AMA: Demandbase VP Product and Industry Marketing, Jackie Palmer on Pricing and Packaging

I've always found that the sales team is a huge partner for you on pricing and packaging. Both in terms of knowledge (competitor prices, what the market will bear, direct feedback from deals etc) as well as being good supporters as you start to roll out pricing changes. A few things I've found that have helped build buy-in are: * Always build a small group of reps you can come to to test out pricing. Either you have a set tiger team of nominees from sales leadership or you build a group yourself more informally. Whichever way you do it, get a group and use them as much as you can. Sales leadership and sales reps themselves will always take things better if the recommendations come from someone they can relate to. * Make sure your test group are diverse and representative of all customers and prospects. If you sell to enterprise, mid-market and SMB make sure you pull in people from each group. Same for local and international sellers. * Be sure to pull them in early in the process. Don't get a pricing change approved by everyone else and then bring it to sales. Make sure sales is in the discussions from the start. * Offer to be a fly on the wall in deals to hear how things are received by customers and prospects directly. Or if you have the luxury of a call analysis tool like Gong, make sure you use it and keep examples handy to pull up as you do your buy-in conversations. * Put together a lot of before and after examples. As you have your buy-in conversations, pull up some example deals. Like here's what it looked like before in deal XYZ and here's how it would look now with the new pricing model if deal XYZ was sold again today. And even better, get the rep who sold deal XYZ to present the before and after. * Show the data. Like the before and after examples, the more data you can show the better. Data like average historical selling prices, competitor prices, market price knowledge etc. The more data you can share, the more comfortable sales (or anyone) will be. As for feedback from sales impacting the pricing and packaging, yes it is good input but it should not be the only thing you consider. You need to consider costs and outside factors like inflation as well. So just because sales says you should lower prices or raise prices, doesn't mean you should do it. But if they have feedback and want a change, you should definitely at least open up a research project. And make sure if you do that you include them from the start so that if the decision is to not change or to do something they don't originally want, then at least you've included them in the process.

As mentioned before, taking an existing product into a new market should always include pricing and packaging research. Research methods include competitor websites, review websites, marketplaces, industry analysts, independent research/survey firms, your existing customers or prospects, your existing partners, and your sales team, etc. If you've been able to win some deals with the enterprise customers you are shifting to, you should definitely interview those customers. Some questions to ask include: * What current features do they find most valuable? * What competitors did they evaluate that might not be part of your current set? * What features do they wish were in the product but are not yet? You may need to price yourself lower until you can add those features in. * What would they be willing to pay if they were buying from you all over again? Internally, you should talk to the reps who sold those deals or who have sold to enterprise in the past and get their feedback on the same questions that you ask the customers. Maybe they can also identify some lost deals who would be willing to talk to you as well. You should also talk to your Customer Experience team to make sure they can accommodate supporting the new enterprise segment. You may need to create more white glove support or implementation packages. You may need to start working with implementation partners rather than doing post-sales activities in house. That could also affect your pricing and packaging as you move to enterprise. Lastly, you should be sure to ask product, engineering and finance if you need to make any adjustments to the underlying product architecture to support those enterprise customers who are more likely to have bigger data needs, bigger compute power needs, more users etc. Ensure that your current cost structure will work if the product architecture has to change. Those costs will likely affect the pricing and packaging you use for your new enterprise segment.

If Product Marketing doesn't own pricing in your organization today, here are some things you can include in a proposal to get it moved: * Competitor knowledge - PMM is often closest to the competitors and can bring this knowledge into the pricing conversation. While you should never price a certain way just because a competitor does, the fact that PMM knows the competitors the best is often key to making the case to own pricing. * Industry analyst access - you've usually got the ear of analysts like Gartner, Forrester etc and can bring that into the research pool for pricing decisions. * Your cross-functional capabilities - this is key, who else in the organization is as close to all the key parties for pricing - Sales, Product Mgmt, Professional Services, customers themselves, etc. You may not have the connections to Finance yet but you have the ear of everyone else and you know how to bring them together. * Speaking of customers, make sure you are talking with them often and also getting on prospect calls even if it is in listen only mode. The more you connect with customers and prospects, the stronger your case will be to own pricing and packaging. * Your neutrality - because you are not in sales or finance or building the product, you are uniquely positioned to be a neutral party. Again your cross-functional stance will validate your position for owning pricing. It may take a few attempts but don't give up. Perhaps you can find some current products that aren't doing as well pricing-wise as they could and do some research on the side to come up with a proposal to fix them. Or get into the trenches on some deals and be helpful with well-researched knowledge. Then use those deals as evidence that PMM can contribute meaningfully. Either way, keep making yourself useful and bring up the above list to continue the push to own pricing. Eventually you'll succeed!

