top of page
  • JJ Rorie

The Secret to Unlocking Value: How to Maximize Your Product's Price

Episode 055

Dan Balcauski, founder and principal consultant at Product Tranquility, joins to discuss product pricing.

We discuss:

  • Three types of value drivers

  • How to know what our customers value

  • How to measure pricing effectiveness

  • How companies find their value metric

  • The connection between customer segmentation and pricing




Dan's Amazing Blog:

Connect with Dan:

Episode Outline:

  • The three types of value drivers that drive value. 5:17

  • How do we know what our customers value? 10:29

  • How do you measure pricing effectiveness? 13:10

  • Why are you losing deals? Is pricing the predominant factor? 16:36

  • How do companies find their value metric? 22:36

  • The first step in segmentation is getting top executive alignment. 27:21

  • Customer segmentation is important in the first place, but it’s not always the best indicator of behavior. 31:43

Episode Transcript:


pricing, customers, product, metric, price, segmentation, people, understand, decision, called, jobs, question, alternatives, discounting, point, company, helps, problems, important, packaging

Intro (the incomparable Sandra Segrest)00:02

Welcome to Product Voices, a podcast where we share valuable insights and useful resources to help us all be great in product management. Visit the show's website to access the resources discussed on the show to find more information on our fabulous guests, or to submit your product management question to be answered on our special q&a episodes. That's all at product And be sure to subscribe to the podcast on your favorite platform. Now, here's our host, JJ Rorie, CEO of great product management.

JJ 00:35

Hello, and welcome to Product Voices, pricing, the easiest part of launching a product? Yeah, I wish right? Pricing is difficult. So let's be honest, there's so many variables that go into it. And it's really a bit of an art and a science. And so today we're gonna dig into product pricing. What does that look like? How do you pull value into it? How do you get it? Right? So my guest today is an expert on this. Dan Bell. kowski is founder and principal consultant at product tranquility. Stan, welcome. Thank you so much for joining me.

Dan 01:10

Thanks for having me. JJ. I'm excited for a conversation.

JJ 01:13

Yeah, me as well. So I gave a very short bio on you. But tell me more about product tranquility and the work that you do.

Dan 01:20

Yes, a product tranquility, we help b2b SaaS CEOs define pricing and packaging for new products.

JJ 01:27

Awesome. And I'm sure that you get a lot of work because again, pricing is not. Not that not that easy. And unfortunately, we're product folks sometimes get it wrong. And that can definitely impact the success of a product. So So first and foremost, tell me what people get wrong about pricing.

Dan 01:46

When it comes to the SaaS pricing, most executives think that what you charge determines your success. In fact, who and how you charge determines your success.

JJ 01:54

Tell me more about that.

Dan 01:56

Yeah. So when I think many clients when they first come to me, they get very enamored with what I think you're talking about the what is the price level? So is this thing $10 A user per month? Is it $100? User? Is it 2995? And I think those are all very fun conversations, I enjoy those conversations as well. But I think people are mostly focused on the wrong thing. It mostly comes down to who are you charging? So really clearly understanding? What are the customer segments that you're best targeted to serve, and to win, and then how you're charging, so all the elements of packaging that go along with the pricing process. So from refer to, you know, the work I do is I help companies with pricing and packaging. And for better or worse, people's eyes maybe glaze over when they hear packaging, because it tends to be ill defined. And so they don't really think about as much. But if we specially think about the b2b case, the price level, again, while important is probably the easiest to change. But all the elements of packaging, and again, who you're serving, those all drive to the value that you offer, and making sure that supports that value story. So oftentimes clients will have a problem where their current packaging model doesn't align with the value story that they're trying to sell. And your packaging can go a long way in helping you tell be at least consistent with that value story. Where as customers derive value, they pay more for the product. And although nobody is necessarily happy about paying more, it makes sense are you if I'm charging you say we're have a marketing platform, and you know, my pricing metric, the unit of value I charge customers for is by the number of accounts that you have in that marketing platform, then as the number of accounts you have grows, then the mound I charge you grows, so the company is winning, because they're making more money. Therefore the company that's helping support that value proposition is also able to earn more.

JJ 04:11

Yeah, I love that. So let's let's dig in a little bit to value. It gets thrown around every time we're talking about price as it should. But, you know, I'm not sure that everybody kind of defines it or understands it the right way. So So what is value? And and maybe a spin on that is are there different ways to think about value and what it is?

