How to Price Your Business So You Actually Take Home Enough | Quinnie Chen from Profit Plainly

0:00 Alan Jones: At the end of the month when I look into my invoice and I realize some of the projects I was spending way more time than what I priced for.

0:08 Quinnie Chen: Yeah.

0:09 Alan Jones: I want to build a product that match with how people think, give them the psychological assurance so they know they're doing okay in this business, it's worth to do.

0:20 Quinnie Chen: I love the way you describe it. I love the way you're targeting, you know, the emotional labor of maintaining relationships with customers. Connecting this into an accounting software platform so I don't have to duplicate invoices and records and things.

0:34 Alan Jones: Yeah. Yeah. It's really hard to solve. I have to agree.

0:39 Quinnie Chen: So I think, right?

0:41 Alan Jones: Yeah.

0:41 Quinnie Chen: One thing to explore is per usage pricing. Welcome to another special episode of Pick My Brain, the podcast where I, Allan Jones, previously startup founder, then angel investor, sit down with founders and see if I can help with the challenges and problems that they face in taking their startup to the stars. You're listening to a Day One.fm show.

1:09 Alan Jones: Founders scale faster on Deel. Set up payroll for any country in minutes, hire anyone anywhere, get visas handled fast, and get back to building. Visit deel.com/dayone. That's D-E-E-L.com/dayone.

1:30 Quinnie Chen: Very special edition of the Pick My Brain podcast today because we are in the beautiful offices of the Cremona Digital Hub down in Melbourne and recording episodes here. And it's very green, but it's very comfortable and rather a nice place to work. I can recommend it highly. Today with me at Cremona Digital Hub is the founder of Profit Plainly, Quini Chen. Thanks for coming on the show, Quini.

1:55 Alan Jones: Thank you for the invitation.

1:57 Quinnie Chen: How are you? It's freezing cold outside today. It is.

1:59 Alan Jones: It was like hailing on my car when I was like driving my son to school.

2:04 Quinnie Chen: Hailing?

2:04 Alan Jones: Yeah.

2:05 Quinnie Chen: Oh no, that's not okay. That's not okay. I've come from Sydney. I do not have enough warm clothes, but I'm committing to Melbourne. I did bring some warm clothes, but none of them fit this horrible ugly big thing, which I did the other day at AWS for Startups Basketball up in Sydney.

2:20 Alan Jones: Oh no.

2:20 Quinnie Chen: Yeah. I have a couple of fractures here to deal with next week. We'll see how we go. But anyway, that's why this is waving around in front of the camera every now and again, people. It's a giant, piece of plaster. Quini, tell us about Profit Plainly. What problem are you solving with Profit Plainly?

2:40 Alan Jones: So Profit Plainly is the financial mental model all the solo founders is missing right now. So the problem I run into is when I was doing my own freelancing business on the side.

2:51 Quinnie Chen: Yeah, we should say your business, you're in the business of building websites and design.

2:55 Alan Jones: Yeah.

2:56 Quinnie Chen: For startups, right?

2:57 Alan Jones: Yes, that's right. So I build website, design website, and also design the apps for the for solo founders and other small startups. And then what I realized is that at the end of the month when I look into my invoice and I realized some of the projects was I was spending way more time than what I priced for.

3:17 Quinnie Chen: Yeah.

3:18 Alan Jones: And then I realized I didn't know what is my effective day rate. I was underpricing myself and some of the clients or the work doesn't align with where I want to go.

3:27 Quinnie Chen: Yeah.

3:28 Alan Jones: So all these questions came up And really I was trying to understand if I want to replace a normal salary, like I used to work in Canva before, like if I want to replace that salary, what do I need to set my realistic goal as for my business? And then the other thing is how do I price myself so I actually have enough for me to take home?

3:50 Quinnie Chen: Yeah.

3:51 Alan Jones: And then understanding who are my good customers, who are not, and then I can confidently make that decision to either walk away or like trying to scale or find more ideal customers. So that's why I started Profit Planning because I couldn't find a tool in the market that match with how I think, what I want to know. Okay, cool.

4:13 Quinnie Chen: Yeah. So where is the product in its path to market? Is it in development? Is it idea stage? Is it out there in an app store or something?

4:23 Alan Jones: It's early stage. So I've been using it for 6 months myself because I initially built to solve my own problems and then And then since then I started to talk to a few of my friends and they all resonate with these problems. So now I'm opening up with an early access beta user group to really, I really want to make sure I solve the right problem for people, but I know there's definitely a problem. There's definitely a gap in the market that hasn't been filled.

4:51 Quinnie Chen: So when people like you try to solve this problem at the moment, what would they use instead and why is that?

