A Guide to a Better Pricing Model w/ Ajit Ghuman

WEBVTT 1 00:00:02.540 --> 00:00:02.740 Yeah, 2 00:00:05.340 --> 00:00:12.030 a jeet a jeep buhman, I'm so glad that you get to join us on the show. Thanks 3 00:00:12.030 --> 00:00:16.790 for having me so pumped. Yeah man, we were talking, I think it was, it was 4 00:00:16.790 --> 00:00:21.260 just before break, but you're blowing my mind even in setting up for this 5 00:00:21.260 --> 00:00:25.980 call so I cannot wait to get into everything that we're gonna get into 6 00:00:25.980 --> 00:00:32.820 today just to kick off. What is a commonly held belief about marketing 7 00:00:32.820 --> 00:00:38.670 that you passionately disagree with? Yeah. About about pricing, right? Like 8 00:00:38.680 --> 00:00:42.910 the question or marketing. Yeah, well, I mean for either because usually yeah, 9 00:00:42.910 --> 00:00:47.350 I guess in particular tell me more of a commonly held belief about pricing that 10 00:00:47.350 --> 00:00:53.070 you disagree with. So basically like we were talking last time and I've been 11 00:00:53.070 --> 00:00:59.880 kind of on this process that I've seen so many companies kind of think about 12 00:00:59.880 --> 00:01:05.319 their product development process in a couple different silos and I'm actually 13 00:01:05.319 --> 00:01:09.790 really frustrated about it because the product manager says it's not my job to 14 00:01:09.790 --> 00:01:13.020 think about how this thing is going to be sword and it's not my job to think 15 00:01:13.020 --> 00:01:17.790 about how it's going to be marketed are priced as a market. And I'm like, but 16 00:01:17.790 --> 00:01:20.850 you do know that if you don't think about it, your product is not going to 17 00:01:20.850 --> 00:01:25.740 be successful, right? And so I do think about it. But what I see is like time 18 00:01:25.740 --> 00:01:30.070 and time again. We are such a technology driven culture out here in 19 00:01:30.070 --> 00:01:33.410 the valley that were like, hey, what is going to build the best technology? And 20 00:01:33.410 --> 00:01:37.680 we literally think build it and people will come not exactly right, you hire 21 00:01:37.680 --> 00:01:45.480 the salespeople, but which is so much more. It's so true. Yeah. It's like if 22 00:01:45.480 --> 00:01:48.730 it's a good enough product, we'll worry about churn and pricing and all that 23 00:01:48.730 --> 00:01:53.300 later. Yeah. And I mean, the honest truth and this is the marketers truth 24 00:01:53.310 --> 00:01:57.670 that people don't like to hear is like you can have a shitty product and do 25 00:01:57.670 --> 00:02:02.250 well and you can have a great product and not do well. And that's the 26 00:02:02.250 --> 00:02:06.240 difference that sometimes technical leaders and technical companies don't 27 00:02:06.240 --> 00:02:10.710 realize that they accept. I'm sorry to say Salesforce is not that great of a 28 00:02:10.710 --> 00:02:15.170 product, but it still doesn't. Anyway, it's terrible. I hate Salesforce man. 29 00:02:15.180 --> 00:02:19.000 Especially if it is literally the bane of most sales people's existence 30 00:02:19.000 --> 00:02:22.710 because they're like, I'm just doing data entry these days, like I don't 31 00:02:22.710 --> 00:02:26.840 actually have to sell, but it it's their successful companies. So they 32 00:02:26.840 --> 00:02:30.960 were really good at martin. You know, the whole whole nine yards of marketing. 33 00:02:31.340 --> 00:02:35.940 Yeah, absolutely. So what's the main thing about pricing that you would say 34 00:02:35.940 --> 00:02:40.860 that people will say, okay, it's this guy's job, is this guy's job. What's 35 00:02:40.860 --> 00:02:44.560 the gist is it that it's complex? Is that what you disagree with? Tell me 36 00:02:44.560 --> 00:02:48.830 more, That's the impression. So people kind of thing, Okay, marketing will 37 00:02:48.830 --> 00:02:53.200 figure it out. Most companies, not even marketing, its people think it's like, 38 00:02:53.200 --> 00:02:56.510 we don't really know anything about the customers, so we will let sales figure 39 00:02:56.510 --> 00:03:02.240 it out, right. And you find these places and companies that have Just put 40 00:03:02.250 --> 00:03:06.580 some random pricing on the board and have survived for so long and you look 41 00:03:06.580 --> 00:03:10.930 at them like you could have done so much more here and instead of being a 42 00:03:10.930 --> 00:03:16.750 $20 million $35 million dollar revenue company and you could have a double 43 00:03:16.750 --> 00:03:20.690 evaluation by now that I mean that's the literal impact of what you could 44 00:03:20.690 --> 00:03:24.990 have done now. I'm not saying like, see I'm not the founder, I think founders 45 00:03:24.990 --> 00:03:28.210 are created. I think they create a lot of value, but I think there is more 46 00:03:28.210 --> 00:03:32.350 that can be done and it's not out of reach in all these consulting companies 47 00:03:32.350 --> 00:03:37.270 that offer value, they have experience. But do you really need to spend 100 48 00:03:37.270 --> 00:03:41.460 kids who have somebody else? Tell you about your startup then? You, you know, 49 00:03:41.460 --> 00:03:45.030 you know, your customers, you know what they like, what they care about, you 50 00:03:45.030 --> 00:03:49.130 know, how much they're gonna pay. It's just a matter of knowing a few steps 51 00:03:49.130 --> 00:03:53.610 and a process by which you need to come about. Okay, I've checked off the boxes. 