Dan 04:32

Oh, starting with easy questions. I see. So yeah, exactly. I actually just wrote a series of blog posts on value because it's, you know, like segmentation, like positioning. I think some of the the concept of value is one of the most misunderstood concepts and it's so foundational to pricing that if you don't really understand it, one conversations will just get mired in In people talking past each other, which is not helpful and then to it doesn't, it sort of sets the foundation, the overall framework for how we think about pricing. So I use two complimentary frameworks. When thinking about pricing. And I didn't invent these, I stand on the shoulders of giants. But the first one is the idea of jobs to be done. I'm a big fan of jobs to be done. I'm sure many of your listeners in the product world have heard of it before. But just as a recap, quickly, one of the ideas behind jobs to be done is that there are three core value drivers tight we call them job types in the jobs to be done world, there's functional or economic jobs. So these are helping a person do a task more efficiently with less risk with less cost with higher performance. There's the idea of emotional jobs that are split into two categories. One of those is personal jobs, you know how I help a customer feel as a way of using my product. So this could be status, you know, if we're selling high value luxury goods, for example, it's not necessarily that your Rolex watch works any better than your Timex watch from a functional perspective. But it confers some other benefits, mostly psychological, it might be increased confidence, less anxiety, those type of things. The third type of value drivers would be called a social job. And so we often forget about this, but we are social creatures. And this really helps if you're in the context of a say, a government or an NGO or nonprofit, we do things to help sort of broader society at large, whether that's advocating for climate change action, or equal access to rights or better education. So those are fundamentally the things that drive value. And the core thing that jobs be done, helps us understand is that the value is really created when we help our customers or users achieve an outcome, right. And that outcome could be any one of those three types that I just mentioned before. The other framework that I use to help people understand value is this idea of the value cascade. The value cascade comes from a gentleman named Tom Nagel, who wrote a seminal book on pricing called the strategy and tactics of pricing. I really what he talks about is, value has these three different core aspects. The first of them is use value. So this is the sum of all possible benefits that somebody might get from using your product. And some of the benefits would include all three of those economic, emotional and social value drivers that I've discussed. However, for pricing, you know, that use value, as it's called, is not necessarily relevant to the pricing exercise, because we live in a market economy and a market economy. Your value that you could price for is mostly set by competitive alternatives. So really, what economic or otherwise termed exchange value helps us understand is your what are the other alternatives that customers would use to help us help them achieve that outcome. And then those set a reference price. So I'll use the example of you and I set up a lemonade stands across the street from each other. And you decide, because you're a smart cookie that you're going to set your price of a cup of lemonade at $5. And so you're I'm sitting across the street, if I decide to price above $5, say I choose $10, I better have some differentiating value that dictates to the customers who come down our street and want to buy some lemonade, why I'm worth that extra $5 Because you've essentially set that market price for undifferentiated value. So unless I have lemons that are freshly squeezed from the Amalfi Coast in Italy or some special vitamins or minerals, right $5 Is the market price and so then the exchange value really helps us understand okay, what is our competitive differentiation? How do we deliver benefits above and beyond what the standard market alternatives have? The third component of that value cascade is perceived value. So with we economists will often use this somewhat humanoid person called Homo economic is that is a completely omniscient rational actor that maximizes the benefits they could pick from any alternative they choose. However, this this robot doesn't exist in the market. I've never met a person that acts like homo economic is oftentimes there are real search costs to understanding all the alternatives that are available in a purchase decision, right. So my knowledge of what what all the alternatives even are is limited by knowledge of for each of those alternatives, how your product is completely different. And she'd for mine and, and all the implications of what that means. And so the ultimate, you know, we ultimately run into human psychology here and information costs that cause people to value the product at a different level than what maybe the Mathematical Association of exchange value would help us believe. And so those are the different ways that are thinking about value. I'll stop there, see if you have any questions about it.