4:58 Alan Jones: Not helpful? So what they have been using— so when I ask them what they have been doing, they basically either like price blindly with intuition about how much they want to price for. They don't track about how long they've been spending time or what type of work they're doing for their customers. And then sometimes the most important thing for like especially creative people is your emotional labor and your opportunity cost doesn't match with the compensation you've got, and that really deteriorates your motivation. And as creative people, your mental health, your motivation is very important to tie into the growth opportunity. So the product I think on the market are usually very transactional based. It's either like, you know, it could be your spreadsheet, you could be accounting software, it could be, I don't know, your banking app.

5:50 Quinnie Chen: Time tracking.

5:51 Alan Jones: Exactly. And time tracking. It tracks the transactions, but it doesn't meet the person behind the numbers. And I want to build a product that match with how people think, give them the psychological assurance so they know they're doing okay in this business, it's worth to do. Yeah.

6:10 Quinnie Chen: I love the way you describe it. I love the way you're targeting, you know, the emotional labor of maintaining relationships with customers.

6:18 Alan Jones: Yeah.

6:19 Quinnie Chen: And being a business owner and all of that, because that is a significant part of the job. And of course you can't just, put that on a timesheet and invoice a client.

6:27 Alan Jones: Yeah.

6:29 Quinnie Chen: You know, when somebody says, some idiot says to you, you know, I want it to pop more, you know, you just can't say, well, I'm going to spend the next 30 minutes trying to understand actually what you mean when you say that stupid thing, right? That's, you know, probably a pretty poor example of what emotional labor really is, but cool that aspiration to care for the whole the person behind the business.

6:54 Alan Jones: Yeah, definitely.

6:54 Quinnie Chen: I think it's pretty cool. How do you do that?

6:57 Alan Jones: So there were a few things. Of course, we do still get your numbers about your revenue, expense, the time, but the important thing is aggregating that in a way that we think about the business. So one of the big feature I have is called Business Ikigai. So just explain the Ikigai concept if anyone haven't heard of it. Finding the overlap about what the world needs, what you love, what the market is going to pay for you, and what you are good at.

7:26 Quinnie Chen: It's a very pretty Venn diagram.

7:27 Alan Jones: Yes.

7:28 Quinnie Chen: Yeah, with concentric circles.

7:30 Alan Jones: Yes.

7:30 Quinnie Chen: And an ex-Canva designer would put a nice little tint around each one, and where they overlap is really cool. Yeah, no, that's a really good mental model to use here.

7:40 Alan Jones: Exactly.

7:40 Quinnie Chen: Sorry, I interrupted you.

7:41 Alan Jones: No, no, no, it's perfect because I feel like A lot of people who come to this business world have a goal, not just like to get money paid. That's a survival mode. What we want is a thriving mode in running your own business.

7:54 Quinnie Chen: Yeah, I wanna take a vacation.

7:56 Alan Jones: Yes, that would be great. I need to plan my vacation as well. But I think a lot of people are trying to find an overlap and they don't see the full picture. And sometimes they probably just don't know whether it's worth to go for, like for example, you could have a client that is long running and they keep on asking for more scope that you can have higher price, but sometimes your, your feeling or where, whether it align with your business is ikigai may not line up. And that actually is just buying more of your life to do things you may not want to go in the past. So I feel like this is about installing a mental framework for solo founders so they can achieve their financial goals, but also like— Mm-hmm. Their business goals.

8:42 Quinnie Chen: How do you execute on that in a UI?

8:45 Alan Jones: Yeah, so the UI actually, once you open up Profit Planly, the first thing is it tells you whether you're doing okay this month. So based on the data, but we actually look into personal psychological need. So you can tell you, you're having a sustainable steady month. And then what is your client spread? If you have 3 clients, one of them is having 69% of your revenue.

9:09 Quinnie Chen: Yeah.

9:09 Alan Jones: And then if you look into your business ikigai map, they are somewhere there, not quite in the overlap, then you can really have a good think about, okay, 69% of my revenue, low alignment, maybe 30%. Can I afford to walk away? So that visual really helps you to think about these deep questions. And then we have a simulator that you can run into, turn off that client and see how long your runway is.

9:37 Quinnie Chen: Okay.

9:38 Alan Jones: So you can make a decision about Based on that, if for my own mental health, for my business goal alignment, if I turn off that client, how long can I recover to the revenue and how long I can run to get more clients that is ideal to me?

9:52 Quinnie Chen: That's an interesting idea.

9:54 Alan Jones: And the other thing is not just about the money. Like as, as solo founders, if we are no longer employee, we always think about what is my take-home money, which is different to employee getting a salary. So a lot of founders don't even know about what do I need to put aside for the tax for next month's expense so I can actually live comfortably? Or is this why I'm— it's driving me insane in this business? So we need to have that picture and it will tell you visually like a cup to see where you are in the waterline. Are you above the minimum wage in Australia? Are you above the standard living cost in Australia?

