Episode Transcript
[00:00:00] Speaker A: But what you're saying is that giving him the right amount of value, no more, no less, is the better approach.
And I'm sitting here saying, but what about the more? Man, what a utility maximizing human wouldn't. I just want more.
[00:00:14] Speaker B: Yo, Mike check. What's up everybody? You're listening to the Street Pricing Podcast, the only show where proven SaaS leaders share their mindset and mistakes in pricing so we can all stop guessing and start growing. Enjoy, subscribe, and tell a friend. Now let's break it down with your host and sought after slayer of bad pricing, Marcos Rivera.
[00:00:37] Speaker A: What's up and welcome to the Street Pricing Podcast. I'm Marcos Rivera, author, founder and CEO of Pricing IO. And today is a special episode, a special day. I have five members of the Pricing IO team joining me today to share their thoughts, broaden some perspective. Actually, the truth is I just don't let them out much. And so I need a get them out here, get them talking. They have so much pricing knowledge in their heads that I can't wait to start digging in. Team, welcome. What's going on?
[00:01:06] Speaker C: Thanks for having us.
[00:01:08] Speaker A: Excellent. Excellent, man. I'm so, so stoked. I mean, between you guys, I'm thinking there's what, at least a hundred pricing models or engagements that you've seen there, and there's a lot of stuff you can share. So let's, let's start with just some basic intros, right? Let's just go around the room and just say hello to everybody. I'll start here with Emily, and then we'll just go quick round robin. Emily.
[00:01:27] Speaker D: I'm Emily Sands. I'm the director of analytics here at Pricing IO. I have been in pricing for a decade in about five different industries. So a lot of different pricing, but SaaS, I'd have to say, is my favorite.
[00:01:39] Speaker A: So definitely you were airlines too, right? Airlines is. That's. That's like the, like top of the mountain when it comes to pricing, complex complexity and craziness. So welcome. Welcome, Emily. Steve, Go ahead, man.
[00:01:51] Speaker E: Thank you, Marcos. I'm Steve Inman and I'm a strategist based in Phoenix, Arizona. And my prior pricing experience in includes over a decade and a half now, I think of pricing experience in the freight transportation, the travel industry, also the airline and the advertising industries. And just really excited to continue to learn in with our SaaS customers.
[00:02:14] Speaker A: Excellent, excellent. Lifelong learner, just like me. That's why I like you, Steve. Excellent. Mario, jump on in, man.
[00:02:20] Speaker F: My name is Mario. I'm a pricing strategist based In Austin, Texas and I have been with Pricing IO for a while now. And about my background, I have over 10 years of experience in SaaS pricing, go to market and expansion strategy. And before joining Pricing IO, I had the opportunity to work in mid sized and big organizations like CBRE and WeWork.
[00:02:43] Speaker A: Super, super out there. Austin, one of my favorite towns, used to be my second home. So thanks for jumping in. Mario. Peter.
[00:02:50] Speaker G: Hey guys. Peter Cohen. I am a pricing strategist based in Los Angeles. I've been and doing pricing for about five years now and before that have had a couple roles in tech. I'm very excited to be here.
[00:03:03] Speaker A: That's right, small, little tiny company called Oracle I think is where he used to work. Right. So thanks for jumping in here, Peter. Amit, take us home man.
[00:03:10] Speaker C: Yeah. Hi everyone, my name is Amit. I've been focused as a pricing consultant for the last couple years and before that I have over a decade of experience in high growth SaaS. Really focused on product management which sometimes includes pricing, sometimes it doesn't. And I'm really excited to be here. Based in San Diego.