JJ 10:29

Yeah, I mean, I love it. And I actually love how you've kind of tied all the frameworks together. And you've, you've thought through all of the elements, they make sense. But the last point, or one of those points about kind of the lemonade stand and, you know, mine's $5, and yours is $10. And how do you get that that human kind of aspect into it? And what what's the true differentiation? That's where I get hung up? That's where I think a lot of people get hung up in terms of how do you define? Or how do we know what our customers value? So as you're going through that lemonade stand example, I'm thinking, Well, you know, I obviously would pick the $5. Me personally, as as a consumer, I'd pick the $5. Because for whatever reason, psychologically, the $10, I can't work out that value. But then as you were talking, I was thinking, but if it was $1 versus $2, you know, I actually may go with the $2. Because psychologically, I might think, well, it's still okay of a price. And I think there's probably some value there. Right? And so again, there's, there's all of these, you know, human behavior and psychology, things that go along. So, so question is for you, how do we know what people value? They're not just going to tell us? Right, so how do we work out the value for our various consumers?

Dan 11:46

Well, so you said a lot there and everything we could probably fill for podcasts with that single point alone. What I would say is, I somewhat disagree with the premise that people won't tell us. We, your understanding value comes from a process, which is under asking customers questions about their business, really becoming intimate with what is the operations? How do they actually create value for their customers? And then what is the value chain? What are the processes by which that value is created? And understanding, okay, if it takes you so much time to create a widget, okay, if we could reduce the time there that would possibly create value for you. So it really comes from a deep understanding and a deep questioning of your customers and understanding how they work to really understand where these value drivers come from. Now, you know, there's multiple layers to this, right, because it's on us to be the researcher and understand that customers do tend to think in and speak in solution language, they do not naturally think or speak in value language. So it's on us to understand what their trade offs are when they make purchase decisions. So jobs to be done really helps us with this, where we could have in depth interviews. And for any of you who have not watched it before, Bob Moesta, who was one of the creators of jobs to be done theory. He's now actually a teacher at Kellogg, School of Management, which is where I got my MBA, so very happy about that new development. But But Bob helped Clayton Christensen, right, competing against luck, which was Clayton Christensen's initial for a book into the jobs to be done framework. A he just gives an absolute Bob mystic gives an absolute masterclass at the business of software conference, where he does a live in depth interview with someone about purchase their purchase of a car that they had just done in like the last six months. And he really walks them through, you know, what was their purchase decision? Your who was involved, you know, you know, when did you decide to go to the, you know, when did you first have the idea of buying a new car, you know, when did you decide to go to a dealership? Okay, you know, which ones did you test drive? Why did you like that one. And so really, by digging in at a be much beyond the surface level, this is where we can extract out these fundamental value drivers that people understand that even in that conversation and business software, you know, one of the guys interviewing was talking about, well, he had just had a baby. And so he had a stroller with him at the car dealership, and he took the stroller and tried to put it into the trunk of the car and it wouldn't fit, you know, so he was like, oh, like trunk size that could fit a stroller became you know, a important thing because he was, you know, had had that part in his life. So, these are the types of things we have to go through and I think you know, if I, if I could put a bowl billboard up anywhere in the world say anything you would be talking to your customers, because this type of thing that you can't just get from I'm a big fan of analytics and using data to support decisions. But this is not the type of thing that you can get easily from those type of systems.

JJ 15:08

Yeah, that's actually really great points and, and talk to your customers, observe your customers, you're you're spot on there. And so, you know, when when I say they're not going to tell us, sometimes they will, to your point, but definitely we can, we can extract it, if we're doing the right things in terms of conversing and observing, and, and that sort of thing. So be in touch with your customers, and you can start to find that value. So great, great, great points there. Great advice. So I want to talk about metrics and how we how we measure pricing effectiveness. I think I'll start with if there are some general, you know, kind of insights on what metrics we should be looking at in terms of measuring if our pricing is working or not.