You may not think that product positioning and pricing are necessarily related. However, something you should definitely consider as you look at pricing a product is how you are going to position it. If you are targeting different segments with the same product, either enterprise/mid-market, different industries, different locations etc, you need to assess how that will affect your pricing. You may need to have different packaging for those different segments and that different packaging could be worked into your positioning and messaging. You need to understand whether your competitors have different packages like a freemium model, edition-based pricing or different discount levels for different segments, that could also affect how you position your products. So in general, while you don't have to, and you probably shouldn't, lead with pricing as part of your messaging/positioning, it is definitely an input you should consider

I've always taken the approach that you don't touch existing customers until at least renewal time. So if you lower your pricing there is no need to address your current customers until they come up for renewal. When they do come up for renewal, you may have to minimize your year over year price increases for those existing customers until they get closer to the average selling price of those customers on the new, lower pricing. If you publish your pricing and the current customers can see that and complain, you may need to supplement the product pricing with value adds like additional training sessions, preferential support options for those existing customers, free services etc until you can give them enough perceived value that leaving their product price the same won't cause them concern. I would try to avoid product price compression on renewals as much as possible though.

I've usually taken the approach that a product bundle should have at least a slight discount as an incentive to purchase the bundle. Many times people want most but not all of the products in the bundle so it is usually nice to give them some small discount, like 5% or 10% off the unbundled price. Bundles are usually stickier too so in the long run you make up for the discount. You can also take the approach of the more products you buy the bigger the discount. I once worked at a company that had 5 main product lines. Our bundled pricing was 3 products bought at the same time got a 20% discount and 4 or 5 products purchased together got a 30% discount. To incent customers to be your early adopters, you often have to give them either preferential pricing or delayed pricing (try it for 3 months free for example). You want their feedback and participation so you want to make sure you give them enough incentive to become early adopters. I would also make a case study, quote or testimonial a condition of this incentive so that you have some proof points you can publish when you do go GA beyond the early adopters. Trial to purchase incentives are often time-based rather than discount-based, like the option to try it for 3 months free. I would not give any monetary incentive other than that free time period for a trial, unless it was a paid trial where you could give a slight discount beyond your normal approach.

There are lots of resources to leverage when thinking about pricing and packaging. Here are some that I've found most useful: * Competitor websites (hopefully you'll be lucky and they'll publish their pricing!). Know that whatever you find here is likely to be higher than actual selling price as it is not usually inclusive of discounts or promotions * Review websites like G2 and TrustRadius. Often people will comment on the price they pay or paid * Marketplaces like the Salesforce AppExchange, HubSpot Marketplace, Microsoft AppSource etc. These marketplaces often require vendors to list a "starting" price. Again, this will likely be higher than actual selling price * Industry analysts like Gartner, Forrester etc. They will be able to talk about average market selling prices and average discounting practices but they won't give you an exact price. * Independent research/survey firms. If you have the budget you can hire a company for market analysis. Many times these companies have people on contract who are practitioners and may know the market from either working at a vendor or buying from other vendors. This is often very useful but costly. * Your existing customers or prospects. If you have a customer community you can leverage, don't be afraid to ask. Your happy customers are often willing to give you their opinion on pricing and packaging both of your own products or any competitive products they may have experience will * Your existing partners. If you work with implementation or resell partners, often they will have knowledge of market pricing. Like the industry analysts, they may be unwilling to give you exact prices but could advise on the market or give suggestions on packaging. * Your sales team. Maybe someone worked for a competitor or knows the general market. Or at the very least, your sales team will know how prospects and customers have reacted to pricing in the past * Your friends and neighbors. I'm only half joking! You never know who might have knowledge of your industry's pricing and packaging. Don't be afraid to ask!

