Impact Pricing

Often people ask if I offer consulting services.  I hate that question because I have to honestly answer no, but then explain I offer advisory services.  Here is what you might want to know about being or hiring a pricing advisor.  

What is the difference?  

In my career, I’ve hired and worked beside pricing consultants.  For each project, they typically have an experienced leader who commands a team of less-skilled workers.  The team gathers and analyzes data and recommendations are made to the hiring executive.  Companies who follow the recommendations often find phenomenal results.  The key is that consultants do the work and present their findings.   

A pricing advisor works with executives and teams within the client so they can solve their own pricing problems.  This happens through a combination of education and frequent consultations. The advisor asks many questions and applies his/her vast pricing experience and knowledge to the client’s specific situation.  Instead of making recommendations at the end of a project, the advisor discusses ideas throughout the engagement.  When data needs to be collected or analyzed, the advisor helps the client understand what to do and the client is responsible for the execution.  

Should you choose a consultant or an advisor?  

It depends on your situation.  If you have money but not people resources, a consultant is probably your best choice.  If you don’t have a lot of money, but you have people to work on the project, then an advisor probably fits better.  An added advantage to using an advisor is your people become more skilled at pricing and value.

What about a coach? 

I have a lot of friends who are coaches so I have to tread lightly here.  My understanding is that coaches ask a lot of questions to guide you to find the answer yourself.  That may help the lessons stick better, but it is slower.  An advisor asks questions to understand your situation and then makes recommendations.  I often think of myself as a coach as I’m helping individuals uplevel their skills, but my coaching friends tell me that’s not coaching.  

Is education enough? 

I’ve taught pricing to thousands of students over the last 27 years, and I’ve learned even when students understand a concept, they aren’t able to apply it to their situation.  That takes practice and guidance.  To those of us who have been doing it for so long, solutions sometimes seem obvious, but experience shows it is challenging for new practitioners.  Education is a significant first step that benefits dramatically from implementation assistance. 

What makes a good advisor? 

Here are three important characteristics of a great pricing advisor. 

Pricing expertise – A true pricing expert has worked in many industries, solved many different pricing problems, and has created a set of principles that apply in most situations.  True experts study their field and create thought leadership content to share with the world.  They willingly engage with other experts and practitioners to push the boundaries of knowledge.  

Communication skills – Knowing pricing isn’t enough.  A pricing advisor must be able to communicate their ideas and reasoning to their clients in ways that resonate.  Clients can only make good decisions when they understand the options. 

Helpful attitude – Pricing advisors must know their role is to advise, not make decisions.  Their job is to help their clients make the best decisions possible.  This requires an attitude of service, not a belief that they know everything.  

Is Mark Stiving a good pricing advisor? 

YES!  (I had to say that since I’m writing this.)  However, here is some supporting information.

Pricing expertise – I’ve been in pricing for over 27 years.  Here are some highlights. 

• Ph.D. in pricing (marketing) from U.C. Berkeley
• Two pricing articles published in top tier academic journals
• Experience as a pricing executive at a $2B technology company
• Started, grew, and sold 2 businesses
• Helped companies with pricing in many different industries
• Author of Impact Pricing: Your Blueprint for Driving Profits (Entrepreneur Press 2011)
• Author of Win Keep Grow: How to Price and Package to Accelerate Your Subscription Business (Morgan James Publishing, October 2021) 

Communication skills – I love to teach and help people succeed.  As an educator, I’ve created ways to simplify pricing concepts so more people can learn and use them.  I’ve been teaching at least part-time most of my career.  Here are a few highlights to demonstrate my ability to communicate complex concepts.

• Distinguished Toastmaster 
• NPS score of 81 when teaching for Pragmatic
• Blog weekly on pricing since 2010.  Initially at pragmaticpricing.com and now impactpricing.com
• Host the Impact Pricing podcast
• Created 10 different pricing courses in my career … so far

Helpful attitude – I will always tell you what I think, but all decisions are yours.  I am never upset if you don’t like or use my advice.  I know pricing better than you.  You know your company and market better than I do. My job is to make sure you have more relevant information to consider when making decisions.  Your job is to decide and execute. Our time together will be spent discussing your specific situations, me teaching how relevant pricing frameworks and strategies may apply, and us discussing whether and how to apply them.  

Before committing to pricing, I was an electrical engineer and a sales engineer (with a quota).  These, plus my experience starting and running companies make me empathetic to every role inside your company. 