52 00:03:53.620 --> 00:03:58.480 This is my kind of decision framework and now I am confident that I have a 53 00:03:58.480 --> 00:04:01.740 pricing structure that is going to serve my needs. That's really what 54 00:04:01.740 --> 00:04:05.080 we're talking about. What are you following? The simple process that's 55 00:04:05.080 --> 00:04:08.840 going to solve you? It's not rocket science and it's definitely not what 56 00:04:08.840 --> 00:04:11.630 they teach you in business school, which you know, complex conjoint 57 00:04:11.630 --> 00:04:16.550 analysis and uh you know, let's look at the impact of this attribute, nobody 58 00:04:16.550 --> 00:04:21.459 does it like that and you don't have to but A G. I get all these people coming 59 00:04:21.459 --> 00:04:27.430 to me telling me, look man, we got to hire this firm, we don't know how much 60 00:04:27.430 --> 00:04:31.370 we could charge. What if we're leaving money on the table. What if what does 61 00:04:31.370 --> 00:04:35.230 it look like as they scale, What does scale look like? So how would you 62 00:04:35.240 --> 00:04:40.780 respond to all these? I think I think the honest people are leaving money on 63 00:04:40.780 --> 00:04:45.540 the table more often than north. I don't think the conservancies are bag 64 00:04:45.550 --> 00:04:50.060 like I think they offer value, I think they have experience but I think you 65 00:04:50.060 --> 00:04:54.790 have as a business the most knowledge about your market and your customers 66 00:04:54.800 --> 00:04:59.790 and you just need a simple framework. So at my current company now where I, I 67 00:04:59.800 --> 00:05:04.010 do all of the pricing and packaging and this whole realization started once I 68 00:05:04.010 --> 00:05:09.560 started this project is hey, uh, this is actually simple, but there is no 69 00:05:09.740 --> 00:05:13.890 document that I can read that just tells me it is take the sequence of 70 00:05:13.890 --> 00:05:19.250 steps to come up with the process. And if I found out what to do by calling 71 00:05:19.250 --> 00:05:22.460 people, I'm like, hey, you're pricing at this company, tell me how you did 72 00:05:22.460 --> 00:05:26.660 this, right? So I called 56 people in the industry and I just knew what I 73 00:05:26.660 --> 00:05:32.900 needed to know and that's an investment of four or five hours. So that's my P O 74 00:05:32.900 --> 00:05:36.850 V Wright. If you if you know just the sequence of steps you need to take, you 75 00:05:36.850 --> 00:05:40.640 can cut all of that out and be more confident. It's really about confidence 76 00:05:40.640 --> 00:05:45.100 in the decision that you want to make for your business. Sure. Okay. So can 77 00:05:45.100 --> 00:05:48.680 you give me example of, you know, where where would you start, where do you 78 00:05:48.680 --> 00:05:54.320 even start? How do you even know you should start focusing on pricing? I 79 00:05:54.320 --> 00:05:59.490 would say that there it depends on the lifecycle of a company, like how do you 80 00:05:59.490 --> 00:06:04.070 know, at some point when you're starting, you need a number on the 81 00:06:04.080 --> 00:06:08.790 table. Right? So it may be that not critical when you're really starting 82 00:06:08.790 --> 00:06:12.820 out and you have a new product in a new market, you're just testing things out. 83 00:06:12.830 --> 00:06:17.800 Okay. I think you can survive, it's not probably be another world as you get 84 00:06:17.800 --> 00:06:21.480 successful. What happens is the decisions you made early on, kind of 85 00:06:21.480 --> 00:06:26.840 these implicit assumptions start to bite you, you start to under undersell 86 00:06:26.850 --> 00:06:30.880 sometimes you create more friction in the sales process than is actually 87 00:06:30.880 --> 00:06:35.230 necessary, depending on how you set up your structure. Uh, and I can give you 88 00:06:35.230 --> 00:06:38.780 some examples of other valley companies that have found that out. And it's a 89 00:06:38.780 --> 00:06:43.430 natural, totally natural and expected transition that companies have to go 90 00:06:43.430 --> 00:06:46.730 through as they get bigger, they get serious and then they solve this 91 00:06:46.730 --> 00:06:51.890 problem. Can you talk a little bit about the friction piece cutting off? I 92 00:06:51.890 --> 00:06:54.860 mean the friction, I'll give you an example and this is a public example. 