10:34 Quinnie Chen: Okay.

10:35 Alan Jones: And then if you're not, what is the best action to take? So combining all this information to really answer the key question about what is my effective day rate so I can price correctly and I don't underprice myself and driving insane. What is the best customer look like to me versus the bad ones? And can I walk away from that without being in panic?

10:57 Quinnie Chen: Yeah.

10:58 Alan Jones: And then if I want to grow, like where's my ceiling, where's my floor? How do I, like what is my combination to simulate my growth? So yeah, that's a lot in app.

11:08 Quinnie Chen: That's a lot for one founder to build. But I imagine you have, you know, stages and phases, features you'll be rolling out over time. And I imagine it's a browser-based app.

11:19 Alan Jones: Yeah, it's a web app.

11:20 Quinnie Chen: Yeah, cool, cool. What feels harder right now than you hoped it would be? Where are the friction points in the business at the moment?

11:29 Alan Jones: I'm actually thinking about who is the right customer for this product. And I think there are so many different angles I can look into.

11:37 Quinnie Chen: Yeah.

11:37 Alan Jones: And talking to different people kind of give me different ideas, but I really need to find out what is my roadmap to find the customers. So initially I just thought about people like me having a business, running business that have no CFO, no finance team, and don't have these financial mental models. And those are the people I want to address first. But then I also heard about people say this will be really useful for side hustlers who has a salary on the side. I really want to see what is the tipping point for them to switch to full-time gig.

12:10 Quinnie Chen: To go full on the Sidekick.

12:11 Alan Jones: Yeah.

12:12 Quinnie Chen: Yeah, yeah.

12:12 Alan Jones: Or it could be like students who are starting to do projects in a university and they never have this mental model about looking to finance. The reason that other tools couldn't do that is because they just look at transactions, not at the person. So like to me, like they're all really good ideas, but I kind of feel like a little bit hard to choose my focus.

12:34 Quinnie Chen: Yeah, connecting this into an accounting software platform so I don't have to duplicate invoices and records and things.

12:42 Alan Jones: Yeah.

12:42 Quinnie Chen: Yeah. Okay.

12:43 Alan Jones: So my app actually can generate very pretty invoice.

12:48 Quinnie Chen: It wouldn't be hard to be prettier than Xero.

12:51 Alan Jones: Yeah. But it does connect the invoice code to Xero, so you don't need to double up.

12:57 Quinnie Chen: Oh, okay.

12:58 Alan Jones: Yeah, so we are different products. So ideally we want to work together.

13:02 Quinnie Chen: Uh-huh.

13:02 Alan Jones: And my, I actually talk to accountant as my friend who is actually one of the beta users. And this is something I want to also prepare every solo founders going to a meeting with their accountant, be prepared instead of like, you know, using all the time to reconstruct what has happened with your money. We actually can go into a meeting to talk about business strategy and that's a much better meeting for everyone. Yeah.

13:29 Quinnie Chen: All right. Look, you've unearthed your own advice here. I'm just going to repeat what you've just told me. So one of your early closed beta customers is an accountant and you've just described how they can help you focus on a particular sector to focus on initially, at least. There are different ways to market, GTM, go-to-market, and one way or another, most kinds of customers we have to pay to acquire, even if you know, we just go and post on Instagram and a bunch of people come and start using our app. We've still taken the time out of operating our business to go and do that post on Instagram and build the following on Instagram so that people will click on a link and sign up for something, right? So most kinds of customers have a cost of acquisition and then we balance that off against, well, what's the lifetime value of that customer? So how much can we charge them? How often? And then how long before they stop using us and try one of our competitors? Mm-hmm. And, you know, most of this game is let's make sure the cost of acquisition is much less than the lifetime value, right? But there are some kinds of customers that can sit in the middle. They can be part of our marketing mix while also being a source of customer revenue, right? And maybe bookkeepers and accountants would be a really smart place to focus on initially.

14:51 Alan Jones: Yeah, I like that. I want to definitely tap into that world. Right now I'm just using my personal network, talking to my accountant, who's also my friend, to test out these ideas. And I have done some poll tests on Facebook and I realized bookkeepers are also the one who understand this problem better than the business owners. They didn't even know. So they kind of outsource the solution to bookkeepers and accountants.

15:17 Quinnie Chen: Yeah, yeah, yeah. I once had a friend who was a bookkeeper and they would be very discreet and they wouldn't tell me which clients they were talking about, but they were always complaining and telling you horrific stories about some of their clients' businesses. The books may have been in order, but the rest of the business was on fire and out of control. When we find someone like that who can be a source of customer referrals, Hmm. That can be a great way to amplify our marketing spend. But when we find somebody out there in our distribution path that can be a source of revenue as well as a source of customer referral, then we may really be onto something that might kick. That means, you know, so none of us has enough marketing budget to be able to boil the ocean, you know, like so we just can't set fire to the entire Pacific Ocean and make all of it boil.