To start with, I strongly believe finance should NOT set prices.

Now don’t get me wrong – finance cares a great deal about pricing, because part of their job is to monitor profitability. They need to determine how profitable the company will be, and pricing is a major part of this. They care about pricing, but they should not SET prices.

Here’s the problem: those in finance don’t know the real value of their products. If they set prices, the only strategy they use is cost-plus pricing. Anybody who knows anything about pricing knows this is the wrong answer if the goal is to maximize profit.

This isn’t to say finance teams can’t play an important role in pricing. There are many ways, including:

Margin guidance: Finance knows what investors/owners expect in terms of overall margin. They can give guidance to those in charge of pricing, who then can ensure the blended margin, across all of their products, achieves the margin goal.

Margin floor: Some companies set a margin floor, meaning they won’t accept any business at a margin below that level. I’m not a huge fan of margin floors, because sometimes companies can accept business at a loss in order to gain other business at a profit. However, one of the roles of finance is to mitigate risk for the company; margin floors help significantly in this capacity.

Price monitoring: Now is where those in finance and pricing can and should work closely together. Finance constantly collects and analyzes data about the business. The two groups should think about what information around pricing will help them understand the health of the business. For example, monitoring average discounts by product could indicate that market conditions have changed. The win/loss ratio is another indicator of changes in the market. There are many other KPIs or measurements that can be monitored by those in pricing and finance.

Pricing committee participation: some companies have a dedicated pricing committee where representatives from different parts of the company come together to discuss and improve pricing practices. Finance should absolutely be one of those participants. As price methodology changes are suggested, finance plays a critical role in projecting the financial impacts of those changes on the business.

Price leadership: In a rare but powerful role, finance can take the lead on pricing. In this role, finance directs and monitors all pricing activities within the company. They spearhead the finding and fixing of all the profit leaks, including the product lines, sales, and even accounting. This is an ideal role for finance for several reasons:

• Pricing success is vital to the success of the company.
• Nobody else in the company generally takes on this role.
• Finance often has enough power to strongly influence all departments, and all levels.
• Finance already works closely with every department in the company.

An engaged and informed finance department can allow a company to have far more successful pricing. It’s just that finance should NOT set prices. They know numbers, they just don’t know value.

Read Full Article Here: https://impactpricing.com/blog/should-finance-influence-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

Often people ask if I offer consulting services.  I hate that question because I have to honestly answer no, but then explain I offer advisory services.  Here is what you might want to know about being or hiring a pricing advisor.  

What is the difference?  

In my career, I’ve hired and worked beside pricing consultants.  For each project, they typically have an experienced leader who commands a team of less-skilled workers.  The team gathers and analyzes data and recommendations are made to the hiring executive.  Companies who follow the recommendations often find phenomenal results.  The key is that consultants do the work and present their findings.   

A pricing advisor works with executives and teams within the client so they can solve their own pricing problems.  This happens through a combination of education and frequent consultations. The advisor asks many questions and applies his/her vast pricing experience and knowledge to the client’s specific situation.  Instead of making recommendations at the end of a project, the advisor discusses ideas throughout the engagement.  When data needs to be collected or analyzed, the advisor helps the client understand what to do and the client is responsible for the execution.  

Should you choose a consultant or an advisor?  

It depends on your situation.  If you have money but not people resources, a consultant is probably your best choice.  If you don’t have a lot of money, but you have people to work on the project, then an advisor probably fits better.  An added advantage to using an advisor is your people become more skilled at pricing and value.

What about a coach? 

I have a lot of friends who are coaches so I have to tread lightly here.  My understanding is that coaches ask a lot of questions to guide you to find the answer yourself.  That may help the lessons stick better, but it is slower.  An advisor asks questions to understand your situation and then makes recommendations.  I often think of myself as a coach as I’m helping individuals uplevel their skills, but my coaching friends tell me that’s not coaching.  

Is education enough? 

I’ve taught pricing to thousands of students over the last 27 years, and I’ve learned even when students understand a concept, they aren’t able to apply it to their situation.  That takes practice and guidance.  To those of us who have been doing it for so long, solutions sometimes seem obvious, but experience shows it is challenging for new practitioners.  Education is a significant first step that benefits dramatically from implementation assistance. 

What makes a good advisor? 

Here are three important characteristics of a great pricing advisor. 