93 00:06:54.860 --> 00:06:59.290 So mixed panel, I spoke to their head of pricing and they were, when they 94 00:06:59.290 --> 00:07:04.650 came out, they were charging, uh, for their analytics software by event. 95 00:07:04.660 --> 00:07:08.180 Right now. Event is the only thing at that point that they could measure and 96 00:07:08.180 --> 00:07:12.160 track, and they said, well, just give you charge by event and all of these 97 00:07:12.160 --> 00:07:15.180 customers as you have different types of customers using your product, 98 00:07:15.180 --> 00:07:19.410 they're like, well we're not getting value out of this and you're charging 99 00:07:19.410 --> 00:07:24.200 us by event. You know, it's not really proportional to how our users are using 100 00:07:24.200 --> 00:07:28.860 the system, Right? So it was okay. It's a fine, it's a rough metric. But that 101 00:07:28.860 --> 00:07:33.180 company has been around for a long time to have only realized it now. Uh, and 102 00:07:33.180 --> 00:07:38.310 that I was like, you should, you guys probably have changed a little bit. So, 103 00:07:38.310 --> 00:07:41.470 so I, you know, I covered, you know, as you know, I'm writing a book on the 104 00:07:41.470 --> 00:07:45.340 topic and I covered this with the head of pricing and he mentioned how they 105 00:07:45.340 --> 00:07:50.140 selected a new pricing variable, which now was like the trackable users on the 106 00:07:50.140 --> 00:07:55.270 website. Similarly to the daily active users on a mobile. Now, that is much 107 00:07:55.270 --> 00:07:58.090 more relevant to business because they're like, okay, well I'll pay you 108 00:07:58.090 --> 00:08:02.110 based on the usage I have on my product. Right? That's if the product is being 109 00:08:02.110 --> 00:08:06.280 used Ivan uneven. Otherwise people start to have these questions, 110 00:08:06.280 --> 00:08:11.000 especially in the enterprise, I'm paying you 50 K or hundreds or whatever 111 00:08:11.000 --> 00:08:14.750 I'm paying you and but I'm not happy and that's where the challenge is, 112 00:08:14.750 --> 00:08:19.230 right? You have this hard Upsell or renewal conversations where people are 113 00:08:19.230 --> 00:08:23.670 like it's not working for me. And the new conversations are hard as well. 114 00:08:23.680 --> 00:08:28.460 You're creating ry models and you're kind of rationalizing and your force 115 00:08:28.460 --> 00:08:34.650 feeding your sales team to work with an outdated methodology. Mm That's so 116 00:08:34.650 --> 00:08:37.980 interesting. Yeah. One of the points you were bringing up about this is 117 00:08:37.980 --> 00:08:43.100 about how sales. One of the indicators, along with what you were just talking 118 00:08:43.100 --> 00:08:46.370 about about friction is one of the indicators is sales isn't even 119 00:08:46.370 --> 00:08:50.260 following the pricing model. Can you talk a little bit more about that? Yeah, 120 00:08:50.260 --> 00:08:55.030 I've seen, I've seen that in some of my own experiences. The thing is that if, 121 00:08:55.040 --> 00:08:57.920 so let's say you're an enterprise company right? You always sold a 122 00:08:57.920 --> 00:09:02.680 certain way and you've gotten good at doing that now, now there comes a time 123 00:09:02.680 --> 00:09:06.390 to institutionalize that, right? And you figure out how to do it properly. 124 00:09:06.400 --> 00:09:10.580 If you do it in a cookie cutter manner, you'll do what in the industry is a 125 00:09:10.580 --> 00:09:14.960 good, better best model, all of the different pricing charts and what the 126 00:09:14.960 --> 00:09:19.160 VCS tell you like. It's just like this cookie cutter approach and if you look 127 00:09:19.160 --> 00:09:23.360 at, I like the guy that price intelligently, but there they have a 128 00:09:23.370 --> 00:09:26.140 podcast, right? And they go through pricing pages. If you start to go 129 00:09:26.140 --> 00:09:29.050 through pricing pages and see, oh everybody does. Just just put better 130 00:09:29.050 --> 00:09:34.350 best. The problem is if you have an enterprise company, it's custom scoped, 131 00:09:34.360 --> 00:09:38.480 there are many more deals that you have to figure out and if you, so I have 132 00:09:38.480 --> 00:09:42.300 been in a company where this has happened and where these pretty much 133 00:09:42.300 --> 00:09:46.160 cut and dry solutions were offered to the sale stream, they didn't like it. 134 00:09:46.540 --> 00:09:51.520 The problem was here, You're adding 10 features here that I'm going to go back 135 