16:07 Alan Jones: Yeah.

16:07 Quinnie Chen: But we might be able to get a cup of Pacific Ocean seawater and put it in a saucepan and make that boil. And so what we might do is we may find You know, even though we're targeting bookkeepers or targeting accountants or targeting solo accountants or solo bookkeepers initially, we may find that around that warming saucepan, other pots of water might get slightly warmer too. So this is a bit of a stretch, but if we target specifically one kind of bookkeeper or in one place or one stage in the growth of their own business, that allows us to really focus our marketing and speak just to them and make them feel like our brand stands for them. And then around them there will be this halo of other sort of, so slightly larger bookkeeping businesses, some of the accounting firms that those bookkeepers are employed by perhaps, and then in-house CFOs in slightly larger organizations, they all might find out about us. But if we try and reach everybody in the world, most likely outcome is we'll get nobody.

17:11 Alan Jones: Yeah.

17:12 Quinnie Chen: But that's something that most of us don't have a GTM that includes some entity, some customer that can be not only a source of revenue and a source of referral, that's a very promising lead to, to pursue.

17:25 Alan Jones: Yeah, yeah, definitely. Thank you for the tips.

17:27 Quinnie Chen: Well, we can go designers, you know, because we, we have deep lived experience of that problem. But the challenge is, and I'm, I'm sure you're aware of this, you probably know lots of other people in the design space. Running their own side gig or full-time. And you probably know most of them, their business is way out of control. And sometimes when a business is out of control, that makes it even harder to fix the problem.

17:54 Alan Jones: Mm.

17:54 Quinnie Chen: You know, like I am keeping the business alive right here. I just do not have another hand to go, okay, I'm gonna install a new SaaS product and see if that solves my problem.

18:03 Alan Jones: Yeah.

18:04 Quinnie Chen: You've gotta set aside the business for long enough to do that.

18:07 Alan Jones: Yeah.

18:08 Quinnie Chen: So sometimes there's really big resistance when we, If we're solving a problem for businesses that are out of control, it can be really hard to get them to just adopt us, even though they can see it's a better solution to the problem. The fact of they put down all these other parts of the business for long enough to do it, their business will be dead. And so they go, oh, I must try that, I must try that.

18:27 Alan Jones: So it sounds like I need to find the pocket of users who might have more capacity in terms of taking action, realizing they want to do something different in their business.

18:36 Quinnie Chen: Yes.

18:37 Alan Jones: And then ideally the accountant will be a great referral source and also revenue generation source that I can tap into those customers at scale. Founders scale faster on Deel. Set up payroll for any country in minutes, hire anyone anywhere, and get visas handled fast so you stay focused on scaling. Deel takes care of onboarding, HR, IT, EOA, benefits, and compliance. So your team can grow without borders. It's why more than 40,000 fast-growing companies trust Deel to move fast. Visit deel.com/dayone. That's d-e-e-l.com/dayone.

19:27 Quinnie Chen: So do you find that customers in that target area are quite price—

19:32 Alan Jones: Sensitive?

19:33 Quinnie Chen: Sensitive, yeah.

19:34 Alan Jones: Yeah, I think because a lot of people who are solo, they don't hire, you know, experts like CFO and finance team. They are already price sensitive, not wanting to hire another thing. But if they are already willing to pay for accountant, pay for bookkeepers, the cost is stable there. What change is the quality of the conversation through this app because no longer we are reconcile what has happened and then no longer waiting for your accountant to tell you, you need to do this, this, this, and then pay the bills. You actually have a good conversation about maybe it's not time to scale your business with more employees because you need to understand your like take-home money doesn't align with what the reality is. Maybe this is something else you can do. So those kind of conversation will surface compared to like very basic compliance. Mm-hmm. Level of conversation.

20:27 Quinnie Chen: Yeah.

20:28 Alan Jones: Yeah.

20:28 Quinnie Chen: Yeah, cool. Yeah, if you've ever been surprised by a quarterly bass that's much bigger than you were thinking, you probably weren't thinking hard enough about what's going on in your business. So sometimes in a customer lifecycle, there are moments that there's a really big headache that needs to be solved right away, or there's nothing I can do about the headache this time, but I know it's going to come again in the future. And next time I'm going to be prepared.

20:51 Alan Jones: Yeah.

20:51 Quinnie Chen: If we can find signals and customer behavior that tend to suggest, oh, they're about to get a big bass. This is where we step in and say, okay, now it's time to start paying for the free version of the product that you've been using and not really paying attention to.

