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I think you misunderstood. When you're in sales, it's an open secret that large companies give managers a discretionary spending limit under which procurement

I think you misunderstood. When you're in sales, it's an open secret that large companies give managers a discretionary spending limit under which procurement doesn't get involved. At all. The exact amount depends on the business, but the figure isn't hard to come by - you basically just need to ask an insider. If you don't have such a discretionary spending limit yourself, but still interact heavily with outside sales, it's because the sales you're dealing with view you as an inside asset - credit to you, you're what's called an influencer - that allows them to get to your boss who does. (Alternatively, you might actually be working for a small or medium business. Which is cool but keep in mind that these can be very different in this respect, in that many managers in them have little to no discretionary spending limit.)

philipodonnell 8y ago
Even if the money is available via discretionary spending, the article is arguing that the lack of an explicit price of $X>$0 means that the client has no skin in the game, as if the cost to the client goes from $0->$X. The implication is that charging a price makes it more likely I will buy once the pilot is over because I now have "skin in the game". My point was that this is not true. The cost is not zero just because there is no price. I already have skin in the game. I am willing to incur those costs on a pilot to decide whether to use your company but the decision will be based on how much benefit your company demonstrates during the pilot. Adding a price to those costs just makes it less likely I'll do a pilot, that's it.
- ddebernardy 8y ago
  Actually, the implication that charging a price makes it more likely you'll buy once the pilot is over is spot on. There's swaths of research, both theoretical and empirical, that supports this. Think sunk costs, change of mindset in the user's mind because they're now a customer rather than some random end-user (it's easier to sell to an existing client, even if the initial sale is symbolic), etc. Adding a price only makes it less likely that some leads don't move forward with a pilot. Specifically, self-entitled businesses that expect to get the moon for free; organizations that are price sensitive enough that working with them will end up earning you very little or worse; and users without a budget or influence on those who have one. You'll of course lose some potentially good clients along the way as well. A free tier can make good sense sometimes. Most of the other times, more than a few execs will go: "Yes, please! Let's price our less profitable clients out of existence."

philipodonnell 8y ago

Even if the money is available via discretionary spending, the article is arguing that the lack of an explicit price of $X>$0 means that the client has no skin in the game, as if the cost to the client goes from $0->$X. The implication is that charging a price makes it more likely I will buy once the pilot is over because I now have "skin in the game". My point was that this is not true. The cost is not zero just because there is no price. I already have skin in the game. I am willing to incur those costs on a pilot to decide whether to use your company but the decision will be based on how much benefit your company demonstrates during the pilot. Adding a price to those costs just makes it less likely I'll do a pilot, that's it.

ddebernardy 8y ago
Actually, the implication that charging a price makes it more likely you'll buy once the pilot is over is spot on. There's swaths of research, both theoretical and empirical, that supports this. Think sunk costs, change of mindset in the user's mind because they're now a customer rather than some random end-user (it's easier to sell to an existing client, even if the initial sale is symbolic), etc. Adding a price only makes it less likely that some leads don't move forward with a pilot. Specifically, self-entitled businesses that expect to get the moon for free; organizations that are price sensitive enough that working with them will end up earning you very little or worse; and users without a budget or influence on those who have one. You'll of course lose some potentially good clients along the way as well. A free tier can make good sense sometimes. Most of the other times, more than a few execs will go: "Yes, please! Let's price our less profitable clients out of existence."