from somewhere to berlin and In the middle of the flight they tell us we're not going to be able to land in berlin So We actually need to stop over in hanova And there's a bus that is going to be waiting for you to take you to berlin It was 2 a.m. In the morning We were told there's only one bus But there was actually too many of us so it became a bit of a gamble who's going to make it who's not At the end a second bus appeared so the drama unfolded in a positive way But actually, um, it was already 3 a.m So what we ended up doing all was Getting on this bus and thinking, you know, sure the payment Was not done by me But I would have been willing to pay for that And the buyer the airline company that paid for it also had a high wish to pay Because they were solving a problem that could have gone quite bad of organizing all the hotels for everyone in hanova The final key element of doing good pricing is related to an anchor This is both a metaphor an actual term related to sales Anchor prices the concept where you are in the mind of your client allowing for them to have A reference point of how much your product should cost We now know that we have two reference points for the t-shirts the two dollars and the 1000 The truth and the anchor price that we all probably have is somewhere else I would say And I would hope but If I look into this metaphorically, I would actually say that the most important bit when it comes to building a product Putting in the hands of a client Is truly allowing for fixating yourself on this price equals value money equals opportunity to solve a problem To allow for the client to have a reference point for the success that you're actually going to be able to bring them Thank you