Pricing and packaging a data product for external revenue

0:00Welcome to the Leaders Insights Podcast.

0:07Today's episode, pricing and packaging a data product for external revenue.

0:12Everybody wants to sell their data now.

0:15Most of them price it like they're guessing at a yard sale.

0:18Why is pricing the part where smart companies fall apart?

0:21Because they anchor on cost, not value.

0:24They think we spent $2 million building this pipeline, so it should cost X.

0:28The buyer doesn't care what you spent.

0:30The buyer cares what your data does to their bottom line.

0:33And those two numbers have nothing to do with each other.

0:36So how do you find the number the buyer actually cares about?

0:39You start with the decision, the data changes.

0:42A hedge fund buying credit card spending data isn't paying for rows.

0:46They're paying to call a retailer's quarterly earnings three days before the market does.

0:50That's worth six figures a year, easily.

0:53Meanwhile the same data sold to a small marketing agency is worth maybe a few thousand.

0:58Same data, 20-fold price gap.

1:01That's the part that trips people.

1:03Same asset, wildly different value.

1:05So do you price the data or the buyer?

1:07You price the use case.

1:09The single biggest lever on willingness to pay, what someone will actually hand over

1:13money for, is how close your data sits to a revenue or risk decision.

1:19Weather data is cheap.

1:20Weather data that tells an insurer which roofs to re-inspect before hail season is

1:25not.

1:26All right, so I found value.

1:27How do I turn that into tiers without just inventing three boxes label good, better,

1:31best?

1:32The tiers should track how buyers naturally cluster, not how your sales team

1:36wants to upsell.

1:38Usually three axes, coverage, how much of the data you get, freshness, how

1:43recent it is, and access method, a flat file versus a leave feed.

1:49Bloomberg has done this for decades.

1:51The terminal isn't one price.

1:53It's a spine of entitlements, and you pay for the branches you touch.

1:58Freshness as a lever feels almost cynical.

2:00You're deliberately serving stale data to the cheap tier.

2:03Delayed, not stale, and yes, deliberately.

2:07Stock exchanges have sold real-time quotes at a premium and 15-minute delayed quotes

2:12for free or near free for years.

2:15Nobody calls it cynical.

2:16They call it segmentation.

2:18The trader pays for the 15 minutes.

2:21The student building a hobby app doesn't need them.

2:23You've just let both exist without cannibalizing yourself.

2:27Where does this go wrong most often?

2:29Flat per record pricing.

2:31You charge a penny a row, feels rational, then a huge customer pulls 50 million rows,

2:36and you've handed them your crown jewels for the price of a sandwich.

2:40Volume pricing rewards your worst deals.

2:42The value isn't in the volume.

2:44It's in the insight per row.

2:46And a whale extracts more insight, not less.

2:48So what do you charge on instead?

2:50Charge on value proxies.

2:52Number of end users, number of markets covered, whether they can redistribute.

2:57Snowflake's data marketplace, and yes, that's the vendor's own framing,

3:01pushes usage-based consumption.

3:03But the sharp sellers on it still gate by seats and use rights, not raw bytes.

3:08You want your price to rise with the buyer's success,

3:11not with your server load.

3:13Give me the other classic trap.

3:15The free tier that eats you alive.

3:17You launch a generous free plan to build adoption.

3:20And it turns out 90% of your value lives in that free tier.

3:24Congratulations, you've built a very expensive charity.

3:28The free tier should be genuinely useful and genuinely incomplete,

3:32enough to prove the data works, not enough to run a business on.

3:36How do you even know what to charge the first time?

3:38There's no market price for your specific data.

3:41You don't guess, why?

3:43You interview 10 serious prospects, and you ask what they're doing today

3:47instead of buying you.

3:49If they're paying an analyst 40 hours a month to hand scrape it,

3:53that labor cost is your floor.

3:55Their alternative is your price ceiling.

3:57Sit somewhere in between, and you're not negotiating blind.

4:01One thing they can do Monday morning?

4:02Take your data asset and write down the single most expensive decision

4:06it improves for a customer, not the feature, the decision, in dollars.

4:11If you can't name it, you're not ready to price.

4:14If you can, you've just found your anchor, and everything else is packaging.

4:18That's a wrap.

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