Pricing expertise – A true pricing expert has worked in many industries, solved many different pricing problems, and has created a set of principles that apply in most situations.  True experts study their field and create thought leadership content to share with the world.  They willingly engage with other experts and practitioners to push the boundaries of knowledge.  

Communication skills – Knowing pricing isn’t enough.  A pricing advisor must be able to communicate their ideas and reasoning to their clients in ways that resonate.  Clients can only make good decisions when they understand the options. 

Helpful attitude – Pricing advisors must know their role is to advise, not make decisions.  Their job is to help their clients make the best decisions possible.  This requires an attitude of service, not a belief that they know everything.  

Is Mark Stiving a good pricing advisor? 

YES!  (I had to say that since I’m writing this.)  However, here is some supporting information.

Pricing expertise – I’ve been in pricing for over 27 years.  Here are some highlights. 

• Ph.D. in pricing (marketing) from U.C. Berkeley
• Two pricing articles published in top tier academic journals
• Experience as a pricing executive at a $2B technology company
• Started, grew, and sold 2 businesses
• Helped companies with pricing in many different industries
• Author of Impact Pricing: Your Blueprint for Driving Profits (Entrepreneur Press 2011)
• Author of Win Keep Grow: How to Price and Package to Accelerate Your Subscription Business (Morgan James Publishing, October 2021) 

Communication skills – I love to teach and help people succeed.  As an educator, I’ve created ways to simplify pricing concepts so more people can learn and use them.  I’ve been teaching at least part-time most of my career.  Here are a few highlights to demonstrate my ability to communicate complex concepts.

• Distinguished Toastmaster 
• NPS score of 81 when teaching for Pragmatic
• Blog weekly on pricing since 2010.  Initially at pragmaticpricing.com and now impactpricing.com
• Host the Impact Pricing podcast
• Created 10 different pricing courses in my career … so far

Helpful attitude – I will always tell you what I think, but all decisions are yours.  I am never upset if you don’t like or use my advice.  I know pricing better than you.  You know your company and market better than I do. My job is to make sure you have more relevant information to consider when making decisions.  Your job is to decide and execute. Our time together will be spent discussing your specific situations, me teaching how relevant pricing frameworks and strategies may apply, and us discussing whether and how to apply them.  

Before committing to pricing, I was an electrical engineer and a sales engineer (with a quota).  These, plus my experience starting and running companies make me empathetic to every role inside your company. 

One of the most fascinating things I found as I was researching subscriptions. Is traditional businesses. Don't really care if you use their product.  

Think about it for a second. You're going to buy a Porsche and you take the Porsche home and you put it in the garage and you put a cover on it and you never drive it for the next 10 years, 20 years. Do you think Porsche cares or were they just happy that you bought it and they got your money? But imagine subscribing to a Porsche. 

“If you think of value as what is a customer willing to pay. Buyers who don't get value are going to churn out.” - Mark Stiving   

And it's very different. If you're going to pay pours $2,000 a month for the right to drive a Porsche, are you ever going to put it in your garage and put a cover on it and not drive it? That because if you do that, you're not getting any value at all for your $2,000 a month. What we're really talking up then his company subscription companies need to retain customers. 

When you think of win, keep, grow, this is the key part. I can go out and win a new customer, but I have to keep them happy. I have to keep them using my product to, in order to get value from my product. 

 And hence comes the customer success department. We didn't really see customer success before subscriptions came along. 

But now that we have subscriptions, we have customer success departments because we need to get people up to receiving value for our product as quickly as possible. We think of that as time to value. We need our buyers to continue getting value over time, and maybe we can get them to, to earn more and more value. 

And we do that by customer success, sharing with them, hints and tips on how to use the product better. And maybe we can even customize those, especially for SaaS businesses.  

When you can see how people are using the product, you can likely say, yes, they're not being as efficient in this area as they could be. 

Maybe we could give them some hints. Customer success then creates value. 

 If you think of value as what is a customer willing to pay. Buyers who don't get value are going to churn out.  

They're not willing to pay anything. Keeping buyers receiving value for our product then really does create value because value is what a customer is willing to pay. 

We hope you enjoyed this memecast. If you see any of our memes that you'd like move to the top of our memecast list, please let me know. If you have any feedback, definitely send it. You can reach me at [email protected]. Now, go make an impact.  

Connect with Mark Stiving:  

• Email: [email protected] 
• LinkedIn 

One of the most fascinating things I found as I was researching subscriptions. Is traditional businesses. Don't really care if you use their product.  