21:07 Alan Jones: I love the idea about quarterly bass as a time trigger. I haven't thought of that.

21:12 Quinnie Chen: There are many businesses that have a predictable cycle of freak out.

21:17 Alan Jones: Yes.

21:17 Quinnie Chen: Ah, shit, how am I going to pay this one?

21:19 Alan Jones: Right?

21:19 Quinnie Chen: Yeah. And individuals rarely do. I know we all need to go to go to the dentist regularly and see a GP once a year. But humans are really, really good at deluding themselves that they don't need to do it right now.

21:32 Alan Jones: Mm.

21:32 Quinnie Chen: You know? And that again and again and again leads to years and years and years of not going to the dentist. And then some poor dentist has to try and solve all the problems that built up in that time. If there's nothing to, you know, there's no law that I'm breaking by not going to the dentist tomorrow even though I need a clean. So if we can find a customer that has a really big problem in the moment, You know, here's a bus that I definitely need to pay. That's the time to introduce an offer.

21:59 Alan Jones: Yeah.

22:00 Quinnie Chen: So sometimes we'll let people use a product for free until that moment happens. I'm sure quite familiar with Canva and I'm quite familiar with Canva too. There's a huge community of Canva users who are using Canva to earn a living and not paying for it. And that's fine with Canva, right? Because they know at some point there's a signal that that customer exhibits that says, it's now time for me to step up a bit. I now absolutely rely on Canva for this particular thing I want to do. That's something I'm going to need to pay for.

22:31 Alan Jones: Yeah.

22:32 Quinnie Chen: The other thing that Canva does is really interesting. It takes people into a usage price model, and that might be something to consider as well.

22:40 Alan Jones: Yeah, actually I have thought about like the different tiers of the product. It's still early days. I actually haven't set up any pricing at this stage, but I think there will be a self-service level versus a conversation, value-add conversation with accountant. And that's where it's much cheaper compared to you pay thousands of dollars for an annual session with your accountant to get the advice. But then you may be able to get a few hundred dollars or like $100 quick assess of the situation in a much more frequent level, like monthly or quarterly.

23:16 Quinnie Chen: Yeah.

23:16 Alan Jones: And I think that's a better outcome for both accountant and the business.

23:19 Quinnie Chen: That's an interesting idea. That's an interesting idea. I think if you speak to most SaaS founders out there, they will tell you, I know from studying the user behavior on my landing pages that when they get to my pricing table, I've advertised the fact that there's a free version and they get to the pricing table and there's 4 prices and I'm focused on the free version and I look at the list of features and it says some of the features I like that I need aren't in the free version, I'm going to have to consider paying for the cheapest of the paid versions immediately. And then often, you know, we'll price it deliberately this way. We start doing the math in our head. That means that monthly price is going to cost me this much a year.

24:00 Alan Jones: Hmm.

24:00 Quinnie Chen: And then there'll be, okay, I can switch the little slider button and now I'm looking at annual prices and now I'm even more depressed and concerned about this. Like, I'm now on a tipping point where I can choose to spend, let's say, $1,200 a year. To solve this problem, or not go back to the free, but just postpone this decision.

24:19 Alan Jones: Yeah.

24:19 Quinnie Chen: So there's an awful lot of browser tabs buried deep in people's laptops where there is a pricing page where somebody thought, I wonder if there's a tool that I can solve this problem. And then they've gone to Product Hunt or a friend has recommended, yeah, there is something. And then they go, oh cool, there's a free version and maybe I'll download it. And then they go to that pricing table and they, Oh no, what I need is only in the paid version. Oh, what am I gonna do? And we must remember that most of those people never move on past that point, not because they have to choose right now, but because they can postpone this decision until later.

24:54 Alan Jones: Yeah.

24:55 Quinnie Chen: I don't have to make an appointment to get my teeth cleaned today. I could make it in the future. And that's how we get to a world with, you know, too much carbon in the atmosphere. That's how we get to a world where we're still dependent on fossil fuels for so many things in our environment. We know there are better solutions, for all of these things, but it's not something we're being forced to do right now. And so we are the species which is the best at putting stuff off.

25:19 Alan Jones: It's really hard to solve, I have to agree.

25:23 Quinnie Chen: So I think, right?

25:25 Alan Jones: Yeah.

25:25 Quinnie Chen: One thing to explore is per usage pricing, right? So rather than charging people SaaS model this much a month or this much a year, consider atomizing, like pulling apart some of the functionality of the product and say, this is a feature that I'm confident you're probably going to use at least once a week or once a month or whatever. And I'm only going to charge you $1.75 and only when you use it.

25:47 Alan Jones: Yeah, actually I love that.

