Impact Pricing

Stephen Plume has more than 20 years of success in venture, executive leadership, and consulting. He is a General Partner of an early-stage venture fund since 2019, driving business strategy and coaching executives in the portfolio.

In this episode, Stephen discusses how AI is shifting pricing models from human-based to consumption-based metrics. He emphasizes the importance of identifying the right value metric that resonates with customers encouraging businesses to experiment with pricing to uncover hidden revenue and margin opportunities.

Why you have to check out today's podcast:

• Gain insights into the cutting-edge pricing strategies for AI companies and how these differ from traditional user-based models to get a glimpse of the future of tech pricing.
• Learn about actionable strategies like identifying the right value metric and conducting low-risk pricing experiments, which can help businesses capture hidden revenue and improve margins.
• Deep dive into how venture capitalists think about returns, risk, and value, which can benefit entrepreneurs and business owners seeking to understand how to attract investment.

"There is so much opportunity to learn from low-risk pricing experiments, and people worry so much about their reputation. Get over that feeling, go out and experiment, and learn from it."

- Stephen Plume

Topics Covered:

01:54 - A funny thing about Stephen not related to pricing

02:46 - How he found his way into pricing

04:21 - Reflecting on his first pricing project with Sybase

05:57 - Contrasting enterprise-level pricing with startup pricing, highlighting the complexity of pricing for larger companies

09:12 - The importance of focusing on the Ideal Customer Profile (ICP) for early-stage companies

10:39 - Explaining how companies often face pricing erosion as they grow and introducing the concept of 'layering' and 'fencing'

16:38 - Discussing how companies, like HubSpot and Salesforce, often start by solving a specific problem with a focused solution but later expand by adding numerous features and add-ons

17:27 - Delving into the concept of competitive positioning

21:40 - The importance of delivering significant value to customers to motivate a decision to switch from a competitor or the status quo

25:09 - Sharing insights about pricing for AI companies and broader trends in AI adoption

29:14 - Discussing the concept of pricing metrics in the context of AI and SaaS

30:32 - Stephen's best pricing advice

Key Takeaways:

"When I'm working with early stage companies my drumbeat is, don't worry about anybody else right now, worry about your ideal customer profile. Because they are the ones who, by definition because math is a thing, will pay you more money faster than anyone else." - Stephen Plume

"In the venture world what I tell the early companies I work with is, for someone to take a bet on you, they're expecting venture returns. They need to be getting 10X their money out. That's not just the investors. That's the customers need to be getting 10X their cost out, or they're not going to adopt you." - Stephen Plume

"The advantage of a platform growing to solutions is, if you do it right, your margins improve rather dramatically." - Stephen Plume

People/Resources Mentioned:

• Sybase: https://en.wikipedia.org/wiki/Sybase
• Salesforce: https://www.salesforce.com/ap/?ir=1
• Cisco: https://www.cisco.com/#tabs-35d568e0ff-item-194f491212-tab
• Regis McKenna: https://en.wikipedia.org/wiki/Regis_McKenna
• Geoffrey Moore: http://geoffreyamoore.com
• Steve Blank: https://steveblank.com
• HubSpot: https://www.hubspot.com
• Zoom: https://zoom.us
• LinkedIn: https://www.linkedin.com
• Siebel: https://www.oracle.com/ph/cx/siebel/
• Zendesk: https://www.zendesk.com
• Intercom: https://www.intercom.com
• Clayton Christensen: https://en.wikipedia.org/wiki/Clayton_Christensen

Connect with Stephen Plume:

• LinkedIn: https://www.linkedin.com/in/stephenplume/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

This is an Impact Pricing Blog published on August 15, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/value-based-pricing-a-simple-definition/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/

Barrett Thompson is a firm believer that applied advanced math and data science can significantly improve customer lifetime value. For more than 25 years, he has helped Fortune 500 companies improve profitability and grow revenues by delivering science-based, optimized decision models. He has found that relying on the accuracy and objectivity of predictive models to guide daily decisions, rather than more subjective methods, yields superior financial results for B2B companies.

