AMA: SalesLoft Former VP Product Marketing, Chris Mills on Pricing and Packaging

I've answered some of this in previous questions, but here are some thoughts... 1) Understand your buyers needs, budgeting/buying process, problem you are solving for them (and/or their users) and the relative value of solving that problem 2) Look at competitive solutions or alternatives to solving the problem and look at how they are pricing/packaging their solution 3) What's the cost of not solving the problem 4) Form a hypothesis on the price for the new product 5) Talk to existing or potential customers (before you launch the product). Ask them what they would pay for it if it solve their problem. Is it close to your hypothesis or higher/lower? 6) Talk to the sales people who will be selling it? Do they think they can sell it at that price point? 7) If it's a self-serve or freemium product, do a targeted/limited launch and see how it does? Are you converting targets for trials and then converting to paid at the rates you expect them? What happens if you lower or raise the price? How does it effect conversion rates? 6) Find some early/beta customers to try the product (for a deep discount or free for a trial period). Get product and value feedback from these early customers. Get case studies and/or peer reviews from the advocates. 7) Enable your sales and customer success teams on selling the new product? 8) Make sure you set and measure success metrics. Test different things to see how it impacts the success metrics (conversion rates, win rate, sales cycle lengths, discounting rates, etc.)

The Professional Pricing Society (PPS) offers courses and a formal certifcation program - Certified Pricing Professional (CPP). https://pricingsociety.com/pages/cpp Their course offerings include topics like: * Core Pricing Skills * Best Practices in Pricing Analytics * Value Based Pricing and Value Modeling \ * Best Practices for Pricing Execution * Pricing and Corporate Strategy * ... (and a bunch of others) Pramatic Institute (formerly Pragmatic Marketing) also offers Pricing courses (https://www.pragmaticinstitute.com/courses/price). Analyst/Advisory firms like SiriusDecisions (now part of Forester) also offer pricing courses (https://siriusdecisionslearning.com/products/pricing-packaging-siriuspathway). Also, most business schools offer courses in pricing that may be available to non-full-time students.

I've done pricing & packaging projects both in-house with the support of external consulting help. If you or others in your org have never done a big pricing & packaging project before it might be worthwhile to bring in external help. I've worked with Simon Kucher in the past and they have a ton of pricing strategy expertise across a variety of industries. In our latest P&P project, we ran it internally but involved advisors from our investors, industry analysts we work with and our customer advisory board. Depending on who your investors are they may have pricing & packaging expertise in-house. For example, one of our VC's has a pricing expert (former Simon-Kucher consultant) that advises portoflio companies. We included him as part of our research and validation of our recommendation.

Pricing & packaging changes have big impacts across the organization - sales, marketing, product, customer success, renewal, sales/revenue ops, systems, etc. You need to make sure you have strong executive alignment from the C-suite on problems that you are solving for and process to research and implement changes. For big changes, don't underestimate the importance of enablement and change management. One thing that has helped us is we have an internal pricing & packaging committee that meets regularly to review and evaluate changes. We've also established Pricing/Packaging Guidelines (simplicity, customer lens, bundle vs. a la carte, etc.) that help us evaluate and make decisions related to pricing & packaging.

I'll answer this from the aspect of a GTM plan for pricing and packaging changes. The top 3 areas to identify and mitigate risk around include: 1) RISK: Did you get the Price/Packaging right? * Does the price and what's included in the packaging resonate with the buyer? * Is the price point in the ball park of what the customer is looking for and relative to alternative solutions? MITIGATION PLAN: Get input from customers, prospects, analysts and advisors in advance of the change and GTM roll-out. 2) RISK: Are your revenue teams (sales, CS, renewals, etc.) properly enabled? MITIGATION PLAN: Make sure that you have all the mesasging, positioning and sales tools ready for the teams. Ensure that you have enablement/training time setup with all the teams. Certify them on the new packaging/pitch/pricing. Makes sure they are ready for objection handling and questions from customers and prospects. 3) RISK: Impact to existing customers (vs. net new) MITIGATION: Map all of your existing customers to new packaging and understand difference in existing pricing and new pricing. Ensure that you have a plan for the timing of when existing customers will go to the new packaging? Will they transition immediately, or wait for renewals? Will you let existing customers grandfather on the old packaging and/or pricing? Are there contractual limitations on what you can change?