00:09:51.520 --> 00:09:55.870 to the customer next year and upset the five features. So why have you bundled 136 00:09:55.870 --> 00:09:59.660 these five features into this? This bundle? I'm not, I don't want to sell 137 00:09:59.660 --> 00:10:03.300 them right now and they're not interested in this because this is not 138 00:10:03.300 --> 00:10:08.540 how the usage scales. Right? So, and so you block your Upsell potential and 139 00:10:08.540 --> 00:10:13.210 your sales team is like, well, I guess I'm the experienced A is not going to 140 00:10:13.210 --> 00:10:17.090 follow your pricing and the inexperienced A is going to end up with 141 00:10:17.090 --> 00:10:21.070 lower SPS because he's just going to say this is what this is my pricing and 142 00:10:21.070 --> 00:10:24.900 I've been in that situation, but there is a revolt and the sales team like 143 00:10:24.910 --> 00:10:29.480 this is just doesn't work for me and somebody gets fired. So that's the 144 00:10:29.480 --> 00:10:35.620 problem with implementing bad pricing actually in a bigger environment and 145 00:10:35.620 --> 00:10:40.840 not thinking thing to, hey everybody Logan with sweet fish here. If you've 146 00:10:40.840 --> 00:10:44.210 been listening to the show for a while, you know where big proponents of 147 00:10:44.210 --> 00:10:48.810 putting out original organic content on linked in. But one thing that's always 148 00:10:48.810 --> 00:10:52.810 been a struggle for a team like ours is to easily track the reach of that 149 00:10:52.810 --> 00:10:56.110 linked in content. That's why I was really excited when I heard about 150 00:10:56.110 --> 00:11:00.610 shield the other day from a connection on, you guessed it linked in since our 151 00:11:00.610 --> 00:11:04.870 team started using shield. I've loved how it's led us easily track and 152 00:11:04.870 --> 00:11:09.460 analyze the performance of our linkedin content without having to manually log 153 00:11:09.460 --> 00:11:13.750 it ourselves. It automatically creates reports and generate some dashboards 154 00:11:13.750 --> 00:11:17.200 that are incredibly useful to see things like what contents been 155 00:11:17.200 --> 00:11:20.150 performing the best and what days of the week are we getting the most 156 00:11:20.150 --> 00:11:24.970 engagement and our average views per post. I highly suggest you guys check 157 00:11:24.970 --> 00:11:28.590 out this tool. If you're putting out content on linkedin and if you're not, 158 00:11:28.600 --> 00:11:33.920 you should be. It's been a game changer for us. If you go to shield app dot Ai 159 00:11:33.930 --> 00:11:38.430 and check out the 10 day free trial, you can even use our promo code B two B 160 00:11:38.430 --> 00:11:44.540 growth to get a 25% discount again, that's shield app dot ai. And that 161 00:11:44.540 --> 00:11:50.150 promo code is B the number to be growth. All one word. All right, let's get back 162 00:11:50.150 --> 00:11:58.820 to the show. Absolutely. If I was to look for some indicators, it would be 163 00:11:58.820 --> 00:12:03.320 that we put out this pricing model. But the contracts either the finalized 164 00:12:03.320 --> 00:12:08.330 contracts that I'm seeing don't match. Is that right? Or what would be some 165 00:12:08.330 --> 00:12:13.350 other things or will be the complaints? Yeah, I'll give you another example uh 166 00:12:13.360 --> 00:12:17.790 one I can share because it's in the book. So again, site like they had this 167 00:12:17.790 --> 00:12:22.210 good better best model and I interviewed johnny chang who is now at 168 00:12:22.210 --> 00:12:26.810 cuba johnny was like when I came in and I saw they had these three packages, 169 00:12:26.810 --> 00:12:31.720 but the only sort of the middle package and that's the only like, like, I don't 170 00:12:31.720 --> 00:12:35.220 know why we have these three packages when we already sell the middle package 171 00:12:35.230 --> 00:12:39.610 and then there is shelf there. Right? So the thing you have to see is all the 172 00:12:39.610 --> 00:12:43.780 features that you saw at some point. Some features are not going to be used 173 00:12:43.790 --> 00:12:48.000 and they're consistently not being used. So that shelf where you sold him but 174 00:12:48.000 --> 00:12:52.700 nobody is using it yet. It causes debt for your implementation steam because 175 00:12:52.700 --> 00:12:56.010 later down the road they may have to implement it. So that's what he 176 00:12:56.010 --> 00:13:00.090 realized which is very unlike its in its situation to the the situation I 177 00:13:00.090 --> 00:13:04.730 discussed and then he said oh wait wait we need to move this totally to a 178 00:13:04.730 --> 00:13:08.680 better pricing model different for commercial enterprise, more modular. So 179 00:13:08.680 --> 00:13:12.960 we eliminate