This is a tough question as it causes a lot of fear especially for salespeople who think it will limit their ability to maintain their current average selling prices but in fact studies have shown that buyers want to see pricing and that vendors who pit pricing on their website actually engender more trust than those who don't. You might even pop to the top of a prospect's shortlist if they can get pricing on your website as having them there might give you opportunities to show them other things on the website and it might drive more traffic to your website than a competitor's website. In general, so many studies have shown that more and more buyers want to self-serve or self-research and so today I would definitely veer more towards putting pricing (or at least packaging) on your website than not.

I would approach this similarly to how I approach any re-pricing exercise. It is a best practice to evaluate your prices at least once a year for most products. Your VP of Sales should understand that things change. If you can prove some of those changes, either internal or external, then you'll have a stronger case. External conditions are things like inflation, global/local economic changes, new competitive entrants, market consolidation or fragmentation, etc, and would affect all of your competitors too thereby lessening the impact on her concerns over meeting her number. Internal conditions, which include new features, features you are missing, new markets or locations, awards or recognition, ROI trends etc, may be less applicable to competitors she will come up against but are still valid reasons for price increases or decreases. In general, it's good to at least review all of the external and internal factors every year even if you decide not to make any changes. Once she sees all the factors, she may change her mind.

Taking an existing product into a new market should always include pricing and packaging research. First, I would begin with some of the research methods that I've mentioned before. These would include competitor websites, review websites, marketplaces, industry analysts, independent research/survey firms, your existing customers or prospects, your existing partners, and your sales team, to name a few. Ideally you've been able to win some deals with the upmarket/enterprise customers you are trying to attract as you make your shift. You should definitely interview those customers and understand what features they find most valuable, what competitors they evaluated that might not be part of your current set, what things they wish were in the product but are not yet (you may need to price yourself lower until you can add those features in), and, if they will tell you, what they would be willing to pay if they were buying from you all over again. You may want to leave your current pricing alone for the time being and create a new package for the upmarket customer base until you get more of them. Ideally this new package or edition would identify features that would be applicable to that upmarket segment that were not necessarily appliable or as needed by your current segment so that you could justify the higher price. But even if you don't have different feature sets, you can still set higher prices for different segments by using other factors like revenue/employee counts to segment companies into the upmarket edition. Either way, make sure you are monitoring both segments with timely reporting and data so you make sure you are not affecting your current segment.

If you have a relatively simple product, you don't have to offer a lot of packages. But if you have the ability to do different packages because you have enough features to merit them, then I would recommend going with three packages. Most customers will look at the three options and say, well I certainly don't want to take the lowest level because I'm not just starting out (unless they actually are!) and I don't want the highest option because I'm not gigantic so I'm going to go with the one in the middle (like Goldilocks). If you offer only two packages, it's likely you will get an uneven split towards the lower package and possibly give up some money you could have gotten by offering three. If you have more than three, you run the risk of choice overload. There's something to be said for the rule of three!!

In my experience, a pricing committee is the most important team you can have for pricing and packaging. Maybe if your company is super small, you can get away without one. But really, once you start having a decent number of customers and deals, you should have a formal process in place and a cross-functional team to review and approve pricing and packaging. Like I've said in some of the previous answers, cross-functional teams including sales are super important. Here's who I've seen as critical to a pricing committee or council and some of their roles: * Product Marketing - proposes pricing and packaging changes, partners with Product Management (sometimes Product Management sends a representive to meetings), consults with Sales and Sales Management, approves pricing changes, conducts pricing enablement * Customer Experience - often proposes services/support pricing and packaging changes, approves product pricing changes, assesses impact on existing customers, consults with Sales and Sales Management, conducts services/suport pricing enablement * Sales Management - consulted about pricing changes prior to pricing committee submission, assesses impact on existing customers and prospects, nominates sellers for price testing and/or pricing tiger team * Sales/Revenue Operations - assesses impact to CPQ, Deal Desk, sales compensation and forecasting, approves pricing changes, implements changes in CPQ * Finance - assesses audit, margin, and financial impacts, assesses impact to billing and collections flow, approves pricing changes or pulls in CFO and FP&A when needed, implements changes in finance systems * Legal - assesses contractual, legal and privacy impacts, approves pricing changes There may be others included ad-hoc, but those are the critical teams involved in a pricing committee.

