How Mountain Dew and Bug Spray Inspired Our Pricing Model

It was a Saturday afternoon in nineteen ninety-something as the sun, directly above, bore down in all its fury. My respirator's glass face mask fogged as beads of sweat poured down my face, creating a hyper-intense face sauna. I looked down and couldn't help but giggle at the full-body yellow suit I was wearing. It reminded me of the computer game I had played the night before. The combination of the fully-enclosed spray suit and mask seemed to be cooking me like a sausage in a microwave.

Think Breaking Bad, but with bug spray instead of meth.

The Jumpsuit

I began to consider what my funeral would be like and who would attend, because, you know, every teenager working on their dad's farm tends to be overdramatic and thinks they'll die from the labor performed.

Just then I heard a muffled and distant yell: "brrm er ruff". As I turned toward the sound, I realized it was my dad yelling, "turn it off". I gladly turned off the chemical spray nozzle and ripped off my mask to feel the refreshing breeze on my nearly smoked face. It was time to refill the tank, which he proceeded to do.

Once the tank was full again and the chemical mixed, he cracked open a can of Mountain Dew and poured it into the mix. This was something I had seen him do hundreds, if not thousands of times before, but for whatever reason, this time I was curious and asked "Why do you do that?". With a half-smile on his face, he proceeded to teach me what has now become one of the most profound lessons I draw upon daily in my career.

My dad owned and operated a wholesale greenhouse business that mostly produced blooming house plants. It was a regular occurrence to spray chemicals to kill the pests and protect the crop. He explained to me that while some bugs are out and visible on the flowers, most are actually up in the crevices of the gutters and in the walls of the greenhouses. The sweet sugar and nectar mix in the Mountain Dew draws the bugs out before the chemical dries, profoundly increasing the effectiveness of the pesticide.

Success Psychology

From that time, I have carefully observed individuals who are successful in their craft, across many professions. I have learned that without exception, those who are able to predictably and consistently achieve their intended result, otherwise known as "successful people", have one thing in common: they fully understand the underlying psychology driving the process that yields such results. In other words, they're not just winging it, and they're not just repeating someone else's formula.

At Nanobox, we've recently made a very drastic, but pivotal change to our pricing model and price points. I'm very excited about this change, but not for the surface-level results, but because of the underlying psychology it represents.

Since launching Nanobox, I have at times felt inadequate as our CEO. This is largely due to the fact that I didn't feel I fully understood the psychology of our customers' buying process to sufficiently craft a pricing model that wasn't just "winging it". To fill this void, I set out to have as many conversations with our customers and potential customers as I could manage.

Finally, after hundreds of fantastic dialogues, one particular conversation provided the spark I needed. This conversation wasn't really about pricing at all, but rather how to best handle a particular scenario. He casually said,

Well you guys have been doing this much longer than me or anybody else I could find, so you would know.

Suddenly I realized, he was right! We existed as a fulfillment team long before we were a product team. We've been on the other side of this process on hundreds of occasions over the past decade, and I needed to recall those experiences and re-live how the purchasing process played out.

Value & Assurances

In an instant, my mind flashed back to an experience I had some years back when I sat on the panel overseeing a very large, enterprise E-Commerce implementation. I was representing the technology while the rest of the panel was comprised of individuals from seemingly un-related sectors of the organization who, to me, were there with the sole purpose to annoy me. At the time I was a young "hot-shot" that had performed exceptionally well in the few years leading into the start of my career and, as such, I had a seat at the table.

Of course, I thought I knew everything, so I was very vocal about the realities of what I was seeing. I pitched the technology and provided a very encouraging prototype, making the decision easy for the company. The panel proceeded to contact companies representing the various open-source technologies behind our stack to get insurance contracts in place. I was part of those discussions and I continued to grow frustrated at the uselessness and futility of such contracts. They were specifically worded to deflect liability and to defer actual blame to the implementation of such technology.

As this went on I continued relentlessly to try to show the panel how useless these contracts were and that, ultimately, they didn't and/or wouldn't do anything. Finally, the VP of E-commerce quieted me down and explained a world to me that I had previously not understood. He said,

Look, you're probably right, but we have shareholders. If something happens and we end up losing sales, or worse, sensitive information, then we're accountable. I'm not going to put myself in a position to have to explain why I didn't approve a contract to hold these entities accountable in that scenario.

A few years later, I found myself in a similar position, representing technology for another large organization. This time, the project was winding down, and we were wrapping up the infrastructure and locking down the perimeter. As part of the usual routine, I put in a sophisticated, highly-custom, dynamic firewall and intrusion-detection system. It was beautiful. I was thrilled to talk to the compliance officer about it... in great detail. He simply stared back at me, disinterested, as if I were giving the same level of technical detail to my wife. After I was done, he asked "So... what brand is this appliance?"

Facepalm

All of my excitement left my body so fast that I'm sure it made an audible noise.

"What?" I asked, looking back at him as though he were an idiot.

"Look, I just have to check a box here that says you used one of these firewall appliances. So... go ahead and do that and get back with me."

I was ticked, but the lesson was well-learned.

While I could go on and on with experiences, suffice it to say, I very clearly understood the driving psychology behind how technology purchasing decisions are made and our existing pricing model was not a fit. Ultimately, what the many experiences have taught me is that developers and managers evaluate technology very differently, each from completely different perspective. Developers are all about the tech, improving processes, eliminating mundane tasks, and ultimately using what works best. Managers are all about the product, velocity, ROI, risk-mitigation, and ultimately using whatever is going to maintain a competitive edge.

As developers are evaluating tech, they will instinctively attach a mental price that is almost directly correlated to how long they perceive it would take them to provide the same value. If the actual price point is above that mental price point, the discovery process will end before it even begins. This can be very frustrating to managers as they understand that an ROI value is really about paying for time – "Can I pay money for something that buys my team more time to focus?" The team, meanwhile, is constantly thinking about how they can build everything themselves if only they had more time. It's a funny paradox.

The Sweet Spot

Ultimately, the sweet spot is where the developer or team feels the value they get from a product relative to the time it would take to build their own is vastly higher than the time they would spend building a hobbled-together version. And the manager can then layer on the insurance, support, and risk-mitigation packages without any concern around how that ties into the feature set.

For Nanobox, this translated into greatly reducing the cost of the tech and introducing the service as a "self-serve" platform. Developers can dig in and be more productive without a heavy cost burden. Managers can opt into the Managed Platform and layer on value that solves organizational concerns such as support, insurance policies, and other risk-mitigation packages. We no longer roll the cost of organizational value into the tech. We've separated the concerns so you can find the perfect fit. We're excited to strike this new balance and hope you will love the flexibility and choice as much as we do.

Tyler Flint

Programmer enthusiast trying to improve the world one line at a time. CEO at Nanobox.

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