I recently appeared on the Product for Product podcast, where I had the pleasure of unpacking the topic of SaaS pricing with marvelous cohosts Moshe Mikanovsky and Matt Green.
We discuss:
- The shared responsibility of pricing
- SaaS pricing ownership
- tactics for determining willingness to pay
- value-based pricing, framing, and packaging
- and more!
Timestamped Outline
[01:15] Introduction[05:09] Pricing Models Impact Fundamental Business Metrics
[12:12] Pricing Ownership: Who Should Lead the Charge?
[19:12] Decoding Pricing Strategies
[26:03] Effective Ways to Determine Willingness to Pay
[31:59] Unlocking the Power of Framing and Pricing
[39:38] Exploring the Four Elements of Packaging
[43:39] Understanding the Pricing Process
Potent Quotables
The Process of Pricing:
“We treat the product like a process, and we think of the product management flow with product management, design, and engineering as a continuous process to update the value we provide the market in a changing environment. We need to think about pricing as the same thing.”
— Dan Balcauski
Who Should Own Pricing?
“Product marketing – that’s usually my number one go-to for folks to recommend who should own pricing. Product marketing is in a good position because they’re helping to understand what is the positioning, what is the competitive landscape that the company occupies, and the ability to share deep user insights with the product management counterparts. So all those things come together. It sits really nicely where they’re in a strategic place in the organization to help drive that forward.”
— Dan Balcauski
Price Level:
“The price level that we’re thinking about is really one of the very last questions we need to ask.”
— Dan Balcauski
The Fear of Pricing a Product:
“The first time that I was asked to come up with pricing, I was scared to death. We started like, okay, so we have to learn about pricing and how do we find the right price and how do we guess what the price is at that point and how do we ask the right questions to the people that going to give us, like, are they comfortable? Is it too cheap? Is it not expensive enough? Is it too expensive just to find the right price there? So how do you do that?”
— Moshe Mikanovsky
Value Relativity
“All value is relative. Any pricing or value question is relative to something else.”
— Dan Balcauski
Willingness to Pay Is an Outcome:
“Willingness to pay is not like Planck’s constant. It’s not like the speed of light. It is not a variable that exists out in the universe independent of human desire and understanding. Willingness to pay is an outcome.”
— Dan Balcauski
The Power of Framing:
“Changing prices, it’s just very emotional, even for the internal executive team, because they could often be more attached to what the current pricing is than even customers are because they’re the ones who are looking at it all the time.”
— Dan Balcauski
Pricing Strategies:
“Even if in your company there is someone responsible for pricing…get involved in that just to understand the process, understand the complexity, understand how by creating more value to clients, you might be able to affect the price, et cetera.”
— Moshe Mikanovsky