For the first time we want to approach monetization in a structured way. So we're planning to run our first ever pricing project. How do we structure such a project?
Taking the time to build out a structured plan is an amazing first step to ensure your project is successful - so happy to hear you're thinking about this from the beginning.
I like to think about pricing projects in 5 phases: Goal Setting, Research, Strategy Development, Testing, Go-to-Market.
First, you want to ensure you start the project by setting a clear objective and aligning on the measures of success with all stakeholders. Once you’ve finalized the goal and KPIs, you’re ready to begin drafting your qualitative and quantitative research plan.
Your research plan should outline the different areas of research, as well as the techniques you’d like to use - ie. Van Westendorp, Conjoint, etc. Once you've completed your research, you can bring together all of the insights to help guide your monetization strategy.
But, before you jump right into go-to-market, it's important to start testing some of your hypotheses. Even with a research-backed strategy, you'll never know how the market will actually respond. Test in phases and then scale go-to-market from there!
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.
Fundamentally, a pricing project is like any other research project, combined with a major product launch.
- Set your research goals. Obviously, better monetizing your product/ increasing revenue, but what specifically do you want to know.
- Establish some hypotheses. What are some possible changes you could make? How would you implement these changes? How would they affect existing customers?
- Conduct research. Typically this is primary research such as customer interviews, focus groups, surveys, and A/B testing (if practical for your product).
- Build a proposal with detailed quantitative analysis
- Review the proposal with cross-functional teams to uncover requirements and impacts that you may have missed.
- Secure buy-in from all stakeholders, typically through a
- Build the implementation plan (including sales enablement and all outbound customer communication
- Secure buy-in on the implementation plan
- Plan and execute the launch
Of course, what matters is the details. Pricing projects are very complex and often involve shifting deep-seated opinions. They can have major consequences for your company profits. So plan carefully, involve key stakeholders at every step, and prepare yourself for an intense ride.