I would definitely advise building out a pricing committee even if it was just a temporary one for this specific project only. In previous answers, I've outlined the teams needed in a pricing committee but just to repeat, here's who should be involved: * Product Marketing - proposes pricing and packaging changes, partners with Product Management (sometimes Product Management sends a representive to meetings), consults with Sales and Sales Management, approves pricing changes, conducts pricing enablement * Customer Experience - often proposes services/support pricing and packaging changes, approves product pricing changes, assesses impact on existing customers, consults with Sales and Sales Management, conducts services/suport pricing enablement * Sales Management - consulted about pricing changes prior to pricing committee submission, assesses impact on existing customers and prospects, nominates sellers for price testing and/or pricing tiger team * Sales/Revenue Operations - assesses impact to CPQ, Deal Desk, sales compensation and forecasting, approves pricing changes, implements changes in CPQ * Finance - assesses audit, margin, and financial impacts, assesses impact to billing and collections flow, approves pricing changes or pulls in CFO and FP&A when needed, implements changes in finance systems * Legal - assesses contractual, legal and privacy impacts, approves pricing changes Then make sure that you use some of the reserach tools I've outlined in other answers as well and build out your pricing proposal (also described above) with as much data and analysis as you can.

I've been in both product marketing and product management and in both cases I have owned pricing so I can see it both ways for sure. But (and I admit I might be biased!) I strongly believe that product marketing should own pricing as PMM is often the most cross-functional team and also closest to all the outside influence factors. However, regardless of who owns it, both product management and product marketing should be involved. While both teams often have conversations with customers, prospects and sales, in my opinion, the types of questions product management asks and gets are not as often the right types of discussions for determining pricing. Product marketing is often brought in to discuss comparisons to other vendors, has deeper connections to sales, and sees more of the external market through industry analysts, market research etc. Whereas product management often focuses on product usage, current and future use case needs, etc. That's valuable to pricing but not as much as some of the aspects PMM will hear. Product management and product marketing should ideally team together on pricing and packaging. Product management can bring a deep understanding of current usage, current costs (working with engineering), future features/products etc that is hugely valuable to product marketing as inputs to setting pricing. Product marketing can bring the external knowledge, the deal knowledge, test things out and shepherd the process. As usual with PM and PMM, it's better together!

The first thing I do when considering a price increase rollout is research. Some of the key pieces of information you need to gather are: * Past average selling price (for an existing product or similar product) - you can get this from your RevOps/Sales Ops team if you don't have access to it yourself. * Past deals - so you can use them as before and after examples in your presentation to your pricing committee. * Competitive prices - sometimes Sales may have this from competitor order forms they've been shown during sales cycles or ideally your competitors list their prices on their website (rarer) or you can also ask industry analysts in an inquiry. They won't tell you the exact price a competitor charges but you can ask them for average market price and average discount. Same for partners, implementation partners or reseller partners may have competitive or market price knowledge they would be willing to share at a high level at least. * Last, if you can but it is sometimes more difficult than the above, try to gather what the market will bear by interviewing current customers or prospects and asking them what they would be willing to pay for a feature/product like what you are working on. Once you have the research, you can start to test it out. If you have the luxury, try getting a few key sales reps to work with you on using the new proposed prices as they sell a few deals even before you roll it out officially. I find this to be an extremely helpful step as it goes a long way towards getting buy in. You may need to try out a few options before you settle in on a price proposal. After you've decided on what price you want to propose, put together a good pricing proposal deck which should include the historical prices (quarterly and/or annual trends), before and after examples, results of the testing you performed, any market/industry data you've gathered, and your rollout plan (when and how you will roll it out, what will happen for existing customers etc). If you come prepared with the right research, this will go smoothly!

