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Nobody wants to touch pricing. It’s political, it’s messy, and if it goes wrong, everyone remembers who led the project. But here’s the thing—when it works, it really works.
In this episode, Toni and Raul talk about why pricing changes freak people out, what actually happens when you go through with them, and how even small tweaks can drive serious revenue. They’ve both run pricing projects that paid off big, and they’ve got the scars to prove it.
If pricing’s been on your to-do list forever but you keep punting it… this one’s for you.
- (00:00) - Introduction
- (01:36) - The dread of pricing changes
- (04:29) - Balancing new prices and losing customers
- (05:53) - Lead pricing changes without losing your job
- (08:55) - Who should own pricing changes?
- (10:10) - Creating a pricing steering committee
- (12:38) - Consultants in pricing projects
- (17:00) - Are we over complicating it?
- (19:44) - Churn and pricing relationship
- (25:02) - The external and internal narrative
- (29:47) - Phasing pricing changes
- (31:10) - Pricing moves in PLG
- (32:59) - Conclusion
Creators and Guests
What is The Revenue Formula?
This podcast is about scaling tech startups.
Hosted by Toni Hohlbein & Raul Porojan, together they look at the full funnel.
With a combined 20 years of experience in B2B SaaS and 3 exits, they discuss growing pains, challenges and opportunities they’ve faced. Whether you're working in RevOps, sales, operations, finance or marketing - if you care about revenue, you'll care about this podcast.
If there’s one thing they hate, it’s talk. We know, it’s a bit of an oxymoron. But execution and focus is the key - that’s why each episode is designed to give 1-2 very concrete takeaways.
Why No One Wants to Touch Pricing—And Why You Should
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[00:00:00]
Introduction
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Toni: Raul and I are talking about pricing. Everyone is scared of touching it. Every consultant is telling you to change it and tweak it all the time, but what is our experience from pricing changes? That drove literally millions of dollars of revenue. And most importantly, what is it we would've liked to know before we did that?
The Impact of Pricing Changes
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Toni: If you can change pricing in the right way, it can be one of the most cost effective things you can do all quarter long. You can work yourself to the bone with all kinds of other things you could be doing, but if you invest time and make the right pricing changes, you could make so much money just with that.
Raul: People are quite afraid to make a step there, which is why a lot of. Successful pricing projects I've seen had to come from the CEO because the CEO was the one who was like, okay, nobody's gonna fire me either. The board is gonna ask me to step down, but at least I know that if it's not me, nobody else is gonna touch this.
Toni: If there's a dumpster fire and you're standing next to it, it doesn't matter whether you cause it, you're still gonna smell like shit. And he's right about [00:01:00] that. So, Mr. You're back from, uh, Las Vegas. How was that?
Raul: It was awesome, man. I, uh.
You, maybe you might be following that, but I played the Magic Pro tour, which is basically like a world championship.
There's three of them a year. I ended up placing that so badly by the way. Uh, around 40th place, out of around 400 people. Um, uh, most of which by the way, are full-time magic players. So I'm, I'm quite happy to be able to keep up with them. Qualified also for the next World Cup again in September.
Toni: So it's really like, you know, the PGA tour for golf and the US open for tennis, right?
Yeah. So, I mean, I think that's basically. What this is. Yeah, just maybe with a different price pool attached.
The dread of pricing changes
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Toni: So what we wanted to talk about today is, um, I think a topic that everyone is always dreading. They're always playing with it in their mind. They're always thinking about it. Uh, but everyone from CEO, CRO, you know, sales leader, RevOps, everyone is always dreading pricing changes.
Like, like always, you [00:02:00] know, today kind of talking a little bit of why this is and, and why it's also silly that everyone is dreading it, right? Because, um, clearly. Clearly, if you can change pricing in the right way, it can be one of the most cost effective things you can do all quarter long, right? You can, you can work yourself to the bone with all kinds of other things you could be doing, but if you invest time and make the right, uh, pricing changes, you could make so much money just with that and basically don't spend any resources.
Uh, you know, at all, almost in order to kind of get this done. So I think it's always super enticing and it's kind of, it's kind of funny how, um, how, how dreaded it is though, right? I'm, I'm not sure what your experience was with some of the pricing changes you've seen, but like the, the, the set default is, oh, it could be great, but I'm kind of worried about it.
Raul: I think a lot of what. Makes people scared of it. And to some extent also justifiably so is the scale of change that they immediately see when they think about pricing. Yeah. [00:03:00] And, but I think that's also a little bit of a crutch in, uh, in the way of, of actually achieving business results is. Pricing doesn't have to be this six month.
I'll get my old buddy from business school, uh, consultant friend in and pay them this much money and do all that math and all that stuff. It doesn't have to be that necessarily. There's a lot of components that you could implement in a week and, and then just see how they work and whether or not they pan out and then go from there.
So, uh, I think just the. Shifting your mind to maybe being a little bit, uh, more fragmented with this topic. Uh, maybe a bit more iterative thinking, uh, is probably quite helpful because then you're also thinking a bit more like your other problems that you're having with your early stage or series A startup.
