Is there a need for data-informed pricing? Price Intelligently founders think so

By Cale Guthrie Weissman , written on May 6, 2013

From The News Desk

Pricing a product correctly can seem like a mixture of witchcraft and pure guesswork. Price Intelligently aims to take out that guesswork, offering a service that uses data to better inform pricing decisions. Last Friday the company released its new Value Management system, a software product that encompasses much of the work the company has done since its founding last July.

Price Intelligently offers a simple service: through data and algorithms it helps companies price their software products more soundly, with an emphasis on profit maximization. This seems like something all companies should have been doing for a while, but I guess that’s not the case.

According to Price Intelligently, pricing has always been a mysterious project for all those involved, “Most of the time, a few key stakeholders will go back and forth on the initial page or proposed changes, and then ‘go with their gut’ or focus on incongruent competitor benchmarks.”

The project started when co-founders Patrick Campbell, Aaron White, and Christopher O’Donnell were all facing pricing conundrums. Campbell told me that they all happened to meet while facing similar difficulties in assigning value to different ventures they were working on. Realizing this gaping hole, they began formulating a system to properly price out software with a focus on pure data.

The company says its new Value Management System is basically a streamlined version of what it has offered in the last few months. Campbell says, “We’ve taken everything we’ve learned in the past six months and baked it directly into the product with the goal to slowly move the proportion of service revenue to pure software, recurring revenue (which we’re starting to do as of this product launch).” So now instead of just consulting, the startup has a software tool touting its analytic abilities.

According to Campbell, what gives Price Intelligently an edge is its focus on real data and not just conjecture. More than 80 percent of companies “put little data behind the structure and numbers on their pricing page.” He claims that the current market for pricing requires expensive software packages or consultants who probably rely on “tips and tricks” and not the econometric background Price Intelligently possesses.

Campbell has been crunching numbers for years now. Previously he worked at US Intelligence Community and in Sales Operations at Google, each stint focusing on econometrics and value modeling. The other two founders are likewise veterans of the tech world, having worked stints at HubSpot, Proxlet, and Boundless Learning. They each took their knowhow to create a methodology they could sell as a service.

As of now Price Intelligently is still a relatively small venture. It only has seven employees, and has only been around since last July. The project is right now completely bootstrapped, and sees itself raking in seven figures by the end of the year.

Though the company claims very promising first-year numbers, you have to wonder if the product will really be as successful as the founders want it to be. While data-driven price consulting does make sense, given that there hasn’t been service up until now claiming to offer Price Intelligently’s services, perhaps this isn’t really that big of a demand. While data does help inform companies and their marketing decisions, pricing doesn’t strike me as a real potential downfall for burgeoning software businesses if they have a grasp of the market.

Either way, with this release and the company’s initial success, Price Intelligently may be a service to watch out for. It is surprising there isn’t already a venture claiming to offer a similar statistical pricing toolkit, but that’s why the three co-founders got so excited when they saw a gap in market. Perhaps this will be the beginning of more data-driven software marketing toolkits.