Think about it for a second. You're going to buy a Porsche and you take the Porsche home and you put it in the garage and you put a cover on it and you never drive it for the next 10 years, 20 years. Do you think Porsche cares or were they just happy that you bought it and they got your money? But imagine subscribing to a Porsche. 

“If you think of value as what is a customer willing to pay. Buyers who don't get value are going to churn out.” - Mark Stiving   

And it's very different. If you're going to pay pours $2,000 a month for the right to drive a Porsche, are you ever going to put it in your garage and put a cover on it and not drive it? That because if you do that, you're not getting any value at all for your $2,000 a month. What we're really talking up then his company subscription companies need to retain customers. 

When you think of win, keep, grow, this is the key part. I can go out and win a new customer, but I have to keep them happy. I have to keep them using my product to, in order to get value from my product. 

 And hence comes the customer success department. We didn't really see customer success before subscriptions came along. 

But now that we have subscriptions, we have customer success departments because we need to get people up to receiving value for our product as quickly as possible. We think of that as time to value. We need our buyers to continue getting value over time, and maybe we can get them to, to earn more and more value. 

And we do that by customer success, sharing with them, hints and tips on how to use the product better. And maybe we can even customize those, especially for SaaS businesses.  

When you can see how people are using the product, you can likely say, yes, they're not being as efficient in this area as they could be. 

Maybe we could give them some hints. Customer success then creates value. 

 If you think of value as what is a customer willing to pay. Buyers who don't get value are going to churn out.  

They're not willing to pay anything. Keeping buyers receiving value for our product then really does create value because value is what a customer is willing to pay. 

We hope you enjoyed this memecast. If you see any of our memes that you'd like move to the top of our memecast list, please let me know. If you have any feedback, definitely send it. You can reach me at [email protected]. Now, go make an impact.  

Connect with Mark Stiving:  

• Email: [email protected] 
• LinkedIn 

Dave Daniels is a launch guru helping businesses plan successful product launches. 

In this episode, Dave shares how understanding market segmentation will help you figure out what consumers are willing to pay so you focus on that segment when you launch a new product. If you are an early-stage company who is concerned about building out a product, you can listen to Dave talk about growth hacking concepts. He also talks about the obstacles and advantages concept you can derive insights from.     

Why you have to check out today’s podcast:

• Learn about the factors to consider in revisiting your pricing so you don’t leave money on the table  
• Discover about using objectives and key results (OKRs) for a clearly defined product launch success  
• Learn how to figure out where the least resistance lies so you meet your product launch objective and key results  

“I would deeply understand their motivations for solving the problem that they want to solve. Because how acute that motivation is will largely determine what their willingness to pay us.”

- Dave Daniels

Topics Covered:

02:07 - Talking about the price class he took while he was at Pragmatic Institute  

03:56 - Using objective key results for defining a successful launch  

06:06 - What does it take to launch a product  

07:32 - How do pricing and product launch tie together  

11:57 - What is a concept of obstacles and advantages  

14:38 - Why is it easier for startup companies to figure out their obstacles and advantages  

17:37 - Taking the whole growth hacking concept for startup companies  

19:31 - Setting price for new products  

22:06 - How frequently do you change your price  

24:39 - Validation of pricing by market segment  

25:24 - How to factor in price segmentation over the lifecycle of a product  

27:07 - Willingness to pay and how everybody relates to this phrase  

29:07 - Your reputation and charging premium  

Key Takeaways: 

“Everyone says I want a successful product, but few of them define what success actually is. And so, my thinking has now evolved into using objectives and key results, OKRs, as a mechanism for clearly defining the success of a launch.” - Dave Daniels 

“Your market segment and that competitive landscape will influence the willingness to pay for buyers that are in that market segment.” - Dave Daniels 

“In order for us to be successful with that customer in that market segment who's willing to pay the price that we want to charge, then what are the barriers that will keep us from being successful? So, what are our obstacles because we got to get rid of those.” - Dave Daniels 

“As a startup, that's a lot easier to figure out your advantages and obstacles. Because if you look at the ledger, you have a whole lot of things in the obstacles column, and you have very few things in the advantages column.” - Dave Daniels     

Connect with Dave Daniels: 

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

Connect with Mark Stiving: 

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

Dave Daniels is a launch guru helping businesses plan successful product launches. 