Dan 15:55

Yeah, so I think, you know, a couple of different levels to this, right. So if I'm talking to a CEO, for example, you know, and they're trying to understand, you know, if their pricing is is not working, or is not optimized for whatever reason, you know, I would be asking them, you know, at a high level look, are you meeting your goals? Is pricing getting away in those goals? Have you did you have a plan for certain prices or volumes that you were expecting to achieve? If not, you know, if you didn't achieve those, why not? How large are deviations between your list and transaction prices? And do you have good explanations for those? Your Why are you losing deals, you know, was priced the predominant factor, there are other factors in play, it's very easy. I, I'm a big fan of, of tracking, like, for example, when loss codes, but this is the type of thing where that data could be a good starting point. But it's never the honest gospel, it's very easy for a prospect who wants a salesperson to go away to just say price, where this could be a place where hiring a third party consultant, or someone who wasn't involved in the sales process, to go back to talk to close lost customers and actually figure out okay, price might have been a factor, but it probably wasn't the only one. So, you know, you'll often see if you look at those win loss codes, for example, that your price might it's probably the dominant issue that's listed, maybe accounts for a third. But if you go talk to those third of customers that said price, maybe only half of them, you know, once you actually dig in, it was it was actually price that was the factor, you know, our discounts achieving your desired effects, you know, are you discounting more than expected or in a way that aligns with your overall strategy and objectives? So those are type of the high level C suite style questions you might ask us specifically about, like, are there specific metrics you'd look at to measure pricing effectiveness, and there's, there's a bunch, so I'll, I'll narrow it down. If you if you want some more, I'll give you the but if one of the first things I might look at is things like a competitive win rate, so you know, the number of opportunities you won over, you know, divided by the total opportunities against a particular competitor. This like the win loss codes can suffer from data pollution, you know, it can be your data hygiene, or sales reps don't accurately or consistently tag customers, or competitors in your in your CRM, or sometimes prospects won't actually disclose who else they are evaluating. And then also, it could suffer from a sampling bias where you win 0% of the deals in which you aren't involved. The other things might look at our percent of deals last a pricing, as I mentioned, with those win loss codes, you know, that could suffer from those problems I mentioned earlier, then discounting percentage, you know, can help you inform if prices are too high or too low, you might want to slice those by deal size or by customer segment. By product, those are helpful ways to look at it. So those are a few things I look at. I mean, obviously, with the subscription business, I'm always gonna be wanting to look at retention, both gross and net revenue, retention, numbers, overall, net expansion, just to make sure that, you know, we're not because obviously, the new business that we win is important, obviously, but in subscription model, the entire model hinges on those customers staying around for an extended period of time and renewing with us. And so pricing can be a issue there, you know, there can be many issues, but pricing can be one that can help impact those.

JJ 19:29

Yeah, yeah. And I think you make a good point about price being used as an excuse, more than being a you know, the legitimate reason. And so there's there's some, some bias there in the data. But how do we know or or, you know, thinking about metrics, and right, there's the kind of Price metric, and then the value metric, if you will, right. So so how do we know we're providing the right type of value or the right amount of value or something. So first, do you agree that, and then how how can you describe the difference between a Price metric? And maybe what we would call a value Mac metric?

Dan 20:09

Yeah, I think it was a great question. Because I see, even among pricing experts, I see a lot of confusion how these terms are used. So I also put the goes to anybody who's not in my world who, who's who's reading content in this area. So I think, you know, first of all, you know, the Price metric is an element of packaging. We mentioned before people's eyes glaze over when they hear about packaging. So Price metric is the unit of value you charge customers for. So this might be a charge by the number of seats by API transactions by gigabytes of data stored or transferred. There's several other elements of packaging, but but Price metric is fundamentally, you know, how does our price scale with, you know, the amount of value that a customer is consuming a value metric. And that's very much our like, company and product focused, a value metric differs, because a value metric is customer focus. So the value metric is the criteria by which a customer judges the effectiveness of your product or service. So going back to that idea of a functional or economic job has to be done. A customer's buying your product with the idea of achieving some outcome, they are trying to become more efficient, they're trying to get more revenue, they're trying to save costs, they're trying to increase or decrease risk, or increase optionality, wherever that might be. And so how is your product meeting that overall objective? And the idea that we want to keep in mind as we're thinking about these two concepts, is that your pricing metric should correlate with your value metric. So again, as we're helping a company increase, for example, the amount of revenue they gain, if we decide that that's the value metric that's most important for the market segment that we're going after, right? Does our pricing metric align with that? Or is it you know, this is often a problem with something like seats, seats is still very much, I think, the there's a wide distribution, but I think it's still accounts for about 40% of software companies will charge by seats. But you can imagine where you know, the number of people I have using the software doesn't necessarily directly map to, you know, the end business outcome that that product is actually helping people achieve. So we want to make sure that there's a correlation between that metric that we're using and the ultimate outcome that the customer is trying to achieve.

JJ 22:36

Yeah, so how could companies find their value metric? Like how do they go about and find that that metric that they believe or know, will resonate with the buyer?