In this episode, Barrett shares AI's role in pricing, how it enhances pricing strategies, identifies trends, and improves pricing decisions. He also highlights the value of understanding customer-specific needs and using data to create more tailored and effective pricing models.

Why you have to check out today's podcast:

• Deep dive into how AI, particularly tools like ChatGPT, can revolutionize pricing strategies, making it more efficient, transparent, and data-driven.
• Gain valuable advice on how B2B companies can simplify and modernize their pricing processes, avoiding the pitfalls of outdated methods when adopting new pricing systems.
• Have a clear understanding of how to effectively implement purpose-built pricing tools to enhance profitability and competitiveness.

"If they undertake an automation of their pricing process into these modern purpose-built pricing tools, they should look very closely and critically at how to simplify their pricing process as they put that onto a superior platform."

- Barrett Thompson

Topics Covered:

01:14 - Touching a bit on the topic of the Boy Scouts program and how it is a valuable tool for character development and citizenship

01:51 - How he found a path into pricing

03:26 - Discussing the qualitative and not just the quantitative aspect to pricing

05:17 - How automated pricing systems can balance efficiency and personalization

09:14 - Explaining how AI holds great potential in generating "smart prices"

11:36 - Reflecting on the rise of generative AI and how AI in general has already influenced pricing systems

13:50 - Exploring the potential of generative AI to enhance negotiation and communication in B2B sales

15:35 - Discussing how understanding a customer's specific use case or application can directly influence pricing decisions

16:33 - Talking about how understanding a customer's specific use case or application can directly influence pricing decisions

17:57 - Highlighting how AI, like ChatGPT, can enhance tools used by pricing professionals by streamlining the process of analyzing pricing data

20:41 - Addressing the "black box" problem in pricing systems and expanding on the idea of using AI to explain its own decisions

24:14 - The importance of deepening the understanding of customer needs, particularly as the push for touchless and self-service channels grows

28:43 - Barrett's best pricing advice

Key Takeaways:

"An important part of setting up any price guidance, price recommendation or price automation system is to ensure that you've identified the factors that were really important in driving price outcomes in the market." - Barrett Thompson

"Pricing becomes a consequence of having agreed on the value and why it matters." - Barrett Thompson

"We gather data to enrich the relationship and define places to add more value to the customer. Yes, the seller should be compensated for fair value, but not to be exploitative." - Barrett Thompson

People/Resources Mentioned:

• ChatGPT: https://chatgpt.com

Connect with Barret Thompson:

• LinkedIn: https://www.linkedin.com/in/barrettthompson/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

This is an Impact Pricing Blog published on August 8, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/value-is-created-twice/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/

Claire Wang helps startup founders and solopreneurs pick a pricing model that ensures their long-term success.

In this episode, Claire shares her journey of transitioning into her own consulting practice after her corporate job. She talks on the misconceptions about pricing, how people mistakenly equate pricing with just setting a price point when it's all about understanding customer value. She emphasizes the importance of integrating pricing early on in product development, not as an afterthought. She also highlights the need for pricing professionals to be more visible and vocal about the value they bring, as many people don't understand the full scope of their work.

Why you have to check out today's podcast:

• Discover the common misconception that pricing is just about setting a number and uncover how it is deeply intertwined with customer value and business strategy.
• Gain insights on what's missing in the pricing industry and how professionals can elevate the value of their role.
• Learn how pricing should be integrated into product design and customer understanding aligning business goals with customer satisfaction.

"Understand your customers, understand their needs. And once you do that, then you'll have a better understanding about their willingness to pay."