[00:03:29] Speaker A: Excellent, excellent. I got my, I earned my stripes in pricing from my product manager days and so I totally get how building value leads to understanding how to capture it. So thank you Ahmed for coming in and sharing some of those insights, man. All right team, so that's, that's the group that we have today. And for the roadmap that we're going to step through here is going to be a little different, right? We're not going to go through our standard rewind and play and fast forward. We're going to change it up and maybe do more of a round robin approach. Everybody here has such great insights to share. So we're going to round robin. I'm going to throw a few grenades in the middle. We're all going to jump in and have a little fun. So I'm going to give us a few things to chew on. The first one here is I talked about all the different pricing engagements you guys have been a part of, right? And it's been in vertical SaaS. You've done pricing in, you know, consumption, usage based AI, all these key things, right? And probably in looking at all these models, you've seen some of your assumptions play out, you've learned something new, you've gotten some type of, you know, realization or some aha moment. So let's first start with what was your biggest aha moment in the last six months or so? What was your biggest aha moment? And Then talk about it and what can we learn from that? Aha. So I'm going to randomly pick somebody and then we're going to go step through here to get and just jump in together. So I'm going to look and I'm going to see Mario, because you have really cool specs on, you're going to start first. What was your biggest aha moment in some of the pricing and packaging models that you've seen so far?
[00:04:59] Speaker F: My biggest pricing lesson of 2024. I would say having a solid packaging is a game changer for customer satisfaction and revenue. And I think it is all about how you package and present value to customers and things like tracking usage data and talking with your customers. Getting constant feedback from your customer is key to improve your packaging and to adopt a value based approach. At the end, it's all about making sure the right customers get the right value at all times.
[00:05:31] Speaker A: Wait a minute, so you're saying the packaging is even more important than the number, the price itself, Is that what you're saying?
[00:05:37] Speaker F: I'm not saying that it's more important, but I'm saying that it's a very important component of your pricing strategy.
[00:05:42] Speaker D: Yeah, I'd say it's more important actually.
[00:05:45] Speaker A: You think it's more.
[00:05:46] Speaker F: Wow.
[00:05:46] Speaker A: I mean that, that I love, I love the bold statement, but I've seen some pretty wonky packaging out there. Right. It could create a ton of friction. So Emily, you think if you don't get that right, then maybe the price, price maybe doesn't even matter? Is that what you're saying?
[00:06:00] Speaker D: I think that if the packaging is not right and you're not actually meeting the needs of your customer with the way they're receiving the software, then you can have a really great price. But they're still not getting what they paid for what they needed.
[00:06:12] Speaker G: Right.
[00:06:12] Speaker D: So the value's never going to align regardless of the price point. Obviously the price point is important, but I'd argue getting that packaging really nailed down is bigger and harder and harder to change. Right. So you can adjust pricing up and down a little bit from a price point perspective, but actually changing that packaging and getting customers understanding what they're paying for is a lot trickier.
[00:06:32] Speaker A: What if I just say I'll you sell, you will buy, you'll get everything, all my features, one one stop shop, just get it all. Forget packaging altogether. Does that make it better or worse?
[00:06:43] Speaker D: Well, now I'm paying for stuff I don't need, so I don't care what you're charging me. Why Am I paying for, you know, six courses when I just wanted to come here for happy hour?
[00:06:53] Speaker C: And that's the biggest thing you see with software pricing. I see we have this discussion, I know all the time, which is we talk about value based pricing and software. In software you can't use input cost generally. And so one of the biggest issues people see, no matter the price they pay, if they're paying for something that they're not using, they get frustrated. So if I have some TV streaming package, it doesn't matter the price point, if I'm paying for it and I don't use it at all, I'm going to get frustrated. So if you try and give everyone everything, inevitably I think you, you see people have that issue to some degree.
[00:07:33] Speaker G: I think people spend their time not in the the best way. Like I, I think they spend 80% of their time thinking about price levels and 20% thinking about packaging. When I think the best ways they really should be flipped. You should be spending most of your time thinking about what we're selling and how we're selling it. And the 20% should be on the actual price points themselves. And I mean a couple of reasons for that. One is that the how you sell in terms of packaging is really going to dictate your expansion motion and your expansion revenue. Seen so many companies over this last year just they don't have enough things to sell or they're over bundling at the start. And the, you know, how you package is really going to dictate how much customers buy from you later. The second reason is that price levels are easier to move up and down as you go than packaging. Like packaging might require some engineering changes. You might even be taking something away from customer who's used to a certain feature. So nail the packaging first, the price points you can hone in on later.