25:48 Quinnie Chen: And that prevents people from going, I can't afford $1,200 more a year. The reason why I'm considering using this product is because I'm worried that I'm not making enough money to make a living out of this. So I'm not going to add another $1,200 to my operating costs. But if you say to me, you know, Every time I generate that report, it's gonna cost me $1.75. That's these days like, you know, 1/10 of a cup of coffee. So yeah, of course I'll do that.

26:12 Alan Jones: Can I ask a follow-up question? Like, do people get into the other spectrum about, okay, I think usage is fair, but I don't know what is my end of month bill. And that could give people surprise. Like that's the difference between usage-based pricing and subscriptions. Like how do you balance these kind of concerns?

26:32 Quinnie Chen: So there's a couple of ways around that. So earlier generations of technology products I've seen where people are worried about the future potential monthly bill that they might get to. We get the customer hooked by offering a certain number of them to the customer for free. And then if we're confident that the user will get value and utility out of that actual operation, then they find that they can't live without that feature anymore.

26:56 Alan Jones: Yeah.

26:56 Quinnie Chen: And then, oh, okay, well, let's see how I go with my first monthly bill, right?

27:00 Alan Jones: Yeah.

27:01 Quinnie Chen: And usually We can't estimate how frequently they use it and they don't have any idea either. So usually if they're already dependent on that feature we've offered them, usually they'll sign up and they'll move forward with us. So I remember in the early days of smartphones, there were platforms that you grew up around push messaging because push messaging was really complicated to implement as a development team yourself. And so probably the biggest company in the early days was something called Urban Airship and there was an Australian startup called Other Levels that did the same. Mm-hmm. But basically they just took care of all your push messaging for you. And of course you didn't know how many users you would get on your app and you didn't know how many push messages you'd be sending. So those companies had a huge challenge with how to persuade people to pay for per usage pricing.

27:47 Alan Jones: Yeah.

27:47 Quinnie Chen: They definitely couldn't afford to do it in tiers 'cause they would get charged by the mobile networks for their, in tiers. And so they decided, okay, let's give, you know, half a million free push messages to every app developer that signs up.

28:02 Alan Jones: Yeah.

28:03 Quinnie Chen: And then by the time, You know, if they've used up those free messages, they're hooked. They won't be able to get out. So that's why, you know, with all the greatest respect to all of our awesome cloud providers out there in the world, that's why you give all of us startup founders loads and loads of credits in the early days because you want us to become dependent on you and then you start to charge us.

28:22 Alan Jones: Yeah, yeah, I noticed that to me, like I'm using Vercel initially, I have to set a monthly bill and then Yeah. Mr. Usage and Pay More.

28:32 Quinnie Chen: Yeah, yeah. A little bit more, a little bit more, a little bit more, include and so on. But you know, I think we're also moving out of a world where, out of the SaaS pricing model of the world and moving towards something which is more aligned with consumption of tokens. And so I think sooner or later, I think the software industry will move towards per usage pricing for lots of things.

28:54 Alan Jones: Yeah.

28:55 Quinnie Chen: Yeah, you can be a leader.

28:56 Alan Jones: Oh, thank you. I need to figure out the psychology of users understanding the token assumption because to me I use like Claude and, you know, and other some AI tools and I realize some of the patterns about limiting the usage within the month or within a week is good. So I don't have like spike of my spend, but other times I feel like really constrained. So I think there's really good lesson to learn from how to price my product based on the usage.

29:26 Quinnie Chen: Sometimes you're in a hurry and you're inefficient 'cause you're really excited about doing something new or you're really frustrated with something and you just like push through, I've gotta get this done 'cause there's a parent-teacher thing on tonight. And so you'll spend much more than you might ordinarily do.

29:41 Alan Jones: Mm-hmm.

29:41 Quinnie Chen: And then you might spend some time in regret afterwards. Like you might sit down at your desk the next day and go, oh no, I'm gonna have a big bill this month 'cause I did that thing and I didn't refactor and you know. And so, you know, our customers will do the same thing. So every now and again we can surprise and delight them with a little gift from us. And the best thing that we can gift most of our customers that costs us the least is a little bit of free use of our product.

30:07 Alan Jones: Yeah.

30:07 Quinnie Chen: So it's very common for us to say to a customer of a startup, here's a referral bonus. So if you can get another one of your friends to sign up, you both get $20 free use of the product. That's very common. It works. That's why it's very common. Not many of us just go randomly, we love having you as a customer.

30:26 Alan Jones: Mm.

30:27 Quinnie Chen: You know, and we've seen you using the product a lot lately, and you've chosen to tell us what you think of the product, and you've asked some questions in the support forum, and you've hit the little like button when you've been using the text interface to brief us on what you want our platform to do for your next, like you're an engaged user of our product, and here's a little reward. You know, so merch can be a reward if you happen to have somebody's postal address, doesn't scale terribly well, but free use of our product can be a really helpful thing to do. Mm-hmm.