- Claire Wang

Topics Covered:

01:34 - How she found herself in pricing

02:12 - Pricing as it relates to actuary

03:57 - Explaining the cost-plus pricing in the world of insurance

06:57 - Discussing about price sensitivity and willingness to pay with regard to insurance

08:09 - Reason behind starting her consulting firm

10:02 - The misconception about pricing and what it truly is

14:46 - How success of pricing strategies often depends on how integrated pricing is within a company's overall operations

16:49 - Pricing being more than just setting a number

18:20 - Claire making her point that pricing should not be viewed as a zero-sum game

23:45 - Sharing her thoughts on building visibility for pricing professionals to raise awareness about the pricing profession

25:56 - Gauging perceived value of pricing professionals based on their visibility and content

27:34 - Claire's best pricing advice

Key Takeaways:

"Most people have no clue what pricing really is. They equate pricing with setting a price point, which is completely untrue." - Claire Wang

"Pricing, fundamentally, is all about value." - Claire Wang

"Pricing has got nothing to do with the price point. You really need to go through the whole funnel. And once you've done that, then the price point is just a byproduct." - Claire Wang

People/Resources Mentioned:

• Allstate Insurance: https://www.allstate.com
• Telstra: https://www.telstra.com.au

Connect with Claire Wang:

• LinkedIn: https://www.linkedin.com/in/claire-wang/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

This is an Impact Pricing Blog published on August 1, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/southwest-airlines-new-seating-strategy-a-billion-dollar-decision/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/

With over six years of experience as a leader in marketing operations, Nathan Yeung helps mid-market businesses build, enhance, or support their marketing functions and drive value creation. As the Vice President, CMO Services at Find Your Audience Marketing Partner, he leads teams of marketing managers, graphic designers, media buyers, coordinators, and freelancers to develop and implement marketing strategies for organizations across various industries.

In this episode, Nathan shares how empathy is crucial for understanding and communicating value, which directly influences pricing and client trust. He emphasized that many web pages fail because they attempt to appeal to everyone rather than focus on a specific audience and problem. Additionally, he advised against charging too little, suggesting that higher rates can be justified when trust is established, and recommends offering multiple pricing options to highlight the value of the primary choice.

Why you have to check out today's podcast:

• Learn to understand and address your customers' pain points to significantly impact your pricing strategy and boost trust, leading to higher revenue.
• Find out why many web pages fail to convert and get actionable advice on how to create focused, empathetic web content that resonates with your target audience.
• Explore how trust plays a crucial role in client relationships and how it can influence pricing decisions, helping you secure higher-value contracts.

"Never give a single price. Think about creative ways to give at least three and make your obvious choice your bottom line."

- Nathan Yeung

Topics Covered:

01:07 - Talking about his disciplined approach to health

02:01 - How he got into pricing and his perspectives on pricing

03:53 - Discussing his approach to helping B2B companies "discover revenue"

06:22 - The reactions and learning opportunities that come when a client quickly accepts a price offer

07:48 - The importance of truly understanding and communicating value when helping businesses discover revenue

11:17 - Value creation in B2B and B2C contexts

14:03 - Expanding on the concept of having marketing take on internal communications

15:08 - Two key issues why web pages fail and bringing in additional point about the "curse of knowledge"

18:22 - Discusses the concept of pricing and positioning in business

22:22 - Trust and how it relates to pricing and business growth

23:04 - Talking about his book, 'The Lazy Consumer', and discussing the concept of trust

24:49 - Elaborating on the importance of empathy in sales and how it can trigger a response from customers

25:53 - Underscoring the crucial link between trust and pricing

27:20 - Nathan's best pricing advice

Key Takeaways:

"When you forget about that [people are human], you get a lot of people locked into this state of logical thinking. And when you're too logical, it's hard to generate a lot of value. Because when they're logical, they're being highly critical." - Nathan Yeung

"Understanding your ideal customer profile and really understanding their true pain points and where they are in a business, you can understand value." - Nathan Yeung

"Value makes you really be empathetic, and you really have to understand what is valuable to your customer." - Nathan Yeung

"Just because there's a quantifiable change that is valuable, that does not necessarily mean that person values that the most." - Nathan Yeung

"HR is great for compliance and process and all that kind of lovely stuff, but they're really not great marketers." - Nathan Yeung

"This idea of building culture, while it's important for HR to take care of that and be the accountable part of that, the reality is that marketers are likely the more important person to actually bring that message to market, which is the company in itself." - Nathan Yeung

Connect with Nathan Yeung:

• LinkedIn: https://www.linkedin.com/in/yeungnathan/
• Website: https://www.findyouraudience.online/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

This is an Impact Pricing Blog published on July 25, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/stop-pre-discounting/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/

Frank Luby is a writing partner and editor for business books, articles, and corporate communication and co-founder and CEO at Present Tense LLC.