[00:08:33] Speaker A: That's the big unlock. Then it's like, hey, instead of 80, 20, 80 on the price, 20 on the package, flip that right and spend most of your time on the package. Get that, you know, whatever that structure, those tiers, you know, what's in, what's out, get all that right? And then you start focusing on the price. And like you said, that stuff can move up and down as you learn and get data and information or as the, you know, whatever the product gets better. I mean all those things factor in. But you're saying that we should flip that, that paradigm and really spend a lot of time on the structure. So the guy who comes up to you and says, look, what if we just do bronze, silver, gold, and just be done with. Who cares? Like, what's the big. When you say, you know, packaging is not getting enough attention, what's really going on here? What are people missing?
[00:09:14] Speaker G: What they're missing is they're not understanding what customers, how they actually land with their product. Like when they, when the prospect signs up, what is the minimum core things that they need to be successful? No more, no less. I think the temptation is let's just give them everything or overserve them because we think that adds more value. And really it doesn't because they end up just undervaluing them because they're paying for them or not using them. But also what's offering that we don't want to have too little, that they say, oh, you know, we couldn't be successful because we didn't get the right amount of services, for example, I think it's really focusing on that expansion path from they land here and then they grow to these three, four upsells down the line.
[00:10:01] Speaker A: That's counterintuitive, man. I don't get it. Like, look, I do get it, actually, but what I don't get is there's this big gap, right? And what I'm trying to hear is, is I. I'll give you an example. I was watching the. What is it? The Ninja blender infomercials, right? And they want to sell you something, and in order to get you to buy, they'll say, and there's more and there's more and they'll keep adding all this stuff to get you to buy. So more gets you to buy. So if I get more for my money, I should in theory buy. But what you're saying is that giving him the right amount of value, no more, no less, is the better approach. And I'm sitting here saying, but what about the more, man? What a utility maximizing human. Wouldn't I just want more? How would you argue with me?
[00:10:44] Speaker G: Yeah, well, you have to want the more. That's the key. If I said, you know, if I was trying to sell you a blender and say, well, to increase the value, I'm going to add in a chair. You know, you're going to walk away and say, I'm just going to buy. I'm going to go somewhere else. That's just selling me a blender. Because those two things are. I don't need those two things together. Now, the blender deal works because maybe I'm selling you an extra shaker and I'm like, oh, I need that shaker, because that having a second cup will help me. That's why it works. It's not when we need that shaker. So really, it comes down to need and actually solving a related use case versus something that's actually unrelated, like, you know, any other type of product or something that I'm not going to need in the near future.
[00:11:22] Speaker E: Well, and Peter, I think that the idea of use case is really important. So thinking about that more is really the positioning is about what is that unique use case. And so helping understand and align the use case for value. And there is an opportunity if you get the packaging right. But if you decide that you want more, you can go ahead and grow through that process in the packaging and identify it that way.
[00:11:43] Speaker C: Yeah, yeah, Peter, I would take your example, actually. And just to really bring it and visualize it, if you're selling a blender for 10 bucks, and you're selling a blender plus a shaker for eight bucks. So, hey, you're getting more for $8, what do you think people would say? Hey, they prefer if I was to ask you, hey, I'll give you a blender and shaker for eight bucks. Just a blender. The same blender for ten bucks. Everyone's nodding, but so what we see, I think they're nervous, but if you go to Target. Yeah. People are gonna. If they see it side by side, they're gonna say, I want the blender and the shaker. Right. At the end of the day, they're getting more. They can touch it and feel it. However, where I challenge it in software, you're actually better off selling just the blender for 10 bucks. Because what happens is some buyer is going to say, oh, I'm getting the blender and the shaker. But if I'm not using the shaker at all, they get frustrated. I'm paying for something that I am not using. Not getting any value of that mindset is a little different in software. And that's one of the big reasons I think, we really try and align that value. People don't know intuitively what it should cost, and so they really want to make sure they're using what they're paying for.
[00:13:05] Speaker D: And I don't have to learn how to use the shaker as a consumer. Right. There's no implementation. There's no risk of the shaker might take up some space in my kitchen. And that's really the only risk. But if I have this software that has all these features and functionality and I'm trying to roll out and make that big change for my team. And it's. Well, this is confusing. This is confusing. I just need it to do this. And I'm distracted by all this other functionality. Well, now I'm confused. The shaker sits in the cupboard and no one cares. Right. So I think that there's a big difference there from a change management perspective too.
