AMA: Gong Director of Pricing & Packaging Strategy, Daniel Kish on Pricing and Packaging

Short answer is as early as humanly possible. Also probably don't launch in your Q4 (Q1 at your Sales Kick-Off is great if you can swing it!). The key is maximum mind share from the field and minimal distraction as deals are in flight. PMM tends to lead (assuming that pricing and packaging is in the PMM org) the recommendation and execution. My feeling has always been that the pricing and packaging is actually messaging, so it's hard to decouple. And importantly, the messaging content needs to flex to the pricing decision (not the other way around). At the end of the day, a pricing change is about a fundamental business strategy shift so PMM leadership is critical.

There's no hard and fast rule here (ugh the "it depends" answer). In truth it's a function of your product maturity, your buyer's sophistication, and use case differentiation. When in doubt, keep. it. simple. The research is pretty clear that good-better-best works, well, best. It focuses a buyer's mind. The most common mistake I see are packages that are invented to solve a use case for a handful of customers. That's how you get SKU-creep. The order I like to start with is: * When in doubt offer three packages: $1 Good, $2 Better, $3 Best - the goal is customer self-selection and decent amount of seller positioning * If you honestly look yourself in the mirror and say "ehhh, the Good and Better are pretty darn close" then do with: $1 Basic, $2 Advanced - the goal is customer self selection and minimal sales positioning * If your value prop is that other tools are super complicated to buy, try only offering $3 Best and we'll work with you on the price depending on how volume scales - the goal is speed and simple negotiations

The price is traditionally based on two things: 1. How much value the thing is or has created 2. How much the provider splits that value capture with the customer Some strategies say minimize #2. That would be Google Ads (take a small slice of a huge pie). Other strategies say maximize #2. That would be Warner Bros. Studios (take a bigger slice for the risk of fronting cash on a blockbuster movie). I weirdly view those two levers as independent (you can measure #1 somewhat objectively within a range, #2 is more a strategy choice). 

Let's assume that you've got the pricing set, the feature packaging defined, and the product technically built. What happens next? Enablement! My laundry list of things to do includes: * Work with the CPQ/Systems team to build out the commercial workflow of what a SKU looks like, how discount approvals and escalations flow, product special terms, and configuration policies * Build a training deck for different audiences (Sales, CSMs, Implementation, Support, Deal Desk) that describes what the product is, who typically will buyer, details on the ideal customer profile, the pricing, who can sell, discount structure, positioning, and selling "rules of engagement" * Generate assets like price sheets, seller guides, proposal/ROI calculators, and feature-packaging breakdowns * Work with the customer marketing team to push content to the install base * Work with the revenue marketing team to push content to prospects * Set up the measurement apparatus on KPIs like average selling price, average deal size, cumulative ARR, and discretionary discounting all broken down by segment, region, deal type, and competitive-threat * Work with the Documentation teams to incorporate feature differentiation into key help center or customer advice channels Because pricing and packaging will touch almost every area of the business, you'll have to prioritize! My method is to start with where the product is most likely to be sold. For example, are you primarily selling to the install base? TALK TO CSMS! Is it mainly for smaller customers? PRIORITIZE THE SMB SEGMENT!

Really depends where you stack up in the competitive ranking. Let's say there are three products: Mercedes, Toyota, Pontiac. The price reflects the package. That's why Mercedes are $50k and Toyotas are $25k. Mercedes has premium leather and a host of other items "included in the price" to justify that price discrepancy. When you're Mercedes, you double down on 1) the experience at every touch-point of being a customer (vs. at Toyota they're not giving you white-glove necessarily when you bring your car into the shop) 2) brand affinity or the luxury it communicates and 3) the excrutiatingly precise details that make it worth the extra cash OK but that's an easy example. What about Mercedes vs. BMW? The first thing is: both companies have an incentive to keep their prices high vs. Toyota (this is actually a huge point!). In fact the Mercedes GLC vs. BMW X3 are only $150 different (though the Mercedes ranges higher for custom add-ons). Otherwise they degrade the luxury premium price. Second: Mercedes vs. BMW largely comes down to a few features (e.g. styling, finish quality, space, fuel economy) since most of the engine power and add-ons are tablestakes at that level. So what does this all this mean, especially if you have a close competitor? 1. Don't kill your market by racing to the bottom on price (too many examples to list sadly) 2. Having a price close to your competitor - even if they're slightly superior - can actually drag you up to their level! 3. Communicate your positioning with your price - if you're a superior product, don't be afraid to show it in the price!