1). Pricing & packaging is a complex topic that typically involves coordination between many internal constiutents and teams including Sales, Customer Success, Product, Finance, Deal Desk, Marketing, etc. It's important to make sure that you have alignment between these teams as you embark on any pricing and packaging changes. A key is you need to align on what problem(s) you are solving for. Are you looking to increase demand or remove friction from the selling or buying process (perhaps lowering the price). Are you looking to price and monetize new products or features or fold in an acquired company into the solution portfolio (packaging or add-on products)? Are you looking to improve margins (raise price)? Are you looking to improve competitive win rates (differentiated packaging or tweaking pricing)? Once you figure out what you are solving for it's important to solicit input and buy-in from your internal consituents and put together a few different pricing/packaging alternatives (one might be keeping it the way it is). Then review these alternatives with analysts, customers, prospects and advisors for their input/feedback. Make a recommendation and make sure you have exec support for the changes. 2) It's important that once you've made the pricing & packaging change that you monitor it's impact. At SalesLoft, we're tracking Average Revenue Per User (ARPU) across our different segments as well as the distribution of each of the packages in new, upgrade and renewal sales and average discounting rates for each package. We also track win rates, average sales cycle length and competitive win/loss to monitor whether we've helped reduce friction from the selling/buying process and differentiate from alternatives in the market.

In different organziations, Pricing is owned by different orgs. Sometimes Product owns it, sometimes Strategy or Finance, sometimes Marketing and specifically Product Marketing. No matter which team 'owns' Pricing it's almost always a collaborative process to determine Pricing and Pricing Strategy (including whether or not to have it on a Pricing page on the website). At SalesLoft we have a Pricing & Packaging committee that PMM chairs and includes ELT members and other execs from Sales, Marketing, Customer Success/Services, Finance and Sales/Revenue Ops. The committee meets monthly to review and discuss changes or issues related to pricing & packaging. Specifially on the Pricing Page (website) and whether or not to include detailed pricing there vary depending on the solution, buyer and price point. A lot of consumer or SMB solutions have their pricing transparently presented on their website. More complex enterprise or higher price point soltuions that may vary pretty significantly depending on the size of the buyer/company often don't put their pricing on the website because it varies pretty significantly from customer to customer and it doesn't make sense to provide pricing because it may anchor the buyer or scare them away. Often the competitive environment may factor in as well. If competitors do or don't share pricing that may influence your decision. PMM or whoever 'owns' Pricing usually makes the recommendation on whether or not to share pricing on the website.

This is one of the more complex areas of rolling out a new pricing model. It's important to make sure that you understand the impact of any of the pricing changes to existing customers. Are you changing any capabilities that are available to them? Are you giving them more? Generally, you shouldn't and in many cases contractually can't take any thing away. If you are giving them more is the incremental stuff that you are giving them valuable to them? Is it worth the potential price change (to them)? If you are in a SaaS/Subscription world, you may be limited contractually on if and how much you can change their price. Generally, you'll need to decide on when to execute the price changes for existing customers. Usually, the renewal period presents a natural place to implement a pricing change for existing customers. It provides an opportunity to talk about new things and sell the value around what you are delivering to justify the price change. It's important not to alienate your customers during a big pricing change, so you need to consider 'grandfathering' existing customers for some period of time on their existing pricing model/price point.

Generally, product marketing creates messaging guides for new products, features, pricing, campaigns, company positioning, etc. While develop the messaging guide, we typically solicity input from other teams and individuals including product management and other marketers like communications/brand, demand gen and marketing leadership. As the messaging gets near final we do a final review with sales enablement, our sales advisory council (a handful of individual reps and saleas managers) and finally with sales/revenue leadership. We then roll-out at one of our weekly or bi-weekly all sales meetings and/or share at the team lead meetings for more in depth Q&A and objection handling. Typically, the messaging guide comes with supporting customer facing slides, talk tracks, etc. We re-inforce through an on-line learning tool to make sure folks internalize the messaging.

It depends on the competitive dynamics in your market. Are you the market leader or a new emerging alternative? What are the important buying factors in your market and with your buyers? Is price a primary buying consideration (hint: it often is not unless you make it that way)? It's always important to understand how direct competitors and/or alternatives are tackling pricing. You need to determine what your differentiated value is and how you want your brand represented in your market. Are you the premium, high quality fully featured solution? Do your customers and the market see you that way? Then you can charge a premium price relative to your competitive alternatives (and understand that you'll be more successful with customers where this matters to them). Are you the new market entrant that needs to steal share from encumbants. You might not have 100% of the features as the other guy, but you deliver the 80/20 of what customers are looking for at a much lower price. You won't be able to win every customer that needs all the bells and whistles, but you'll win deals where customers just need - 'good enough'. If you focus on pricing to the value that you deliver and can demonstrably show that customers achieve 5-10X more in value than they spend on your solution, then don't focus too much on what your competitors are doing price wise. It's not good for you or your market.