[00:13:34] Speaker F: And I think it's important to talk about revenue expansion and growth. Right. If you give too much, you eliminate your ability to upsell. And I'm going to drop a data point. I think I read this data point in one of your LinkedIn posts, Marcos. Companies that have net revenue retention of more than 120% grow 2x faster. Right. So packaging is really important.
[00:14:01] Speaker A: Yeah. And thank you for dropping in a little data into this mix. We could, we couldn't resist. Right. With this group. But you're right, I mean that expansion, what happens is. And I think Ahmed and Emily. What? I'm listening. It's just the whole group here with consensus. Slightly different lenses though. But software is really a relationship, right? You kind of grow into it, you learn how to use it. You got to change your habits. And you're right, you don't intuitively even know how much this thing is supposed to cost. Right. But as you kind of work your way into it and adjust and that, that what, what ends up happening is you're consuming more of it, you get more value. That is something that you can continue to pay for as you expand. If you don't use more of it, if it just is a one trick pony and it does one thing for you, then fine, then you're happy, you pay it, you move on, it blends the stuff and you're done. But the way this really works is that software changes a lot faster than blenders. And so all these new features and all these new things come. Your business using it changes. I'm thinking in a B2B kind of software or like a SaaS context, right. And that really drives a lot of sort of the perception of what am I getting for the money, but also when am I getting that for the money? Because when what ends up happening is if all your values front loaded, then you get this really weird dynamic of what have you done for me lately? And if you can give everything all away, you don't have an expansion path or anything else to sell, then you're. You're kind of going to start melting like an ice cube, right? And then if your, if your value is like way, way backloaded, like it takes Me, six, nine months. I think about Emily, like all the training and everything you just said, then the way you package and the way your model is, maybe you give them like nice little stairs to like work their way in, get some value and then later get more and get more. And then from there that amount they pay sort of aligns with that, right? So there's a huge alignment factor. And I think Mario said it, even his opening is like selling the right value to the right customer. And I'll even take it further, like the right value to the right customer at the right time or stage. And then that's really why packaging is so damn important. A lot of folks miss out on it. So that was again, terrific back and forth. I think a lot of folks just listening to the last, what, 10 minutes has gotten a lot. Team, I want to take a quick pause here to ask you for a huge favor that'll mean a lot to me. Please review and share the show. Share it with your team, your friends, your peers. Not only will it help them stop the guesswork in pricing, but it'll also help you and increase the chances that you'll take action and change for yourself. All right, much love. Now back to the show. I want to take us to another question here. I want to bring in a hot topic. Mario already started throwing data in here, so let's just bring in a piece of news, right? We know that last months ago, whatever it was, Salesforce decided to really shake things up, like the grand puba of good, better, best and usage. You know, sorry, use user licensing, right? So user based licenses, seats, you know, good old three tiers, whatever, buy the one in the middle. They started this stuff like gajillion years ago, right? And now they're disrupting things. They're saying, hey, we're making a hard pivot, we're going to. They sort of rebranded. Remember that whole Einstein thing they came out with? So they really souped it up. It's like an Einstein 2.0. And now they're calling it Agent Force. And now they're going to charge. Not by the user, not good, better, best. They're going to do two bucks a conversation, right? This is like that, that that outcome or that work based pricing that we've been seeing a lot more of. We've seen resolution based, reservation based, a lot of stuff happening. So that was the big shift. And they say this is the way of the future. This is where everything's going. Agent based agents taking a lot of the manual work out of workflows. And systems. And they're putting a lot of marketing, they're putting a lot of effort and time into this new wave. Now we know what we know and we. We see what we see. What do you think about this change from Salesforce Mistake. Right. Move. What are you guys thinking?