all of the shelf with and we make sure we are pricing these like 180 00:13:12.960 --> 00:13:16.960 if you have I have three plans if we're always going to pick the middle plan. 181 00:13:16.970 --> 00:13:20.920 So and that was their main market. Right? I believe the insides main 182 00:13:20.920 --> 00:13:25.090 market was mid market and that's where the pricing was the worst. That's oh my 183 00:13:25.090 --> 00:13:29.330 goodness. No way. Also this is like two or three years ago. Yeah, totally. They 184 00:13:29.330 --> 00:13:33.910 probably fixed it. Yeah. That order. Yeah. But game sites, if you're 185 00:13:33.910 --> 00:13:38.230 listening then get on. Yeah. Yeah. Yeah. No exactly. No, I'm sure they fix it as 186 00:13:38.230 --> 00:13:42.620 well. No. That's crazy though. That's awesome. There is some points you 187 00:13:42.620 --> 00:13:46.820 brought up about, you know even like more money up front. What did you mean 188 00:13:46.820 --> 00:13:50.560 by that again? Because I think that's such a crucial point for a lot of 189 00:13:50.560 --> 00:13:55.420 businesses is how do we get cash up front? Is that possible? Yeah, exactly. 190 00:13:55.420 --> 00:14:03.990 Yeah. So the point is Let's say you saw a package for $20,000, right? And maybe 191 00:14:03.990 --> 00:14:08.770 you were able to get 20,000 whatever. Yet. There were four things in. There 192 00:14:08.770 --> 00:14:14.840 are three things that In historically wellbeing up sold all the time for much 193 00:14:14.840 --> 00:14:20.590 higher prices. Most companies in the valley and this has happened after 2015 194 00:14:20.600 --> 00:14:26.020 have gone through more of a sas growth modern land and expand. Its less of, 195 00:14:26.030 --> 00:14:31.270 I'll tell you this big block of software and it's less of that and it's 196 00:14:31.270 --> 00:14:34.710 moving too, I'll tell you the small thing and then you keep increasing your 197 00:14:34.710 --> 00:14:40.340 usage, right? That's fear the Valley has shifted to and is going. So now if 198 00:14:40.340 --> 00:14:43.410 you have this fixed thing and you provided these features that you were 199 00:14:43.410 --> 00:14:47.270 gonna sell later, then you cannot go and sell these things later to the 200 00:14:47.270 --> 00:14:52.040 customer anymore. So if you really have to be thoughtful about what the 201 00:14:52.040 --> 00:14:56.220 customer journey has been further customers in terms of feature usage so 202 00:14:56.220 --> 00:15:00.780 that you can design something that's going to maximize upset. There is a lot 203 00:15:00.780 --> 00:15:06.250 of research now that points out like beyond the point beyond like around 204 00:15:06.250 --> 00:15:11.270 roughly 50 million. There are, there is an inflection curve where GTM now has 205 00:15:11.270 --> 00:15:16.410 to focus on existing customers to Upsell more products to existing 206 00:15:16.410 --> 00:15:21.380 customers as the biggest driver of growth leading to I. P. O. Not new 207 00:15:21.380 --> 00:15:26.340 business. So that's the biggest part. And you said that was 15 million air or 208 00:15:26.340 --> 00:15:32.080 is that like about 50? Around 50 15. Okay. Yeah. Rough estimated there is a 209 00:15:32.080 --> 00:15:37.650 point in evolution companies beyond which you gotta start focusing on that 210 00:15:37.650 --> 00:15:42.680 upset path a lot more because it's I believe it's like 3 to 4 times cheaper 211 00:15:42.680 --> 00:15:47.680 in terms of customer acquisition rate. Uh it is cheaper for it's cheaper and 212 00:15:47.680 --> 00:15:51.340 this is a pacific crest survey price intelligently also talks about that all 213 00:15:51.340 --> 00:15:56.030 the time and before that you are more focused on new business acquisition and 214 00:15:56.030 --> 00:16:00.280 new logo acquisition. If you look at the valley, everybody is focused on new 215 00:16:00.280 --> 00:16:07.450 local acquisition, nobody's solving the Upsell expansion volume of sell path. 216 00:16:07.460 --> 00:16:13.500 However, if you did that intelligently and I know of companies who have, you 217 00:16:13.500 --> 00:16:18.740 do not suffer anything during the covid pandemic because you intelligently kept 218 00:16:18.750 --> 00:16:22.740 charging more for usage for your existing customer base and you kept 219 00:16:22.740 --> 00:16:25.970 selling them more even when you couldn't go up to the broader market 220 00:16:25.970 --> 00:16:31.580 during during a recession. So it's an incredibly powerful lever. Absolutely, 221 00:16:31.590 --> 00:16:35.670 wow. That's awesome. So what have you seen to speak to some of how powerful 222 00:16:35.670 --> 00:16:39.140 it can be? What have you seen from companies when they reject the idea 223 00:16:39.140 --> 00:16:43.150 that pricing is complex and we shouldn't go