31:02 Alan Jones: Yeah, definitely going to try that.

31:04 Quinnie Chen: There are emotional rewards as well. Sometimes we can build a community of our users.

31:07 Alan Jones: Mm-hmm.

31:09 Quinnie Chen: Communities are difficult and time-consuming to manage. And so sometimes we can reward people in our community if they're prepared to step up and help us manage and foster the growth of a community. So you might choose to set up a Discord or a Slack or a WhatsApp for those technical enough users that you have.

31:26 Alan Jones: Yeah.

31:27 Quinnie Chen: And when that community, if that community starts to grow and thrive, it's gonna be taking way more of your time than you might expect. You can't reasonably expect any other people in that community to do it for free for very long. And you certainly can't afford to pay them. But it's funny how far the value goes in like labeling someone as, you know, community manager or 'Head of Community,' or, you know, 'Here's some merch and take a photo of yourself wearing the merch and we'll put you in our blog and profile you as our community chief.' You know, rewards come in all kinds of shapes and sizes. A little greeting card on your birthday, you know, digital or physical. A little message of thanks, a little text if you have their mobile number.

32:15 Alan Jones: I love all these ideas.

32:17 Quinnie Chen: Cool.

32:17 Alan Jones: Can I also ask one more question? So like, I'm thinking about about, you know, building a community or me showing up on social media and talking about the product or SEO or like ads and of course like referral of accountants. There's so many different ways. What is the pros and cons of different channels? And then what do you think I should prioritize?

32:40 Quinnie Chen: Cool. I think there's a few dimensions to look at all of these channels through. So one is difficult to unearth until we participate in them and, and that is cost of acquisition. So every different channel has a different cost of acquisition. We only discover that through exercising our marketing in that channel. Another thing which is important to take into account is ability to scale.

33:03 Alan Jones: Mm.

33:04 Quinnie Chen: So we can always buy another ad on Google Search. We can always target another ad on Instagram. But beyond a certain point, the platform itself starts charging us more because we want different keywords or more expensive keywords or higher volume in that same targeting. And so price starts to get up. So even though notionally I could reach 5 billion people, I just will never have the marketing budget to reach that—

33:33 Alan Jones: Yeah.

33:34 Quinnie Chen: Reach that kind of audience. So we should think too about starting to experiment with the cost of the advertising targeting we want to conduct before we're really ready to start without having that market, that funnel filled at the top, right? So it's impossible for us to tell how an advertising channel might perform until we are bidding for keywords.

33:56 Alan Jones: Yeah.

33:57 Quinnie Chen: And we tend to go, okay, first I'll build the product and it will be good enough for me as this first customer. And then I will create some ads and then I will see how much those ads cost me and then I'll derive my, my cost of acquisition and my revenue per customer. The problem with that approach is working in that sequential fashion, it's going to be a long time before we know whether that channel is working for us.

34:22 Alan Jones: Yeah.

34:23 Quinnie Chen: If we can set aside some time now, we can start experimenting with creative, we can start experimenting with messaging, start experimenting with call to action, we can start experimenting with offer. And then obviously we can spread different with our targeting. Now, none of those ads actually have to lead to a product that we're ready to sell.

34:43 Alan Jones: Mm-hmm.

34:44 Quinnie Chen: Which is surprising. And we can always find more random strangers on the internet to market our products to. So it can be scary and maybe sometimes frustrating or worrying that, you know, we're marketing, we're paying to market to people who, when they come to our website, are gonna see a product that I'm not happy with yet. But first of all, I'm not my customer anymore. I'm a startup founder. So my expectations for the product are probably radically different to my customers. Don't really know what my customers' expectations are. So why don't I just expose them to, you know, so that's why we do a private beta, right? Or a public beta. But how about we just take what we currently have as a private or a public beta and just see if someone will pay for it. Even if they don't, if we're leading marketing-driven users to that landing page.

35:32 Alan Jones: Yeah.

35:33 Quinnie Chen: We're starting to test. What targeting works, what creative works, right? So what problem we're surfacing, what solution, how we're describing the solution to them. So that's the messaging. And then what's the call to action? Like what's the why? Why should I act on that ad right now? And then maybe alongside that, what's the offer? If I act right now, what's the offer that comes with it? So all of that needs experimentation. We're starting with hypothesis. Mm-hmm. Yeah. Maybe we, we get it right the first time, but more likely we're going to have to run hundreds of combinations of those variables to find the one that works. There's no reason to wait until we think the product's ready to start experimenting with that.

36:12 Alan Jones: Yeah.

36:13 Quinnie Chen: Have those ads go somewhere.

36:15 Alan Jones: Mm-hmm.