[00:17:47] Speaker D: I actually really like it for a couple of reasons. I think something we're seeing more and more is this perception of outcome based pricing. Right. So outcome based pricing is really popular. And when you think about that, that makes sense, right? We win together, you grow, you pay me more, and everyone wins. And I think we're seeing it more and more in our clients, even a little bit more, that kind of outcome based pricing. But when you think about AI, there's also some folks that are using outcome based pricing. Right. Per successful interaction. But what kind of raises the flag to me is when you think about it that way, of that per successful interaction. Well, if my software's making everything better and people need help less often, now you're paying me less because I've made you more efficient. So I think the Salesforce approach actually solves for that. Right? It is per conversation, regardless. If you get to an outcome necessarily regard, you know, it's not in that same way. And so I'm getting value from it because this conversation's occurring. Right. The act of having the conversation is where I'm finding the value, not necessarily in the outcome because someone else would've had to do it. Right. If there was a person on the other end, they would've had to be there either way. And so that's something that I really like about their model is I'm paying for where the value is. I'm paying for what would have been done instead. And now if I get better and you get better, you're not going to pay me less. So I think it makes a lot of sense from Salesforce's perspective. I'll be interested to see what their customers think about it.
[00:19:10] Speaker A: Me too. Solid points all around. You guys agree with this? This is crazy.
[00:19:14] Speaker D: Disagree with me, guys.
[00:19:15] Speaker A: This is crazy talk.
[00:19:16] Speaker C: I have a question. If you have less conversations, won't they get paid less? Salesforce. So it's not fully tied. Like, are you gonna have more conversations?
[00:19:25] Speaker D: Well, but if you're seeing the value, you would maybe have more. But that's a good point.
[00:19:29] Speaker A: You mean like if. If the AI gets smarter and can solve the problem with fewer conversations, Is that what you're saying?
[00:19:35] Speaker C: That's what I was thinking. Like if it's customer service, right? Thinking that but that's different than, I don't know, maybe if it's sales calls then you would have more conversations, right? So, so that maybe a conversation that's a good one.
[00:19:47] Speaker A: A definition of a conversation. If is are they all created equal right. This two bucks for all conversations even makes sense. What do you guys do you guys think that the per conversation is a mistake?
[00:19:57] Speaker G: I really like it. I mean I think this is another, another example in this long trend that I think I've seen over the last five years of user based pricing is still common but we are slowly moving away from user based pricing. And even the companies that are user based are incorporating usage based elements into their pricing model. And now we're seeing some companies go fully usage or outcome based which I think is great for a number of reasons. But I was, I mean there's a lot of discussion, you know, and maybe just in pricing circles but in terms of how AI should actually be priced. And I think this is a good sort of heuristic for it is if AI is something that's, that complements something that a person is doing, like it helps you work, like Think Copilot or chatgpt for example. I think a fine starting place is to price it per user because there's always going to be a person tied to it. But in Salesforce case where the AI is actually replacing a person, you know, we call these like agents or you know, other terms for it, then there's no person to tie it to or no user to actually license it by. So that's why we're seeing companies have to get more creative or adventurous with the pricing metrics, which I think is really exciting. Like this will unleash a new wave I think of competition and of, of experimentation in pricing because AI is forcing a different conversation.
[00:21:21] Speaker E: And I think Peter, one of the things about that is that it does provide a low barrier to entry, which I think is, is interesting. I think this price point itself is something in which they customers can can experiment with. But I can also see from a purchasing side and I'd be curious with the team here what your insights are. But what about the predictability and what additional enhancements would Salesforce want to provide from an analytics or a reporting perspective that would help firms be able to predict how much they think they're going to be spend. How many calls am I actually going to be making?
[00:21:53] Speaker A: That's a good one. That's a good. Actually that brings up a really interesting question because think about a. Take the customer service rep example, right you say you're, let's pick an easy number, like 30 bucks an hour, right? You're paying somebody to answer calls or they could do, you know, I don't know, in an hour, what, six calls or something. So they're, they're spending ten bucks a call in today's world. And this thing is two. That's like what, like a five to one. That's a really, you know, that's a pretty quick ROI right there. Especially if it could solve it as effectively. That's the big bet, right? But you know, thinking about as a sales rep, right, where you're, that's not $30 an hour, it's probably a lot more and there's more commissions involved and other things like that, that ratio can get even higher. And so what happens is you kind of get, you kind of get addicted to it in a way because the scale that it provides, at least I think that's the big bet they're making. But from a psychology perspective, two bucks, the conversation is so easy to remember, so easy to say, so easy to get, that I think there's a big ease of use component, easy to get started. So Steve, I, I'm high fiving you, man. I think there's a big low barrier to entry thing.