Basically, you do both. Working for premium product companies, you tend to optimize for customer value learnings. And then obviously recognize the reality of a competitive environment. Something that surprises a lot of people is that you can shift your price up dramatically by presenting it in new ways. Let's say your competitor sells lemonade for $5. You sell for $6 (it's "hand-squeezed" so you get the premium). If you ask customers what they think lemonade should cost, most will say $5-$6 because that's what the anchor is. But assume it's a hot day and you've got ice shavings in your cooler. Now you ask customers whether they'd be willing to pay $10 for a Lemon Icee. It's a little silly, but the same principle applies to SaaS. Break down your interview questions into new metrics (# of deals generated/saved, # of steps removed, $ value of winning 1 extra deal) and you might learn something new about how to pitch the price vs. a competitor.

For starters, going multi-product is hard! Like, really hard! And it's typically for reasons outside of pricing and packaging: 1. sellers need to communicate a bigger narrative (think the Customer 360 platform vs Sales Cloud at Salesforce) 2. the product needs to have natural cross-sell points that seed reasons for a customer to expand 3. support, success, and implementation will all need to level-up their knowledge to provide killer experiences But let's say you get past that. On the P&P side, here's a way to start breaking down the problem: 1. map out the ideal buying journey across the top 3-5 most common entry points (i.e. what's the preferred buying order...appetizer, entree 1, entree 2, then dessert? vs. the whole buffet?) - research, interview, collect data! 2. find out where you have a sustained competitive advantage and can exploit bundles where you capture another vendor's market by subsidizing it's value in your product (i.e. give away free chips & salsa when you dine in for a burrito to edge out the spectacularly-delicious-only-chips-and-salsa business down the street) 3. incentivize going all-in on multiple products (use discounts, MS Dynamics 365 is a great example) 4. if you're the premium player...capture the value you create (i.e. price high) to reinvest those proceeds back into R&D to expand your product advantageif you can 5. and lastly...make the buying structures as simple as reasonably possible (i.e. buy 1 get 10% off, buy 2 get 20% off, buy 3 get 35% off) One lesson I've learned is that you need to over-index on purchasing behavior research. Here's a mistake I made once I encourage you to not have to make: don't try to incentivize multi-product purchases between two different department buyers (e.g. CFO vs. CRO) when you're a) not at that level of power with the sales team b) the buying cycles happen on different cycles c) you can't go to a different purchase champion (e.g. CIO). Deep buyer interviews will help surface these challenges so that you can come up with both the hypotheses and fact-bases that help you deliver the winning pricing strategy. 

If there are lots of products, typically you want someone minding the entire purchasing POV. That means pricing is typically owned by Product Marketing. Product tends to own pricing very early in a company's maturity or when PMs are particularly business minded on new markets vs. building in an established category.

It certainly can! Usability is a big reason why some companies win a bake-off vs. a competitor. The winner gets to say: "Yeah their product is cheaper, but our design/UI/experience makes users adopt and come in naturally" "That way you're not buying shelfware" Premium products need to be premium at every level of the buyer/user's experience. 

I like to start from a place of trust: give customers a credit for the difference. Think about how much more likely you are to come back to a restaurant who made a mistake on the order and gave you a free item to make up for it. You're playing a customer-lifetime-value game, not a maximize-one-time-revenue game. 

Someone is theoretically in charge of the product roadmap (Head of Product, CEO). They're your best friend. Use them! I find that a bi-monthly sync on state of the roadmap is helpful. The agenda I would ordinarily run is: 1. What's shipping in the next month 2. How is that impacting the product vision for the next 12-18 months 3. Are these tablestakes or differentiated feature ships 

The short answer is: think really hard about your buyer. Usage-based pricing makes a huge amount of sense for small teams who want to experiment. Hence why you see startups moving fast with dev on AWS or engineers coding on Twilio. What do most UBP products have in common? The thing you're counting is easy to understand and scales with value. That's why you see so many CIOs loving UBP (remember that advice about the buyer?!). Counting data, integration points, servers, storage, compute, etc. is pretty easy for those teams. You know who it's super tough for? A VP of Sales. Not many of them want to count the # of opportunities in their Salesforce instance. What they do like to count are people in their org. That's a big reason why Salesforce charges per user. Often I'll see lots of creativity around usage (# of emails! # of workflows (huh?)! # of API calls). These can work great! Just remember that if your buyer can't count it easily it's unlikely to be effective. So ask them!