through a step by step. 224 00:16:43.150 --> 00:16:48.070 But when they actually go through the step by step, right. Undoubtedly they 225 00:16:48.080 --> 00:16:53.230 see their SPS increase their C deal velocities increase. They see pricing 226 00:16:53.230 --> 00:16:57.340 adoption improved Associates team actually starts to use it and they see 227 00:16:57.340 --> 00:17:01.350 the customer being actually have regularly easier renewals, right? So if 228 00:17:01.350 --> 00:17:06.670 you, especially with this uh if the model was wrong and you fix the model, 229 00:17:06.740 --> 00:17:12.510 it has so many cascading effects easier, renewal's easier contracts, no hassle 230 00:17:12.510 --> 00:17:18.690 negotiations upfront. It's easier to justify our oh I better SPS better 231 00:17:18.700 --> 00:17:23.060 lower turn rate. Like it's everything like that's why I like there are many. 232 00:17:23.060 --> 00:17:27.710 So yeah, they're saying this is just like one thing is not a very tiny thing 233 00:17:27.710 --> 00:17:31.560 to fix it, fixes so many other problems in their business. If you do it right? 234 00:17:32.140 --> 00:17:37.080 That's huge. That's huge. You have me sold. Where do we start? Where do I 235 00:17:37.080 --> 00:17:40.880 begin? What's the first step? Which what should I do? Right away And then 236 00:17:40.880 --> 00:17:45.730 and then what should I do after that? Yeah. I mean I think there are roughly 237 00:17:45.730 --> 00:17:50.060 like there's like a decision diagram I follow, but think of it as three or 238 00:17:50.060 --> 00:17:54.140 four steps. I think you consider yourself as a business owner or their 239 00:17:54.140 --> 00:17:59.660 product manager. I call it like P. P. P. It's just my framework. Think about 240 00:17:59.660 --> 00:18:05.000 your positioning first. Are you the premium player? Are you a pricing you 241 00:18:05.000 --> 00:18:09.130 know, are you commoditized price, competitor? Think about where you are 242 00:18:09.140 --> 00:18:12.840 in your customer segment and just make sure you know what you want your 243 00:18:12.840 --> 00:18:17.520 positioning to be 2nd. You come to packaging, right? Think about your 244 00:18:17.520 --> 00:18:22.140 customer segments. Do you have many customer segments? Bill has many 245 00:18:22.140 --> 00:18:26.270 packages per customer segment that really solve their problem then and 246 00:18:26.270 --> 00:18:32.000 then finally pick the right pricing variable. Find something that maps to 247 00:18:32.000 --> 00:18:38.180 customer value, Right? So historically there used to be per seat pricing where 248 00:18:38.180 --> 00:18:43.190 it's a very standard model of software pricing that may not necessarily always 249 00:18:43.190 --> 00:18:47.300 map to value that a customer is getting. So the Valley now has the world to 250 00:18:47.300 --> 00:18:51.960 usage based pricing like the portfolios of the world. So select whether it's a 251 00:18:51.960 --> 00:18:56.850 capability or usage based model. Right? So we looked at positioning, we looked 252 00:18:56.850 --> 00:19:01.780 at packaging, we looked at the type of pricing variable. If you think about 253 00:19:01.780 --> 00:19:05.860 all listeners, step by step process, you solved most of the problems right 254 00:19:05.860 --> 00:19:10.090 there and then what you need to do is you could do so a little bit of 255 00:19:10.090 --> 00:19:14.700 research on the price point itself, which is probably the least important 256 00:19:14.700 --> 00:19:18.610 problem here. But you can do some research using surveys and conjoint or 257 00:19:18.610 --> 00:19:24.940 what have you. And the final step yet the longest step is pricing operations. 258 00:19:24.940 --> 00:19:29.000 You have to, if you have a bigger field sales team, then you have to build all 259 00:19:29.000 --> 00:19:33.930 of the materials sales, enablement materials pricing, calculator, CPU 260 00:19:33.940 --> 00:19:39.720 execution stuff. So first process strategy, get it right in that order. 261 00:19:39.730 --> 00:19:43.440 If you get it right, it's very likely that you won't get the operations peace 262 00:19:43.440 --> 00:19:47.470 wrong, but the operation peace will take time. And that's where you involve 263 00:19:47.470 --> 00:19:50.270 your pricing of folks, right? That's where you know, all other parts of the 264 00:19:50.270 --> 00:19:54.520 business and say, hey, I've decided this is the structure I'm gonna follow. 