[00:22:57] Speaker C: Steve and Marcos, let me challenge you. I do here like two bucks a pop. You know, we could easily do it. I could sign up, but are you forgetting the enterprise buyer? So I'm thinking when I'm in high growth B2B SaaS, right, I buy a product like Zendesk or an old Salesforce or. Exactly, right. There's somebody in the C suite or wherever, they want to know, how much is this going to cost? I can say 30,000 a year or 40,000 or some range, you know. Now you buy this and say you have a whole operations team, 30, 40 people doing these calls. Well, how much is it going to cost us? Well, somewhere between 10,000 and 300,000. Then it's like, oh, well, well, can we cap in? There's just a huge unknown. So I can imagine. You know, let's not forget about. There's a lot of risk someone would have to take to adopt this versus, again, I agree, Outcome based pricing, that's the trend we're going to keep going there. But I think Peter's key word of slowly might be more important than people realize because it's not easy to buy this.
[00:23:58] Speaker D: I think to add to that and something kind of. Steve was mentioning around the predictability. I think this works really well for Salesforce, because they're Salesforce. Right. So they have all the data and they can get really good at predicting what your actual usage is going to be because you probably have an established relationship and if you don't, they're, you know, they're the big name so they're trusted that their estimate they give you is probably going to be about right. The predictability piece is really dangerous if you're more of a startup B2B SaaS company because that you don't have that trust, you don't have that reputation, quite frankly, you probably don't even have that data to be able to give that great estimate. And so kind of on what Steve mentioned around the predictability and what Amit was mentioning, I think that it works for Salesforce. I don't know how it would work across the board.
[00:24:39] Speaker A: That's a really solid point. I mean, listen, if, if I was their customer and I've been with Salesforce for seven years and they know all of my, my usage patterns and all that stuff, then I think it's a very easy, smooth way to transition to use it. You can even give them a fricking free trial of it up to X amount of conversations and see how it goes. Right. Very, very strong upsell and cross sell. But for new, that equation is a little different. I think I'm, I think you're right, man. I think that the predictability or the lack of predictability of how many conversations do I really think this thing is going to do? Because the way they're billing for it is they're counting the conversations and then adding it to the next invoice. What if you get a spike? Right? Those are the scary things that people think about.
[00:25:20] Speaker C: And if you remember AWS and when all the cloud, I mean that was the big thing, usage based pricing. I know of a lot of companies that got spiky bills and now there's a whole set of SaaS tools actually to help deal with that.
[00:25:34] Speaker A: SaaS helping SaaS AI helping AI these days. Right. But no, I actually thought the move is good, but I think it's only one of a series of steps. I actually think this, this two bucks a conversation is not the final pricing packaging they're going to be doing with this agent force and even other things. I think this is going to be an adoption play for their base because their base is ginormous. I think they're going to learn the patterns, they're going to start differentiating between the types of conversations and probably start introducing other, I don't know license types or agent types or something like that as they expand. And so this is to me the start, not the end of their sort of journey into outcome or work based pricing.
[00:26:12] Speaker G: Steve, to your point, I would be really surprised if many of their largest customers don't have some type of caps inserted in their contracts. Like if I'm, I'm a CFO of a large company and I get signed up for $2 a conversation with no idea or say I don't have a lot of data about how many conversations I'm expected to have. Like that's, that's a huge liability. And I expect the $2 per conversation to be more implemented in pilot phases so that companies aren't exposed to these potential for massive bills. One other thing that is interesting that less from the buyer's perspective and more from Salesforce perspective is the, the move towards outcome based pricing will lead to a lot less revenue predictability on Salesforce's end as well. I think we're still in this honeymoon phase of all our AI revenue is good, which it is. But this will create a difficulty forecasting for Salesforce itself because it's not. No one's locked in to any type of subscription. So either we're going to start to see more subscription elements with AI like this agent force similar to how we saw with COMPUTE and AWS over time, or we're also going to have to, we're going to have to retrain investors on what AI revenue looks like and what they can expect because it's just as dependable as subscription revenue but it's not quite as guaranteed. Like there's just a different way of thinking about it that investors will, this is a new, new era or new territory for them.
