On a recent episode of Small Business Edge, I had an engaging discussion with host Brian Moran about the complexities of pricing in the software industry. We tackled how understanding customer outcomes is crucial for creating value and highlighted the significance of frameworks like “jobs to be done” and the value cascade for effective pricing.
Brian and I explored the concept of “use value” and why your product’s worth is often subjective and contextual, showing how different customer personas influence pricing strategies. I emphasized that pricing should be a strategic growth lever seamlessly integrated into business planning. At the same time, Brian made a compelling case for continuous evaluation to ensure your pricing truly reflects the value you offer.
Key topics we covered in this episode:
- Concept of “use value” as combined benefits for customers
- Emphasis on understanding who and how to charge rather than the price itself
- Importance of knowing customer outcomes in pricing, especially in the software industry
- Regular evaluation of pricing to reflect the value of products
- Treating pricing as a strategic growth lever
- Value as subjective and context-dependent
Timestamped Outline
12:07 Pricing orientation: cost, competition, customer value.
23:38 Value is vital in pricing and products.
26:00 Prosocial behaviors, use value, and economic value explained.
33:07 Understanding context is crucial for appropriate product offers.
41:10 Treat pricing as a strategic growth lever.
Potent Quotables
The Intricacies of Market Economy Pricing:
“When it comes to pricing, use value is almost never enough because we live in a market economy. There’s always another way to get a job done.”
— Dan Balcauski
Value Illiteracy in Pricing:
“Value is actually the more important lever because software is a bit intangible.”
— Dan Balcauski
Adapting to Market Changes:
“People set it and forget it. Your value is especially important with the companies I deal with who are in the software world and are always shipping new features. Right? Their competitors are shipping new features. They got new competitors coming in, competitors going away.”
— Dan Balcauski