265 00:19:54.520 --> 00:19:57.930 This is roughly the price points and there is more like, you know, there's 266 00:19:57.930 --> 00:20:02.460 some more details to it, but it's a simple structure and now I want you 267 00:20:02.460 --> 00:20:05.860 guys to operationalize it and tell me how to do it. And then you can 268 00:20:05.860 --> 00:20:10.780 negotiate, you can delegate to it to some other team. But as the product 269 00:20:10.780 --> 00:20:14.910 manager or as the business owner, you made the important calls first, that's 270 00:20:14.910 --> 00:20:19.120 all I'm asking you to do. Just take the important calls for your product. Mm 271 00:20:19.130 --> 00:20:25.570 That's so good. Obviously this will range based on internal dynamics and 272 00:20:25.570 --> 00:20:29.930 everything. The time commitment. But what would you say is a typical someone 273 00:20:29.930 --> 00:20:34.310 should budget when they're saying OK, you know, redo pricing. Usually the 274 00:20:34.320 --> 00:20:38.210 redo pricing conversation is like, we need to redo pricing like this week and 275 00:20:38.210 --> 00:20:42.760 it's almost crazy pressure and and they may make the wrong decisions. Whatever. 276 00:20:42.940 --> 00:20:46.320 How long would you say? Typically that process should from beginning to end 277 00:20:46.320 --> 00:20:50.840 and go through, all those steps should take right. If you are somewhat of a 278 00:20:50.840 --> 00:20:57.500 well runs established business, I would say it would take about a month or six 279 00:20:57.500 --> 00:21:03.650 weeks to come up with the structure and then probably a couple of months or 280 00:21:03.650 --> 00:21:07.770 more for operational. Izing it. Now you can operationalize it in a manual 281 00:21:07.770 --> 00:21:12.170 fashion uh and do it faster. But to make the right decisions is going to 282 00:21:12.170 --> 00:21:15.900 take at least a month to six weeks, that minimum. Right? I don't think you 283 00:21:15.900 --> 00:21:19.380 can do it in a week but it is possible you could do it in a week if you're 284 00:21:19.380 --> 00:21:22.700 coming out with a brand new product that nobody's ever seen. Right at that 285 00:21:22.700 --> 00:21:28.010 point, you just have a hypothesis. Sure. But for a functioning company that's I 286 00:21:28.020 --> 00:21:32.930 probably say that's the minimum, people do tend to fall in like if you go to a 287 00:21:32.930 --> 00:21:36.320 consultant they will take more time because they want to do things properly 288 00:21:36.320 --> 00:21:40.410 and they want to charge by the r I don't think you need that. The other 289 00:21:40.410 --> 00:21:45.060 problem is operationalized operationalization. Be a little careful 290 00:21:45.740 --> 00:21:50.250 if you don't need to do the whole hog of a lot of automation don't because 291 00:21:50.250 --> 00:21:54.870 the C. P. Q. Step of implementing things in Salesforce is where there is 292 00:21:54.870 --> 00:21:59.260 the biggest failure rate and if you think that is all going to be automated 293 00:21:59.260 --> 00:22:02.700 and it's going to be the most well functioning thing is never going to be 294 00:22:02.700 --> 00:22:06.730 that way. And it is not that even established companies so that's just 295 00:22:06.730 --> 00:22:12.240 the pitfall that you probably need to watch out for wow. That's such good 296 00:22:12.240 --> 00:22:17.800 advice man. That's so good. Is there anything that you would want a big 297 00:22:17.810 --> 00:22:22.870 what's the big takeaway that you'd want our listeners to walk away with? The 298 00:22:22.870 --> 00:22:27.150 biggest takeaway is a stone fear. You know one is just think holistically 299 00:22:27.150 --> 00:22:30.620 about your product GTM right but I think it's part of your product GTM 300 00:22:30.620 --> 00:22:35.580 it's not separate it's part of marketing, I would love for product 301 00:22:35.580 --> 00:22:39.560 managers to have ownership about it because it's their product and it's 302 00:22:39.560 --> 00:22:43.720 just a simple step by step framework. Just think logically about the steps. 303 00:22:43.800 --> 00:22:49.630 It's not very complex, it's not math, mathematical, everyone can do it. Don't 304 00:22:49.630 --> 00:22:53.980 fear it, it's good advice. That's great advice, man, There's so much you've 305 00:22:53.980 --> 00:22:57.710 unpacked in this episode. I mean there's I know we're just scratching 306 00:22:57.710 --> 00:23:03.380 the surface and it's hard to, even if you can go so deep into this, and so 307 00:23:03.390 --> 00:23:07.460 you've been working on this, what's the name of your book again, for all 308 00:23:07.460 --> 00:23:12.180 listeners? Yeah, yeah. Thanks. So, the book I'm writing on this is called 309 00:23:12.180 --> 00:23:18.010 Price to scare price to scale. What a great name. It's awesome. And then and 310 00:23:18.010 --> 00:23:22.800 when is that going to be available? Uh I'm hoping sometime in january. So this 311 00:23:22.800 --> 00:23:26.420 month. Sweet, that's right around the corner. That's awesome. We're in 312 00:23:26.420 --> 00:23:30.740 january, That's fantastic. So either this month or