[00:27:43] Speaker F: Also I think if you talking about investors, I think this outcome based model will help Salesforce to map the real cost of providing this service. Right. And I read, I think last week the founder of ChatGPT said that they recently launched a new subscription for $200. I think that's well known in the SaaS market. But they underestimated the usage and now they are losing a ton of money and investors are freaking out. So I think this outcome based pricing also help companies to cover the real cost of providing an AI service.
[00:28:25] Speaker A: That's super smart. That's why you have the glasses and the vest, man. Super smart perspective on that now. I think you guys are right which is kind of interesting to see how this plays out. I mean it just was launched recently and so we'll kind of See how they adjust and pivot over time. But I generally think it's the right move and let's just see how it expands and evolves from there. But I'd caution other SaaS companies, especially if you're a CRM with an AI agent, you know, trying to compete with Salesforce to just copy them, be, be careful because Salesforce is Salesforce. I mean, they're, they're kind of unique in their own right, so they can do a lot of stuff that that startups can't. So. So guys, I want to move on to a few insightful nuggets for our audience. Right? You've been so generous with your time. I know you got pricing problems to go out and solve. So I just want to leave the folks here today with your big piece of pricing advice for 2025. Like if you were sitting down in front of a SaaS CEO and he was like, give me the one piece of advice you would give me for pricing and packaging, what would you say to him or her? What would you say?
[00:29:25] Speaker F: I like to say that usually who have the answers to most of the pricing challenges of a SaaS company are the customers and the employees. So my advice is talk with your customers, ask them questions about feature importance, ask them questions about the value that they are receiving from the platform. And with employees, talk with sales, talk with customer success. These teams are usually very close to the customer and ask them questions about the main pushbacks, asking about how that current pricing structure help or hurt their ability to sell. And ask them also what changes they would make to the current pricing model. Right. So basically it is extremely important to have regular conversations about pricing internally, but also with customers.
[00:30:13] Speaker G: You know, one interesting thing. So software is a mature category now. Like there is a lot less differentiation among different players today. There's a lot of good enough solutions. We're seeing horizontal players struggle as there's just a lot more options out there. And increasingly to be successful you have to be vertical or, you know, targeting enterprise. And so I think one thing that's going to increasingly differentiate software firms going forward is actually services. I know if you're a cfo, this is like might be nails on a chalkboard, but the as it becomes hard to stand out on features, what I've seen is the reason many customers stick around or don't is because of the team and the people that they work with, because they can get a lot of the same features from anyone. So I would be taking a really hard look at my customer success motion, my support motion. And I would make my MPS tsat whatever measure you look at one of my core really top metrics. And I would actually over think about over providing services because that to me is where what customers are deciding on more and more versus features that all are all are similar. Look the same.
[00:31:22] Speaker A: Words of wisdom. I love that. Who else wants to throw in a piece of advice for SaaS leader Emily?
[00:31:26] Speaker D: So I think everyone on the call knows I love discounting and I obsess over discounting. So similar to what Peter was saying.
[00:31:34] Speaker C: Around SaaS purchasing and sorry. Both when you buy as a consumer and for pricing models.
[00:31:40] Speaker D: That's true. That is true.
But I think something that Peter is saying about just kind of the maturity we are seeing in SaaS is two things with discounting, look to your base and see what's there. Right. There's probably a lot of opportunity from customers that were discounted years ago to maybe move them up. The products change. Let's make sure we're able to do that. But also on the front end. Right. Are we landing customers at discounts just because it's gotten to be more crowded? Are we over discounting and then letting those stay? Just be really careful with the Overall impact on ARR that A1 time discount can have during a lifetime of a customer. And so as much as I love discounting, I definitely would give that advice to look at it, refine it and it works. Just set some guardrails to it.