Dan 22:51

Yeah, this is so you know, this really depends a lot on kind of what stage of company that you're at, because, you know, it's very different for a brand new company that are brand new product that they haven't put in market, where they're like, I don't know, it couldn't could increase, you know, these 10 different value metrics, and I've been in those conversations. And so that process looks different than maybe an established firm, where, you know, if you spend your time with with sales, or marketing or customers of any length, they'll tell you exactly why they buy the product and why the product helps them. Right. To a certain extent, the choice of value metric, is what I would call a, you know, where you whether you play decision, so it's almost a strategic decision. And I'll use the example of like Southwest Airlines, you know, has made explicit decisions about, you know, it's been the only profitable airline for the past 30 years, you know, Southwest Airlines, you know, they've made an explicit decision, you know, they don't care about snacks, they don't care about in flight entertainment systems, they've realized that, hey, this, the customers care, hey, they don't get treated poorly by the staff, the flights leave on time. They're, you know, the, the price to value ratio is is good for what I have, right, I have access to the places that I want to get to, you know, those are the things that they've decided and they've know that over over time, and then they've made explicit decisions of, okay, we're not going to focus on these other things. You're ultimately you know, understanding these value metrics they derive from these jobs to be done that we talk about, and what we will do like in the in the early case, you know, so say you're just launching a product is your, again, qualitative questioning. So a lot of my research will hinge on both qualitative and quantitative I always start with qualitative we will ask them okay, you know, how, how are you making choices, you know, if they are you have just bought another product in the category, right? How did they make that decision? Digging in, right until we really understand what that what the value metrics are. And then once we have a set of those, we may go do a either within qualitative interviews or a broader survey, asking them to force rank value metrics. And this can also be very helpful, we may or may not talk about segmentation, but you may find different customer segments, prioritize different value metrics, right? And then this becomes a angle of understanding, okay, which customer segments are we going to go after? So doing a value based customer segmentation, and then deciding, okay, given that and how we want to position ourselves, this is the set of customers that we'll go after. So, you know, the idea being is that we want to take that list of maybe 10 value metrics, and then narrow that down to say, three, five at most of how we're going to help customers play. Most of that is because if you get beyond your three to five, the story becomes way too complicated. And no one can remember it anyway.

JJ 25:59

Yeah, right. I'm glad you brought up customer segmentation, because I did want to ask you about that. And you and you, you, you mentioned it, but I want to dig a little bit deeper. So how have you found that customer segmentation impacts pricing and how companies can use segmentation to to better optimize their pricing?

