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What Drives Discovery Pricing? Andy Wilson and Kyle Povar Discuss Aligning Pricing With Market and Mission

May 30, 2019  |  6 min read

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“Price is what you pay,” as Warren Buffet once explained. “Value is what you get.” The implication, of course, is that price and value are often not the same, whether you’re discussing stocks, socks, or discovery software.

So when it comes to putting a price on the software and services that legal professionals use, what goes into that calculus—and how can companies make sure that their customers' interests are central to that determination?

To explore that question, Logikcull CEO and co-founder, Andy Wilson, recently sat down with Kyle Poyar, VP of Marketing Strategy at OpenView, for the venture capital firm’s “Build” podcast. Together, they discussed Logikcull’s history and the pivot from a traditional services company to a software company, how Logikcull disrupted its own approach to pricing, and why Logikcull’s mission to democratize discovery continues to drive pricing strategy.

For anyone who has ever handled an eDiscovery invoice, it’s a must read hear. Listen to the episode on Apple Podcasts or, for those of you without headphones handy, read on for some highlights directly from the podcast, then tune in when you can.

On Logikcull’s Evolution From a Traditional Vendor to a Software Company

Kyle Poyar

Kyle Poyar: You touched on it briefly, but it’s a super interesting story that you started as a services company and actually was super profitable, very successful, but yet made the scary decision to pivot from service to software as a service. Could you take us back to that period and talk about why you made the transition?

Andy Wilson

Andy Wilson: TBD if it was a good decision because it was a highly profitable business at the time. We went from profitable to intentionally unprofitable as a SaaS company. The business was largely services, but we had built a software that would essentially process hard drives and hard drives of data, and then we would package it up and send it back on hard drives to our customers. 

"What we realized during the recession is this was humans doing what should be a digital process end-to-end."

That was the game. People would ship us hard drives, we’d process it with our software, and then we would ship it back and we would charge a fortune for that, sometimes millions of dollars. We worked for some of the largest companies in the world and large law firms.

What we realized during the recession is this was humans doing what should be a digital process end-to-end. Why is it that people are shipping us hard drives when they could just do this themselves, and what would it take for people to do this themselves? We realized we could do that. We could actually build this software to be self-service, make it drag-and-drop easy, put it in the cloud, and basically automate ourselves out of the entire process. If we weren’t going to do that, somebody else would.

On Finding a Pricing Model That Fits Customers’ Needs

Kyle Poyar

Poyar: For several years, you’ve had success selling the typical SaaS model, the annual subscriptions paid upfront, and then you got the “maybe we can disrupt this” model. What gave you the conviction that it was time to try something new and shift towards more of a pay-as-you-go approach versus the tried and true annual subscription?

Andy Wilson

Wilson: This was a big eureka moment for us, and in hindsight, we looked like complete morons [LAUGHTER] because we didn’t realize that we were in a pull market, where the market is pulling us, where they’re signing up for our service. Yet, we were trying to push a model on to the market that they didn’t really want. 

That was this annual subscription pricing, which is what I think a lot of SaaS companies fall in love with because who doesn’t want recurring annuities as an amazing business? It compounds and you can predict the future and it solves lumpiness problems in your revenue, etc. Who doesn’t want that? It’s very alluring.

"Discovery is this unknown event. You don’t know when you’re going to get sued. You don’t know when the next internal investigation is going to happen and trying to procure software for this unknowable event is problematic for a lot of people."

But if your customers don’t want that, then you should make changes. We came to the realization that our customers don’t know how much they need to buy. They’re in an event-driven buying model. Discovery is this unknown event. You don’t know when you’re going to get sued. You don’t know when the next internal investigation is going to happen and trying to procure software for this unknowable event is problematic for a lot of people. We had this idea of, “The market is just not ready to buy software. The market is still on this services mindset. How can we satisfy the market’s demand?” and we came up with this pay-as-you-go pricing model that did exactly that.

On Keeping Your Mission at the Center of Decision-Making

Kyle Poyar

Poyar: What was it like to have that conversation, the first board meeting post pay-as-you-go, or the first investor conversation?

Andy Wilson

Wilson: I think the biggest thing that I was trying to represent to the board was the bigger why. Why are we here? Why did we start this company in the first place? That was more the mission statement of we wanted to democratize this process of discovery. By forcing a model of subscription first into the market when that’s not what they wanted was counterproductive to that mission.

Poyar: Can you talk more about Logikcull’s mission and how that impacts your decision-making?

Wilson: Sure. The mission of Logikcull is to democratize this process of discovery and discovery is just a process of finding the unknown. In our world, that’s litigations, internal investigations, etc. 

The unknown today is data volume. We all know that data is growing at an exponential rate. It’s not slowing down. The signal within that data isn’t necessarily growing at an exponential rate as well, so that makes it really hard for legal and investigative teams to find the signal if this noise is just growing and growing and growing. 

Logikcull’s job is to pull that noise to the side, which makes it much easier to find the signal.

"In today’s world to get access to justice, you need to have access to data. If access to data is too expensive in time or cost, then your access to justice is at risk."

That’s important, because in today’s world to get access to justice, you need to have access to data. If access to data is too expensive in time or cost, then your access to justice is at risk. Deadlines are real. Those things have not changed for legal teams. If anything, they’ve gotten shorter and that’s causing a lot of stress. Logikcull is alleviating a lot of that and giving more and more people access to data and therefore access to justice.

I think it’s important for founders to always put that mission ahead of everything else. If you can do that, then you can come up with the right strategy to achieve that mission.

That’s the mission, but how does that relate to pricing strategy? I think it’s important for founders to always put that mission ahead of everything else. If you can do that, then you can come up with the right strategy to achieve that mission. You can come up with the right culture that you need to execute on that strategy.


Want more? Listen to the entire podcast here.