In this episode, Frank emphasizes the importance of clear and effective writing for pricing professionals, offering techniques like the "10-10" and "Rule of 13" methods to structure writing efficiently. He highlights how good writing can influence decision-making within organizations, often reaching and persuading people beyond initial conversations. Additionally, he underscores the value of listening to customers and understanding their real needs, which can significantly enhance pricing strategies and company success.

Why you have to check out today's podcast:

• Discover practical writing tips and actionable strategies to help you organize and improve your writing, making it more persuasive and impactful.
• Learn how writing plays a crucial role in influencing and shifting thinking within organizations amplifying your message beyond one-on-one conversations.
• Gain insights on structuring effective communication, prioritizing the right information in your writing and focusing on making a single point effectively.

"Truly, honestly, listen to customers."

- Frank Luby

Topics Covered:

01:33 - How he got into pricing

03:23 - What's his contribution in Hermann Simon's book on pricing

04:21 - Noting two challenging tasks that makes writing about pricing difficult

05:39 - Acknowledging the complexity of the term "value" in pricing

07:36 - Deciding which narrative perspective to use in writing between blogs and books

09:15 - An effective writing technique to engage readers

10:05 - What his role is at the upcoming PPS (Professional Pricing Society) conference

12:09 - Why a pricing director or manager should care about improving their writing skills, even if they feel confident writing emails

14:10 - How writing can have a greater influence than many people realize

15:46 - Sharing two key writing approaches to help people organize their thoughts effectively

18:50 - Comparing writing to architecture

20:03 - Explaining the "Rule of 13" method as a way to test whether a chapter idea can stand alone

21:21 - The concept of prioritizing writing tasks using the acronym "CSR".

23:01 - Importance of understanding your audience, especially when trying to shift or replace existing strategies in pricing

25:53 - Introducing the 50/500 rule: Making a single, clear point in writing

27:31 - Frank's best pricing advice.

28:24 - Why businesses often don't listen to their customers, despite it being an obvious necessity

Key Takeaways:

"I often make the analogy to writing an architecture. And you wouldn't want somebody building your house just by having a bunch of bricks and cement and two by fours delivered. You'd like to see a plan, you'd like to see what they're going to design. And it's hard to change things later on. So, that planning part, especially for a book, is immensely important." - Frank Luby

"That's where this 13-method comes in where you can test some of those things that if you can't have those three supporting pieces, or three examples or three ways to elaborate on a particular point, that's your signal right off the bat that that might not carry a chapter." - Frank Luby

"The other hint is prioritizing what you want to write about." - Frank Luby

"We love simplification and we love to have simple answers and simple descriptions, and no segment of customers, or no individual customer, is really that simple. So, we pick up on the things that we can make easy groups out of and we tend to ignore the rest. And sometimes, the rest we're ignoring is really the vital part of the equation." - Frank Luby

People/Resources Mentioned:

• Hermann Simon: https://hermannsimon.com
• Price Management: Strategy, Analysis, Decision, Implementation: https://www.amazon.com/Price-Management-Strategy-Analysis-Implementation/dp/3319994557
• Dow Jones: https://www.dowjones.com/about/
• David Brooks: https://www.nytimes.com/column/david-brooks

Connect with Frank Luby:

• LinkedIn: https://www.linkedin.com/in/frank-luby-318220/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: [email protected]

This is an Impact Pricing Blog published on July 18, 2024, turned into an audio podcast so you can listen on the go.

Read Full Article Here: https://impactpricing.com/blog/the-5-ws-of-pricing/

If you have any feedback, definitely send it. You can reach us at [email protected].

Now, go make an impact.

Connect with Mark Stiving:

• Email: [email protected]
• LinkedIn: https://www.linkedin.com/in/stiving/