Dan 26:17

Yeah, so if we think about, again, the ideas that you mentioned before, right, where you would lose the lemonade stand example, were used five and $10. And you're like, why wouldn't pay $10. But if it was one to two, I might write. But we see this all the time, right? Some people are like, I'll never go to Starbucks and spend $6 on a coffee, I can make my coffee at home, right? And so those are two perfectly rational points of view, you know, within the context of that particular customer of like, I would spend one to $2. You know, but I would never spend 10, right? And so, we try to do pricing, I've I've made this mistake before early in my career, where it didn't consider segmentation, early enough in the process, what it tends to do is, if you leave it, if you leave it out of the conversation, at the end of the process, you have a bunch of arguments in the executive room around. Well, yeah, but what about x customer? What about y customer. So the idea is that we want to understand who those customers are upfront, and then make very clear strategic decisions over who we're trying to serve. Because otherwise, you're you're dealing with this, too many levels of dimensionality where you can't make a decision, right? Because you're gonna get different. Again, going back to the five versus 10 versus $1, for for the same item, you will get that type of feedback from the market. And so then it's on you to really be like, Okay, actually, this is who we want to serve. And so we think about segmentation, I think, a couple a couple of pro tips here. One is have if you're going to go down this route, and start discussing segmentation or going through segmentation exercise, the first step is getting top executive alignment, that segments are actually a thing that your your product is in for everyone. This step is first otherwise, it doesn't matter how fancy your segmentation scheme is, or any of the other tools that we might talk about. There's very unfortunately, too many leaders who are just like, well, you know, Amazon serves everyone. So we could just serve everyone, it's like, well, yeah, but they didn't start that way. They started out with a very niche focus. And then over time, they expanded. And then at some point, you become a fortune 500 company where you have, you know, 1000s of employees and hundreds of products, each targeted towards a different group. So you're making sure that you know, your executives buy into your this is actually a strategic decision of understanding, you know, where you're going to play and how you're going to win. And the idea behind segmentation is we really have to make at the end of the segmentation exercise, you really have to know two things, who customers are and what customers want. And the question becomes, where do we start? So understanding who customers are, if we have a, we can have the most beautiful value based segmentation in the world. But if the company is left being like, well, I don't. How do we actually talk to these people? Who do sales call? Who does marketing send marketing collateral to? How do we target people with our demand gen engines, that becomes a problem. If you don't know what customers want, you can end up in a situation where you have focused primarily on clear, say, like demographic information that actually doesn't drive differences in how people buy. So I had a client recently, and you know, they were in a innovation incubator in May Major companies, so a very, very large company, but but they acted very much like a startup within this larger firm. And so you can imagine that if I was operating from a segmentation of like, why don't serve, you know, fortune 100 companies, you know, I might say, Well, okay, I'm not going to bother talking to these people, because they're not going to be a fit. Except, you know, within that company, there's a group that operates very much like a startup. And so you can, you can make mistakes like this with a, we call it a priori segmentation approach where I'm using distributors like demographics. So with the b2c space, that might be your age, income, gender level of education, or in the b2b space, we might think about firma graphics, like number of employees amount of revenue industry, where those don't actually drive differences in one purchase behavior or underlying value drivers of what those customers actually want. And so we'll, I'll usually use a mix of sort of an a priori and what's called a post hoc approach. So a priori approach, meaning I'm using sort of those initial, maybe firmographic approaches to help introduce the idea of segmentation to the organization, right, get them comfortable with the idea, but then ultimately trying to get to a post hoc segmentation, where we're using more value based drivers, and then using the results of that research to profile personas based upon Okay, given you know, these are the sets of customers needs, and how they, how they differentiate from each other. Okay, what does that how does that then map to, you know, in a statistical sense, the, you know, some of the how, who customers are type aspects so that we can successfully go after them.

JJ 31:43

Yeah, that's amazing. And I love how you've, again, I mean, even mentioned that, you know, making sure that the leaders believe that customer segmentation is important in the first place, and I think that's, I almost, you know, laughed at it giggle that it a little bit, but it's so true, I mean, to think about something as simple as that. But to your point about, yeah, everybody should love this product, we've got to make sure that baseline is is in place first and then really kind of use those and, and really important points about how, you know, just demographics, or just certain segment segments, or segmentation methods aren't always the best that are true indicators of behavior, or purchasing, etc. So I think those are all really amazing insights there.

Dan 32:33

Yeah, I think I think that's one of the things one of the things I'll just make a point tying it back to the jobs to be done idea, because I think what jobs to be done is really helpful for is understanding that context is decisive. Yeah. So it's not that problems follow people, problems, follow situations, problems arise within the context of a situation. So it's not that Dan makes a purchase decision, because he's a 40 year old male living in Texas with a graduate degree, I make a decision because, hey, I'm taking a flight for a work trip. And so I'm going to be on a plane for four hours, and I need something to entertain myself or I'm at the gym, or I'm, you know, I'm on a bus or, you know, what is the context because, you know, my behavior might look almost identical to someone who looks incredibly differently demographic, from me, because the context I'm in is very similar to that person. Yeah.

JJ 33:27

Such a great point. So last question that I have for you, I'm gonna ask you about resources, which I always ask, as the last question. You've mentioned some great ones. So we'll definitely link to those. But But last question around this is, how can organizations tell if their pricing is not working or not optimized?