[00:32:23] Speaker A: That's a good one. People can take that way, way too far. Yeah. And it can start killing the business. One more. Who wants to give one more to a SaaS leader?
[00:32:31] Speaker C: I'll go quickly. Just building on Mario's. Mine's a little more tactical. But one thing I've seen, if you want to be intentional on pricing, you should think pricing committee. And a pricing committee does not have to be fearful. There's extremely lightweight way a company can do that. But I would really think through a pricing committee, at least having one meeting, it'll allow a company to be intentional about pricing.
[00:32:56] Speaker A: Yeah. How do people miss that one? It's such a. You set it up and you do it right. It actually can drive so much in terms of good decision making, visibility, tracking, all these key things. I'm with you, man. Pricing committee all the way. Steve, given that you're. You are sitting there staring at me with a big smile. Give give us just one extra one. A bonus.
[00:33:15] Speaker E: Yeah, just one extra one. Very simple. Pricing is not always simple. It's definitely not simplistic. But this is I think a simple idea, and that is when you test it, track it, really think about making sure that you've got some data in the background when you're testing it so that you can track it. And that's thinking about your segments, your customer types, your volume, your effective price, so that you can look and see what those changes, including those discounts that Emily's a fan of.
[00:33:40] Speaker A: It's jaw dropping how many companies either throw out a pricing change without testing or change something in their packaging, don't track what happened. And that's like a golden moment to really see how customers are really viewing your value, what, how they react to some of these different changes. And it's super vital data for the next one. Right? And so that's a big piece of advice, team. Like, I really want to thank you for coming in, sharing in all of this knowledge, but if you know me, which you do, because you work with me, I'm going to throw you one more curveball question as we wrap up here today. I need to know, what is that one jam, the big one that lights you up? Just give me one. Just don't. Don't overthink it. Just let. Let the natural one that pops to the top of your head come out. All right? Just give me the one thing. Ahmed, since you're right next to me, what's the one jam that lights you up?
[00:34:25] Speaker C: I'm going to twist it a little, but on Spotify, we're all 80s all the time in our vehicle. My kids hate it, my spouse loves it. So it is what it is. All 80s all the time.
[00:34:37] Speaker A: I'm a big 80s fan, too, man. Big high five to the 80s, Peter.
[00:34:40] Speaker G: I'm in a sentimental mood because I just saw the I'm Tim Doc Avicii documentary on Netflix. So I. Every time I hear levels, it's a classic.
Gets everyone moving.
[00:34:53] Speaker A: Gets everyone moving. Levels, Is it levels? Is it? Mario, what's the big jam for you?
[00:34:56] Speaker F: Mgmt. Electric Field. I really like that song.
[00:35:00] Speaker A: I like it. Very boosting. I like it. Steve, what's the one for you, man?
[00:35:04] Speaker E: For me, anything that anytime I hear it and it comes on. Animal. Def Leppard.
[00:35:11] Speaker A: See, I never. I didn't think about that one for you. You're always so serene and calm, Animal. All right, Emily, take us home.
[00:35:19] Speaker D: Hips don't lie. Shakira. First song on my first ipod. Probably listen to it Lord knows how many times. Because you had to pay per song back then, right?
[00:35:28] Speaker A: Oh, you did. You're right. You're right. And that song is infectious. And you know who would have thought that we would even say the word ipod today. We would see a cap like this today. Like today was a special day. I told you right?
[00:35:40] Speaker G: And we had a lot of outcome based pricing.
[00:35:44] Speaker D: Very true.
[00:35:45] Speaker A: That is true. That is true. So this trend isn't new, right? It's been around for a while. Guys, thank you again for dropping the knowledge and team our community listening. Please take these lessons, bring them back, apply them on Monday, get 1% better every day. Try to move away from that guesswork so that way you can continue on your growth path. So remember, stop guessing and start growing. Until next time.
[00:36:08] Speaker B: Thank you and much love for listening to the Street Pricing podcast with Marcos Rivera. We hope you enjoyed this episode and don't forget to like and subscribe. If you want to learn more about capturing value, pick up a copy of Street Pricing on Amazon. Until next time.