In this episode, Dave shares how understanding market segmentation will help you figure out what consumers are willing to pay so you focus on that segment when you launch a new product. If you are an early-stage company who is concerned about building out a product, you can listen to Dave talk about growth hacking concepts. He also talks about the obstacles and advantages concept you can derive insights from.     

Why you have to check out today’s podcast:

• Learn about the factors to consider in revisiting your pricing so you don’t leave money on the table  
• Discover about using objectives and key results (OKRs) for a clearly defined product launch success  
• Learn how to figure out where the least resistance lies so you meet your product launch objective and key results  

“I would deeply understand their motivations for solving the problem that they want to solve. Because how acute that motivation is will largely determine what their willingness to pay us.”

- Dave Daniels

Topics Covered:

02:07 - Talking about the price class he took while he was at Pragmatic Institute  

03:56 - Using objective key results for defining a successful launch  

06:06 - What does it take to launch a product  

07:32 - How do pricing and product launch tie together  

11:57 - What is a concept of obstacles and advantages  

14:38 - Why is it easier for startup companies to figure out their obstacles and advantages  

17:37 - Taking the whole growth hacking concept for startup companies  

19:31 - Setting price for new products  

22:06 - How frequently do you change your price  

24:39 - Validation of pricing by market segment  

25:24 - How to factor in price segmentation over the lifecycle of a product  

27:07 - Willingness to pay and how everybody relates to this phrase  

29:07 - Your reputation and charging premium  

Key Takeaways: 

“Everyone says I want a successful product, but few of them define what success actually is. And so, my thinking has now evolved into using objectives and key results, OKRs, as a mechanism for clearly defining the success of a launch.” - Dave Daniels 

“Your market segment and that competitive landscape will influence the willingness to pay for buyers that are in that market segment.” - Dave Daniels 

“In order for us to be successful with that customer in that market segment who's willing to pay the price that we want to charge, then what are the barriers that will keep us from being successful? So, what are our obstacles because we got to get rid of those.” - Dave Daniels 

“As a startup, that's a lot easier to figure out your advantages and obstacles. Because if you look at the ledger, you have a whole lot of things in the obstacles column, and you have very few things in the advantages column.” - Dave Daniels     

Connect with Dave Daniels: 

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

Connect with Mark Stiving: 

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

Many companies use cost-plus pricing. In fact, I’d say nearly all hardware companies, and service companies with fixed costs, use cost-plus pricing in some way. And yet, pricing people know this isn’t ideal (or at least, they should) since it leaves money on the table.

Most of the time, cost-plus pricing doesn’t make sense. Imagine you build a product for $10, and want a 50% margin. This means you price is at $20. But what if your market would pay you $50? Shouldn’t you try to capture that? And what if your market would only pay you $15? At $20, you either leave money on the table, or you don’t sell. It’s an arbitrary number, based on what you want – rather than a meaningful figure, based on your customer’s willingness to pay. 

We should always, as much as possible, price based on how much our buyer is willing to pay. Easily said, hard to do.

Now, why do companies use cost-plus pricing? It’s usually because they want to cover their costs while being competitive on price. Finance set margin goals for the company, and this becomes the cost-plus price-setting mechanism. Note however, that this is not a great reason to do cost plus. It might look like you’ll meet your margin goals on paper, but it doesn’t optimize the return on your innovation.

That being said, I can think of a couple of instances when it makes sense to use cost-plus pricing:

If you have tens of thousands of products to price, it would be cumbersome and unrealistic to use value-based pricing (VBP) on every single one. Imagine you are pricing every item at a retailer, or every item at a distributor. Pure VBP isn’t practical in these circumstances.

However, in these situations, we can and should use VBP for portfolios of products. There may be brands or product lines where you have no competition, for example. Those should have higher margins. The brands or product lines that tend to attract new customers should have a lower margin. Even though you are likely using a cost-plus pricing model, the ‘plus’ part doesn’t have to be identical for every product. The margin you can earn should be dependent on the product, the competition, the buyers and their buying process (especially the last two).

The other scenario where cost-plus pricing makes sense is when your costs fluctuate dramatically. For example, in the chemical industry, it is common to quote prices as a function of the price of a raw material. Buyers see this as fair, and it helps finance people maintain their margin goals. However, even in this situation, you still want to use the underlying principles of VBP to determine what margin you should charge different types of customers or situations.

So, yes, cost-plus pricing can make sense some of the time. However, blanket cost-plus never makes sense. Even when we feel we have to use cost-plus pricing, we should still look for ways to charge our buyers as close to their willingness to pay as possible. Don’t just accept cost-plus pricing on its own. If you do, I guarantee you’re leaving money on the table.