next would still be huge. 313 00:23:30.750 --> 00:23:35.410 What? So for all the listeners, if they want to go and check out the book, 314 00:23:35.410 --> 00:23:39.510 where would they go and check out your book, yep. So it's, my website is aged 315 00:23:39.510 --> 00:23:44.110 cumin dot com. You can just land on my website and navigate to the pricing 316 00:23:44.110 --> 00:23:47.320 book or if you want to go directly to the book, it's a G Komen dot com 317 00:23:47.330 --> 00:23:52.760 forward slash pricing dash book. That's awesome, man, that's great, definitely 318 00:23:52.760 --> 00:23:57.290 check out that book, I would say, reserve it now or rather make sure you 319 00:23:57.290 --> 00:24:01.120 subscribe through through that link now. So then as soon as the book drops, you 320 00:24:01.120 --> 00:24:04.770 can get that, um I definitely be getting, going to be getting a copy. 321 00:24:05.140 --> 00:24:11.760 This topic is so huge and comes up so much. Obviously I'm more on this. Not 322 00:24:11.760 --> 00:24:14.930 obviously, but for those who don't know, I'm more on the sales side. Usually the 323 00:24:14.930 --> 00:24:19.820 conversations and when you're communicating it from a sales point of 324 00:24:19.820 --> 00:24:22.410 people like, oh, you should be able sell anything or sell any price. It's 325 00:24:22.410 --> 00:24:25.640 like, no, you don't understand when you're communicating, there's only so 326 00:24:25.640 --> 00:24:29.300 far you can be asked before. You're like, I honestly have no idea and the 327 00:24:29.300 --> 00:24:33.540 client knows it. Like they know without a doubt that you're just making up 328 00:24:33.540 --> 00:24:36.050 reasons and they're going to ask, they're gonna be like, why are we 329 00:24:36.050 --> 00:24:38.890 paying for this? If I thought you said you'd probably be using that for the 330 00:24:38.890 --> 00:24:42.090 first couple months, why are we going to pay for this now? Can't we just pay 331 00:24:42.090 --> 00:24:48.210 for this? And so those conversations happen with good pricing, you're arming 332 00:24:48.210 --> 00:24:52.460 your sales team with the best weapons they could possibly have totally, 333 00:24:52.470 --> 00:24:59.080 totally huge. Yeah, we, I mean, I think sales people are often given the short 334 00:24:59.080 --> 00:25:03.790 end of the stick and expected to be superman and you know, it was like, hey, 335 00:25:03.790 --> 00:25:07.040 you have a product, you know, you're a bag sales person if you can't sell it, 336 00:25:07.050 --> 00:25:13.060 but it's not the case like we make so many mistakes before we set up, send a 337 00:25:13.060 --> 00:25:16.920 sales person out there. I think, you know, I think there's a little more 338 00:25:16.920 --> 00:25:21.400 empathy is needed because you know, see at the end of the day they're going to 339 00:25:21.410 --> 00:25:26.240 maximize the valuation of their business. Yeah, big time. Big time. And 340 00:25:26.240 --> 00:25:30.680 then all the up cells and everything else makes so much sense. G this was 341 00:25:30.680 --> 00:25:34.570 awesome. Thank you so much for being on the show if people want to connect with 342 00:25:34.570 --> 00:25:39.270 you personally. Um is it best to connect with you on linked in? What's 343 00:25:39.270 --> 00:25:44.220 your preferred social platform? Yeah, linden is perfect. Okay, awesome. Great. 344 00:25:44.220 --> 00:25:47.530 Well I'm sure we'll have all the links in the show notes and everything, but 345 00:25:47.560 --> 00:25:52.000 thank you so much for joining us uh in discussing pricing and I cannot wait to 346 00:25:52.000 --> 00:25:54.940 read your book when it comes out. Thanks josh. Thanks for having me 347 00:25:54.940 --> 00:25:57.260 appreciate it, awesome man. 348 00:25:58.840 --> 00:26:02.590 For the longest time I was asking people to leave a review of GDP growth 349 00:26:02.590 --> 00:26:07.040 in apple podcasts but I realized that was kind of stupid because leaving a 350 00:26:07.040 --> 00:26:12.200 review is way harder than just leaving a simple rating. So I'm changing my 351 00:26:12.200 --> 00:26:15.910 tune a bit. Instead of asking you to leave a review, I'm just gonna ask you 352 00:26:15.910 --> 00:26:20.440 to go to be be growth in apple podcasts, scroll down until you see the ratings 353 00:26:20.440 --> 00:26:24.520 and reviews section and just tap the number of stars you want to give us no 354 00:26:24.530 --> 00:26:29.820 review necessary. Super easy and I promise it will help us out a ton. If 355 00:26:29.820 --> 00:26:33.420 you want a copy of my book, Content based networking, just shoot me a text 356 00:26:33.430 --> 00:26:37.920 after you leave the rating And I'll send one your way, Text me at 4074 and 357 00:26:37.920 --> 00:26:40.360 I know 3, 3 to eight