FOCUSED
Pricing
Pricing is one of the most powerful yet under-used levers for a company’s growth.
When executed well, pricing aligns customer value to revenue, can strengthen a firm’s positioning, and can lift margin without incurring costs like additional headcount or product / service complexity.
Why this is important
Pricing is one of the most powerful levers for profitable growth. The ‘right’ and clear pricing, ideally based primarily on value reinforces differentiation and gives sellers confidence for commercial conversations.
When pricing is fully aligned with value discount pressure is reduced and upselling can be encouraged.
Consistent pricing with guardrails for discounting helps ensure a steady revenue stream and accurate forecasting.
How to Grow Better and Faster
We recommend taking three broad steps to address pricing:
Set - Build a Pricing Strategy and Model
Understand value – learn through segmentation, benchmarking competitors and interviews what prospects and customers really value
Select the right model – e.g. subscription, usage, product-based with service add-ons, upgrade paths,…
Articulate clearly – if sellers can’t explain simply and clearly prospects won’t get it
Plan incentives – what will it take, affordably, for sellers to go the extra mile
Execute Effectively
Define rules, including delegation levels – give the right degree of authority to discount and upsell and scenarios when threshold crossing might be considered
Enable sellers – provide the selling skills and proposition narratives, including competitive differentiation talking points, to ensure they can sell on value confidently
Monitor and enforce standards – track actual pricing to ensure pricing deployed as planned
Assure and Evolve
Analyse – review actuals versus variances, averages, win / loss conversion rates, renewal and churn to assure effectiveness
Experiment – run structured and localised experiments to test new and different pricing models
Evolve – never ‘set and forget’, pricing should evolve continuously as customer value and the competitive landscape alters
Case Studies
Helping a SaaS provider understand its pricing competence and potential
We worked with a provider of covert software to understand their pricing competence (performance within the Set, Execute, Assure framework) and to elicit opportunities for changes to price (introduction of mechanics, increases, decreases). As part of its growth agenda, this organisation also wanted to unlock cross selling opportunities. We uncovered opportunities to improve its processes and tighten up the setting of price. In addition, we uncovered significant opportunities to increase prices across multiple product lines as well as exploit ‘white space’ in existing customers.