As mentioned before, competitive intel is important to at least understand when thinking about pricing and packaging. You certainly shouldn't price a particular way just because your competitors do but you should always at least understand what the competitive landscape looks like. Here are some resources I've found useful: * Competitor websites (hopefully you'll be lucky and they'll publish their pricing!). Know that whatever you find here is likely to be higher than actual selling price as it is not usually inclusive of discounts or promotions * Review websites like G2 and TrustRadius. Often people will comment on the price they pay or paid * Marketplaces like the Salesforce AppExchange, HubSpot Marketplace, Microsoft AppSource etc. These marketplaces often require vendors to list a "starting" price. Again, this will likely be higher than actual selling price * Industry analysts like Gartner, Forrester etc. They will be able to talk about average market selling prices and average discounting practices but they won't give you an exact price. * Independent research/survey firms. If you have the budget you can hire a company for market analysis. Many times these companies have people on contract who are practitioners and may know the market from either working at a vendor or buying from other vendors. This is often very useful but costly. * Your existing customers or prospects. If you have a customer community you can leverage, don't be afraid to ask. Your happy customers are often willing to give you their opinion on pricing and packaging both of your own products or any competitive products they may have experience will * Your existing partners. If you work with implementation or resell partners, often they will have knowledge of market pricing. Like the industry analysts, they may be unwilling to give you exact prices but could advise on the market or give suggestions on packaging. * Your sales team. Maybe someone worked for a competitor or knows the general market. Or at the very least, your sales team will know how prospects and customers have reacted to pricing in the past

Product deployments should really not affect pricing significantly especially weekly changes. Really you should only focus on pricing and packaging changes for big feature additions which are probably at least in your monthly releases or maybe even only some of those monthly releases. So I would focus on the feature itself to determine if it merits a price/package adjustment and not tie it to a weekly/monthly release.

I've found that it is a best practice to evaluate your prices at least once a year for most products. If your market changes very rapidly, you may consider bi-annual or quarterly pricing reviews but for most annually is great. You need to consider both outside conditions, like inflation, global/local economic changes, new competitive entrants, market consolidation or fragmentation, etc, as well as internal conditions. These can include: * Have you released a lot of new features in the last year that would merit charging more for your product? * Did your competition release any features you don't yet have that would merit maybe lowering your pricing to stay competitive? * Have you been experiencing a lower win rate and do you have any actual indication that it is due to pricing? * Have you gotten any feedback, actual observed or anecdotal, that the current pricing is not working? * Are you planning on entering a new market or location in the coming year that would have different price expectations? * Have you received any awards or recognition (analyst evals etc) that might support a price increase? * Do you have any customer ROI numbers you could turn to to prove that customers are getting increasing value for their investment that might support a price increase? Or the opposite for a price decrease. It's good to at least review all of the above external and internal factors every year even if you ultimately decide not to make any changes.

Definitely check out some of the research resources I've mentioned in previous answers. I would also interview people at your company, salespeople, your CEO, finance, etc and also see if you can get any time with board members to get their viewpoints. And then there are also a few companies like the PMA and others that offer pricing specific training. Those are great places to start! 

Similar to other questions above, there are lots of resources to leverage when thinking about pricing and packaging including competitor pricing. Here are some that I've found most useful: * Competitor websites (hopefully you'll be lucky and they'll publish their pricing!). Know that whatever you find here is likely to be higher than actual selling price as it is not usually inclusive of discounts or promotions * Review websites like G2 and TrustRadius. Often people will comment on the price they pay or paid * Marketplaces like the Salesforce AppExchange, HubSpot Marketplace, Microsoft AppSource etc. These marketplaces often require vendors to list a "starting" price. Again, this will likely be higher than actual selling price * Industry analysts like Gartner, Forrester etc. They will be able to talk about average market selling prices and average discounting practices but they won't give you an exact price. * Independent research/survey firms. If you have the budget you can hire a company for market analysis. Many times these companies have people on contract who are practitioners and may know the market from either working at a vendor or buying from other vendors. This is often very useful but costly. * Your existing customers or prospects. If you have a customer community you can leverage, don't be afraid to ask. Your happy customers are often willing to give you their opinion on pricing and packaging both of your own products or any competitive products they may have experience will * Your existing partners. If you work with implementation or resell partners, often they will have knowledge of market pricing. Like the industry analysts, they may be unwilling to give you exact prices but could advise on the market or give suggestions on packaging. * Your sales team. Maybe someone worked for a competitor or knows the general market. Or at the very least, your sales team will know how prospects and customers have reacted to pricing in the past * Your friends and neighbors. I'm only half joking! You never know who might have knowledge of your industry's pricing and packaging. Don't be afraid to ask!