36:15 Quinnie Chen: All right. Um, but just track those clicks, track those impressions, track those clicks, and that will allow you to say, well, this is how much it costs to target that user. This is how I have to adjust my pricing to fit it.

36:28 Alan Jones: Yeah. Do you recommend a testing budget in terms of—

36:33 Quinnie Chen: Well, you know, as much as we can afford. We've already talked about this. You know, budgets can get out of control or we can spend the budget much more quickly than we did. So it's just like your Versailles budget. You know, mentally you've got a model and you think you know how much you should spend. And it's another hypothesis to test. If I spend this much, every month, how many users might I acquire?

36:57 Alan Jones: Yeah.

36:58 Quinnie Chen: We all want to drive down our cost of acquisition. That happens over time. That time can start now, or it can start when we think the product is ready. I think I would rather start now, because I may discover along the way that I need to pivot the product because I'm never going to make that money back.

37:15 Alan Jones: Yeah, really good point.

37:17 Quinnie Chen: Cool. So I imagine on Google Search, we're probably targeting very expensive keywords.

37:22 Alan Jones: Yeah.

37:23 Quinnie Chen: You know?

37:24 Alan Jones: What do you think about the AEO and Google search right now? I've been thinking about if I'm going for like experimenting what message aligns, what if a lot of people don't go to Google? I don't know whether there's a strategy or thinking about how do I effectively drive my experiments.

37:43 Quinnie Chen: Well, I think it's always really important to make sure that we have a control. So there's gotta be one marketing channel, one marketing message, and so on and so forth that doesn't vary so we have something to compare everything else against. So sometimes I see people throw the baby out with the bathwater and go, "No, that was way too expensive," and just chucking that ad campaign away. Don't do that because then you've got, you know, like you've got the numbers, but ad campaign performance changes over time. And if we switch one off, we don't get to see how our new campaign compares against that control group very accurately. Other than that, it's, this is a delicate tightrope balancing act where we just have to make sure that we don't spend too much and hope, trust that we will discover a sustainable acquisition channel in the meantime.

38:28 Alan Jones: Yeah.

38:29 Quinnie Chen: So on top of that, you know, marketing to random strangers on the internet, we should also be experimenting with the other things that we know for sure won't scale, but may turn out to have surprising benefits. So appearing on podcasts.

38:42 Alan Jones: Yeah.

38:44 Quinnie Chen: Finding a reason for a journalist to write about us, coming up with something that other people might share from your LinkedIn to their connections' LinkedIn. Attending in-person meetups, maybe even chairing or bringing together a little group of real customers in a physical space.

39:02 Alan Jones: Yeah.

39:03 Quinnie Chen: To talk about all the other challenges that they face as little independent side gig small business owners. So managing the finances and your mental health is one challenge. There are others too.

39:16 Alan Jones: Yeah. Oh, thank you.

39:19 Quinnie Chen: No worries. Queenie, thanks so much for coming on the show today. It's been a real pleasure to talk to you. You've really refined your thinking already, and I'm quite keen to give the product a go because honestly, privately, Pick My Brain is out of control. So where can people find out more about the product and how can I help you?

39:37 Alan Jones: The website is called Profit Planly, P-L-A-I-N-L-Y, just in case is, it sounds differently, profitplanly.com.

39:46 Quinnie Chen: Great.

39:47 Alan Jones: And I'm opening up for the early user access. So once you're on the waitlist, I will email you personally about what to do so you can get on board.

39:58 Quinnie Chen: Fantastic. So if you're watching or listening to this podcast, the time is now, get on. Queenie, thank you so much. Let's stay in touch.

40:05 Alan Jones: Thank you.

40:06 Quinnie Chen: Thanks. Joining me for this and every episode of Pick My Brains, the advice podcast for every startup founder. Never mind the "don't forget to like and subscribe" bullshit that every podcast host goes on about. Instead, please take a moment to think about someone you know who could use some of the advice I've shared and tell them that they should listen to it. I don't know, maybe they'll choose to like and subscribe. Anyway, I'm not a lawyer or an accountant, and what you've heard today is not intended as financial or legal advice. You should always seek that from a qualified professional before making the big decisions. And I'm not a superhero either, so don't forget that sometimes I'm fallible, and very occasionally I might even be wrong. Please let me know when you think I might be so I can get better at this too. Just reach out to me on any of our social channels or email the show at pickmybrain@startupfoundercoach.com. Speaking of startupfoundercoach.com, that's where you might sometimes find show notes, transcripts, and bonus bloopers if I have the time. The Pick My Brain podcast is produced, edited, and beamed directly to your ears by the hardworking and understaffed team at Day One, the podcast network for founders, operators, and investors. Find out more at dayone.fm. Thanks for listening.