Pricing your Pilot Project

This is more of a continuing series of tips for B2B startups that are trying to develop pilot projects.

The issue of “What should I charge for a pilot?” is one that comes up frequently for startups. What’s particularly challenging about this is that a startup may not even yet understand its business model, its revenue structure, its cost model or other attributes that will help it eventually determine whether it can be a profitable entity.

So how do you price a pilot project? 

One approach is to think in terms of “value exchange”. That is, what value are you receiving back from the customer that is going to assist you in determining product and services viability along with feedback on your business model. With this approach, you can offer a substantial discount because of the tangible and intangible benefits you are receiving from the pilot project. You are asking the customer to spend considerable time on a new product, to try things that may not work, to live with the frequent changes that you’ll be making, etc. With the value exchange approach, you can compensate them in some way for their time and effort by giving them a discount.

It’s difficult to put a one-size-fits-all model around this so one way is to diagram it out and put a price on the activity/feature they are receiving and then to guesstimate how much value you are receiving back in terms of feedback, testing, dealing with bugs, etc. Here’s a simple way to map it: 

This gives you a framework to at least consider how you might move forward with coming up with an agreeable price and something that provides more than just an “out of thin air” price. With this approach, you can be transparent with your pilot project customer and show them that you appreciate the value you are receiving back from them and how they are contributing to the overall project.

Finally, for SAAS business models, you may want to put a time limit on the discount but still considering giving the customer a long-term (or even lifelong) discount because of their early adopter status. This can help keep them engaged for the long-term and create a strong partnerships that benefits both parties.