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SMI #022: Glassdoor for Software Pricing

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SMI #022: Glassdoor for Software Pricing

De-mystify software discounting

CJ Gustafson
Feb 17, 2022
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SMI #022: Glassdoor for Software Pricing

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Ophrah discounts
Oprah slinging SaaS dizzys

Opportunity in a Tweet:

If you’re a startup negotiating a software purchase, there’s no quick and easy way to validate if you’re getting a good discount. Specific data is gated behind very expensive consulting memberships. And any data you can find with a google search is either too generalized or too biased to be useful. Build what Glassdoor is to salary reviews for software pricing.

The Problem:

After salaries and marketing programs, software tools are often the most expensive line item in most tech company budgets. In some cases it can be as much as 15% of overall operating expenditure. When contemplating a purchase, procurement professionals often ask themselves,

“What discounts do companies like us get when buying this tool?”

Which roughly translates to,

“I really hope I don’t get ripped off and then canned for buying this thing”

Buyers have historically relied on Gartner and Clear Edge (now owned by Accenture) to figure out if they’re getting a fair shake. But they get hosed in the process, as the consulting contracts can be upwards of a hundred thousand dollars per year and require a significant investment of time to get an answer.

Kids hate pricing

What This Is:

  • Glassdoor (employee salary data) meets Lease Hackr (car leasing data) meets Vendr (procurement as a service)

  • A website with software discounting data anonymized by license type and volume

  • A snapshot of approval matrixes within organizations

What This Isn’t:

  • Procurement as a service

  • Consulting

  • Linked back to the buying company in any way


You got ripped off
tell em, Uncle Tony,...

Thesis:

The same types of contracts are negotiated every day

  • The following tools are negotiated over and over again by companies of the same size and shape:

    • Productivity (Monday, Asana),

    • Dev Ops (Gitlab, Atlassian),

    • Security (SentinelOne, Okta)

    • Finance (Netsuite, Xero, Quickbooks),

    • R&D (Grafana, Jetbrains)

    • Sales (Salesforce, Salesloft, Gong),

    • Marketing (Hubspot, Marketo, Mixpanel),

    • Hosting (AWS, Azure),

    • Workforce (Workday, Bamboo, Greenhouse)

  • But most companies wander into the proverbial lion’s den blind as to what to ask for off the list

Glassdoor’s model for data submission works

  • Remember the time you had to submit your salary data to see more data on GlassDoor? Kinda like that

  • Free to view a few jobs (discounts in this case), but need to give data to get data after your allowance is up

  • Creates a self-perpetuating network effect where data drives more data

Software companies will pay for hot leads

  • Despite being “exposed” from a discounting standpoint, the leads would be extremely valuable - it’s a highly targeted audience with intentions of purchasing


Share Steal My Idea


Back of the Napkin Market Sizing

Market sizing

*Note: # of eligible companies (150K) pegged to Salesforce’s total customer count as a conservative starting point


Rolling the ball uphill

To Get the Ball Rolling, Sisyphus Says

  • Seed the site with initial data on a few of the most commonly purchased tools

  • Concentrate on software with very straightforward licensing models (annual, one year, subscription, paid up front)

  • Offer gift cards to sales reps who recently left a company to discuss common pricing practices at their former employer - it’s easier to go to one rep that did 50 deals than finding 50 different procurement professionals who purchased from that individual

  • How did Glassdoor get their first 1,000 reviews?

We had them call every software engineer in Silicon Valley and offer the chance to win a free iPod if they would tell us what their salary was and what it was like to work at their company. That's how we got our first thousand Glassdoor reviews.

-Robert Hohman, Founder and CEO


Kinda Biased Competitive Landscape

Market landscape

How It Makes Money

Unit economics

Why This Might Fail

  • The companies getting their pricing “reviewed” may try to spread FUD

    • Companies will either want to advertise, and pay up, or want to shut you down

  • Pricing may change too often to keep track of

    • Perhaps, but I doubt the relative discounting off list will…

Animated GIF

Potentially Reliable Stuff I Read at 3 AM

  • Saas stats

  • How GlassDoor got their first 1,000 reviews

  • Salesforce customers


Irrelevant Post Script No Reputable Business Publication Would Allow

Get Hyped

Get Loud

Get Wise

“Time and money are largely interchangeable terms.”

-Winston Churchill

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