Turning the art of pricing on its head
Swallow goes bottom-up to target pricing professionals with something fresh
Here at PreSeed Now, we usually cover startups around the stage when they’re raising their first funding round. But occasionally the timing works out that they’ve just raised by the time a piece goes out.
That’s the case with today’s startup, which has just raised $1 million in pre-seed funding to try a fresh approach at serving the market for pricing professionals - and they’re taking a leaf out of Slack’s growth story.
Scroll down to read all about Swallow.
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Swallow is targeting pricing professionals with a bottom-up approach
Pricing can be one of the most challenging aspects of selling a product. Where is the exact sweet spot between attracting customers and maximising profit?
It becomes a whole lot more complicated in markets like insurance, loans, mortgages, or leasing, where a large number of variables come into play before you can set a price for each individual customer. And that’s before you consider regulation and other concerns.
In recent years, the role of the pricing professional as a standalone career path has emerged to oversee this specialist work. But while most software serving this market is of the old-school, ‘reassuringly clunky’ type, Swallow wants to bring the sheen and accessibility of modern B2B SaaS to the pricing world.
“It’s a platform for pricing professionals to get pricing changes in front of their customers with more speed and confidence,” explains Callum Rimmer, founder of Swallow. If you’re running a service that needs to offer prices to customers online by way of complex variables or risk assessments, Swallow wants you to use its offering.
Currently, Rimmer explains, big financial companies will use specialist software to take complex spreadsheets containing pricing data and turn them into code. But this isn’t accessible to smaller companies, so they write their own code to do this.
“The problem with that is over time it gets munged and mixed with your other product code, so when you want to make a pricing change, it becomes a technical concern rather than a pricing concern, and things slow down,” says Rimmer.
“For the young companies, over time, your pricing gets mixed up intertwined with the rest of your business code, and it becomes a headache. Or if you're a really big company, there are packages that you can use, but you can get frustrated by the expense or the time to set it up, or your limitations on how often you can make changes.”
Targeting users, not management
So Swallow wants to be a pricing solution for pricing professionals at any size of company. The startup is taking a ‘bottom up’ approach that tools like Slack have successfully proven in the past. This involves getting the ‘coalface’ employees using it internally to prove its worth and act as internal advocates before the C-suite is even aware of it.
“We're giving it to the lower-level pricing professionals in order for them to make financial products. They may only use it internally to begin with, but at some point when they want to expose that to the customer, that's when we have to start engaging with the broader business.”
With this approach in mind, it’s not surprising to see that Swallow has a modern, quite minimalistic-looking interface
“What we're trying to do is build a product that’s simple. It looks simple to use, simple for you to try, not intimidating, with low switching costs for you to pick up and start using it. It doesn't mean it's weak, it doesn't mean that you can't build very complicated insurance models in it, because you can.
“I'd rather be seen as something that's very simple for people to try and have a play with like a plaything, than be seen as like the Starship Enterprise or something. I don't want it to be intimidating, big, and complicated. I just want to create something that people want to pick up and have a tinker with, have a play, and just enjoy the experience of it.”
Swallow works to a freemium business model. It’s free to try for a limited number of quotes, and then there’s tiered pricing once you start wanting to use it at scale.
So what’s the opportunity we’re looking at here? Rimmer gives insurance as an example, as that’s the market they’re tackling first. He says that between £2 billion and £3 billion per year is spent by insurance companies on tech in the UK alone.
The road to founding Swallow
It was Rimmer’s own previous startup experience that led him to the idea behind Swallow. He co-founded By Miles, now owned by Direct Line Group, which is a usage-based car insurance offering targeting low-mileage drivers.
“We had to do our own pricing for insurance… We built it ourselves. We had to manage about 10 underwriting relationships while we were there. And it really was very eye-opening about how hard it could be to do the whole pricing process,” says Rimmer.
And that’s all before you factor in building robust testing procedures and the data processing requirements, especially if you appear on price comparison websites.
“There's a technical consideration, an analysis consideration, a publishing consideration, a process consideration. And all these things were complicated. They were hard. We had to build robust internal solutions that took us the majority of the time that we were an insurtech.”
Rimmer sees Swallow as a manifestation of everything he learned about pricing.
“We put all those learnings into a platform that enables businesses like By Miles were at the beginning to get up to speed, understand how to do pricing, and how to be effective as quickly as possible.”
Go deeper on Swallow
Much more on their investment, vision, competition, and challenges:
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