Dan 33:47

Yeah, we touched on a little bit of that earlier. Right. So again, it goes back to you know, first of all, is your Are you hitting your goals? And if not, is pricing a part of that, you know, one of the things we haven't really touched on is unlike, so if you think about product management, product management has come a long way, in the last 20 years, where, you know, still very an apprenticeship type of model. But, you know, until it was only 10 years ago, when I was at my MBA course that they actually taught a first course in product management. Now I teach a course in product strategy for for Kellogg's executive online program. And so now you have, you know, whether it's whether it's that or your reforge or other tools or people who put on those type of courses, you know, there's there's a lot of resources available and frameworks that we apply, I still think pricing is behind the curve compared to where product management is. If you think about the role of a product manager, you know, their role is to bring be the walking persona of the product in the company, right and take in all of the perspectives of the stakeholders. including the customers, right and bail and make the decision that's going to make help drive the business forward and be able to take action. And there's not really that person for pricing. So one of the things I will talk to people about is making sure that you have one a pricing owner, and most likely having a pricing committee or pricing Council, where that pricing Council is a has the the key stakeholders, that's finance, sales, marketing product, the CEO, that and you have a process and you have a way decisions can be made. Because what I found is without that without a process, without a framework without proper governance, these problems linger. And I've had, you know, so many stories from people where they're like, yeah, the CEO will come into the Monday exact meeting and just yell at everyone about this pricing thing. And then everyone kind of looks at each other, and they walk out of the room because nobody actually owns it or feels they have ownership of there's no, there's no way to actually move that forward. So I think it's really important that we leverage the better angels of our nature, when there's not a crisis, to come up with a clear plan of how we will dress these questions, because it's, it's much too easy in the heat of battle, when there's a big enterprise deal on the line. And it's the last day of the quarter ad sales is like, well, we got to give them a 75% discount to push them over the the edge. Even though in your cooler heads, we're prevailing, you know, an irrational situation be like no, that actually wouldn't go against our long strategic interest, that that's going to make a really conversation for customer success in a year when they have to renew that contract and get them Trude up to our actual list prices. But if we could do that, then that will any of these problems that we're talking about of why problems issues might not be working? Right, we could put those plans in place to address those in a more global sense.

JJ 36:50

Yeah, that's a really interesting, and I can see incredibly valuable approach to kind of be proactive and, and having that ownership and having that the ability to be to be objective. So love that. So So finally, you've mentioned some some amazing resources and, and everything that you've mentioned, we'll try to link in the, on the website Just so if anybody's listening, and wants to dig into any of those any other resources, including your own, well, we'll link to your blog posts and resources as well. Any other resources that you found incredibly valuable as you've been learning about pricing, but then of course, about, you know, helping organizations with their pricing strategies?

Dan 37:33

Yeah, I'm a big fan. Well, first of all, I do blog regularly on my website to help demystify this world of pricing for everyone else. So everyone else can go make new mistakes, don't make the same mistakes I have. But that my websites at product, you can check out my blog there. I think two books that I think are very good intros to folks who want to get their heads wrapped around pricing that are are done at a level that is very approachable, is there's one called monetizing innovation, that's really good. And there's another one called price to scale by a gentleman named as De Guzman, who I've actually did a webinar with a few months ago, really, really sharp guy there. And so I definitely recommend those. And then, from a from a strategy perspective, I've become a really big fan of there's a gentleman named Roger Martin, who co wrote a book with AG, late Lafley, the former CEO of Procter and Gamble. And he, you know, I think I hinted at it in one of my comments where, you know, around value metrics and how it's a playing to win, or where to play a decision. And that comes from his sort of framework of thinking about strategy at a very high level, you know, you have to make it a lot of people think about the very sort of tactical aspects, right, as we talked about the price level, is it $10 or $20? Is it 9095? But, you know, really, the pricing tends to sit in this world where if you haven't really figured out, what is the value proposition of your product, who are you? Who is it for? What is the positioning of yourself in the market, if you try to go into pricing exercise, and you haven't thought through all of those, it becomes a bit of a mess. And so I think having that high level sort of idea of how strategy applies in the company is very helpful.

JJ 39:21

Yeah, those are great resources. And we'll certainly link to those in case anybody wants to check those out, and including your blog and all of the great work that that you put out there. Dan Bell hausky this has been such an amazing conversation. Thank you so much for joining me and sharing all of your wisdom around product pricing.

Dan 39:39

Thank you for having me, JJ. I really appreciate all the questions and hopefully is valuable for your audience.

JJ 39:44

Yeah, I'm sure it will, will be it was a wonderful conversation. So thanks again. And thank you all for joining us on product voices. Hope to see on the next episode.

Outro (the incomparable Sandra Segrest) 39:55

Thank you for listening to product voices hosted by JJ Rorie to find more information on our guests resources discussed during the episode or to submit a question for our q&a episodes visit the show's website product And be sure to subscribe to the podcast on your favorite platform


bottom of page