Read Full Article Here: https://impactpricing.com/blog/when-you-should-use-cost-plus-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

Many companies use cost-plus pricing. In fact, I’d say nearly all hardware companies, and service companies with fixed costs, use cost-plus pricing in some way. And yet, pricing people know this isn’t ideal (or at least, they should) since it leaves money on the table.

Most of the time, cost-plus pricing doesn’t make sense. Imagine you build a product for $10, and want a 50% margin. This means you price is at $20. But what if your market would pay you $50? Shouldn’t you try to capture that? And what if your market would only pay you $15? At $20, you either leave money on the table, or you don’t sell. It’s an arbitrary number, based on what you want – rather than a meaningful figure, based on your customer’s willingness to pay. 

We should always, as much as possible, price based on how much our buyer is willing to pay. Easily said, hard to do.

Now, why do companies use cost-plus pricing? It’s usually because they want to cover their costs while being competitive on price. Finance set margin goals for the company, and this becomes the cost-plus price-setting mechanism. Note however, that this is not a great reason to do cost plus. It might look like you’ll meet your margin goals on paper, but it doesn’t optimize the return on your innovation.

That being said, I can think of a couple of instances when it makes sense to use cost-plus pricing:

If you have tens of thousands of products to price, it would be cumbersome and unrealistic to use value-based pricing (VBP) on every single one. Imagine you are pricing every item at a retailer, or every item at a distributor. Pure VBP isn’t practical in these circumstances.

However, in these situations, we can and should use VBP for portfolios of products. There may be brands or product lines where you have no competition, for example. Those should have higher margins. The brands or product lines that tend to attract new customers should have a lower margin. Even though you are likely using a cost-plus pricing model, the ‘plus’ part doesn’t have to be identical for every product. The margin you can earn should be dependent on the product, the competition, the buyers and their buying process (especially the last two).

The other scenario where cost-plus pricing makes sense is when your costs fluctuate dramatically. For example, in the chemical industry, it is common to quote prices as a function of the price of a raw material. Buyers see this as fair, and it helps finance people maintain their margin goals. However, even in this situation, you still want to use the underlying principles of VBP to determine what margin you should charge different types of customers or situations.

So, yes, cost-plus pricing can make sense some of the time. However, blanket cost-plus never makes sense. Even when we feel we have to use cost-plus pricing, we should still look for ways to charge our buyers as close to their willingness to pay as possible. Don’t just accept cost-plus pricing on its own. If you do, I guarantee you’re leaving money on the table.

Read Full Article Here: https://impactpricing.com/blog/when-you-should-use-cost-plus-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

Is subscription a business model or payment model? Probably the easiest example to think through is Porsche. 

Yes, you can subscribe to a Porsche. 

But before I describe that to you, let me talk about buying a Porsche. Let's say you want to go buy one, there are four different payment models that you could use. 

You could pay cash, you could take out a loan from a bank, you could take out a loan from the dealership who's selling you the car, and you could lease the vehicle.  

“Subscription is a business model, not a payment model. ” - Mark Stiving  

Now, leasing may not be exactly ownership, but it acts almost exactly like owning the vehicle. In each of these four cases, the experience from the consumer is almost identical when it comes to the product. The only thing that's different is how we ended up paying for it.  

But now let's jump to the subscription. In Atlanta for sure, you can subscribe to a Porsche for a measly 2000 or $3,000 a month, you can drive any Porsche you want, any day you want. That's pretty cool. They'll even cover all the maintenance fees, they'll pay for the insurance, you're simply paying for the right to drive a Porsche whenever you want.  

Notice that's a very different experience than owning a Porsche.  

Can you think through what are the benefits that your buyers are expecting when they buy your product and use your product?

And is it possible that we could, we can take that product and that series of benefits that they're truly looking for, and deliver the benefits to them without requiring them to own our product?  

And then could we deliver those benefits so it's a stream of benefits?

And the stream of benefits never ends, it goes on forever. In that case, maybe our buyers will pay us forever. 

We hope you enjoyed this memecast. If you see any of our memes that you'd like move to the top of our memecast list, please let me know. If you have any feedback, definitely send it. You can reach me at [email protected]. Now, go make an impact. 

Connect with Mark Stiving: 

• Email: [email protected]
• LinkedIn