Toni: Yeah. But let's just say kind of all the pricing stuff is always super exciting, right? Because you get more money for kind of the same thing that you did before. Yeah. Great. Right? It basically improves all your unit economics. Everything is wonderful. People are telling. So research is telling folks that they actually should be looking at pricing [00:04:00] every three to six months.
By the way, I've never seen that. Wow. Anyone do outside of like a HubSpot or something like that. I've never seen anyone do that. You know, from your, your perspective, your experience, why, why aren't people touching pricing so often? Why, why is that? If, you know, we can maybe disagree whether or not you should do it every three months, but, but you should definitely do it more often than people are doing it.
I think that's at least clear for me. But in your, in your perspective, from your perspective, why, why is it people don't touch pricing that often?
Balancing new prices and losing customers
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Raul: So obviously the number one thing is you're just scared of either losing existing customers or not getting a future business, uh, or not converting opportunities that you're having in the funnel.
Yeah. Or either now or in the future. So this is the most obvious, right. And. For sure. Um, because typically when we're talking, uh, uh, pricing, people are always thinking about increasing prices. That doesn't necessarily have to be the case, by the way. So reworking pricing can also be that you're, uh, reworking a little bit of one package and then maybe [00:05:00] putting a bit less effort on the other package.
So maybe actually you're turning a profit maker a bit bigger, and then another one a bit smaller. So it doesn't necessarily have to be that you're only increasing prices, but unless either way. Um, you might lose some customers. Yeah. So the, the, the equation here is there's kind of a trade off and there must be a sweet spot where you might be losing some customers, but from the existing and future customers, the increased revenue you're making from increasing prices is still outweighing that.
Yeah. And finding that equilibrium is what makes people so anxious, I believe. Uh, and just being so. Erring on the, on the, on the, on the side of caution there.
Toni: I think that's already kind of the math, nerdy next step. Those are maybe some rev offs folks that are listening and are thinking about this, oh, there's probably an equilibrium between churn and LTV and you know, discounts we are giving in cac.
We're spending, and there's certainly is, we're gonna talk about this in a little bit.
Lead pricing changes without losing your job
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Toni: I think another thing that I usually see go really, really wrong, or at least I was scared of it, and maybe at this point I [00:06:00] was VP of revenue operations. So commercial operations, actually, that's what we call it. Um, I was scared of it because, oh no, all the salespeople gonna hate this.
Um, yeah, like the, the amount of work kind of you put into this thing and the amount of pushback you get from everyone, it's. It's just a dreadful project to be assigned to. And the thing is, when I got this the first time around, I was like, really? You know, I wanted to do pricing. Then I went through with it once and, and, and I think that's when I, you know, decided I was at the talk with a, with a founder the other day.
He was like, Tony, you know, to kind of need some help with pricing and packaging, you know? That's not me. I'm not gonna touch that right now because it is, it is, it's a difficult project too, right? Um, and I think that's the other reason it's trying to maneuver something like that, that is gonna touch your marketing, it's gonna touch sales, gonna touch cs, it's gonna touch your finance folks.
It's gonna definitely [00:07:00] touch your CEO. You know what he wants to do or she wants to do, um, and. Just trying to manage this project. That alone is, let's just say, has a lot of risk attached to it, right? Yeah. And, and I would say one of the worst outcomes is to try and do some, you know, decision by committee.
And we are just doing everyone a little bit. And, and then in on the last mile, VP of sales is a change of heart. It's like, no, you know, I talked to the sales rep. We can't do it like that. I mean, it's. The, the, the risk just in the execution of this project, I think is tremendous, uh, actually,
Raul: and also the personal risk to the person who's kind of in charge of that project.
So if you're, let's say you're a, whatever, a VP of product or maybe you're a CFO or something and you're suggesting this and it's not going through, well, that might have just been your death sentence for this job at this particular company. Yeah. Um, I think by the way, that's not necessarily true, so it's not like every single time a price project uh, fails that that person [00:08:00] gets axed, but in people's minds, I think this is such a big one that people are quite afraid to make a step there, which is why a lot of successful pricing projects I've seen had to come from the CEO.
Because the CEO was the one who was like, okay, nobody's gonna fire me either. The board is gonna ask me to step down, but at least I know that, uh, if it's not me, nobody else is gonna touch this. So,
Toni: so quick anecdote and then question actually. So you, you talked about the, um, the impact on someone's career.
Basically, if you run this project and it's not going well, and I was kind of discussing, this was a previous co-founder of mine. He, he had the best way to put this, basically like Tony. Um, if there's a dumpster fire and you're standing next to it, it doesn't mean it doesn't matter whether you cause it, you're still gonna smell like shit.
And he's right about that. Right. Kind of that, that is, that is going to have an impact on you. And my question though is like you talked about like, Hey, it would be great if the CEO is driving this.
Who should own pricing changes?
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Toni: Who owns pricing actually, you know who, who is responsible for this [00:09:00] thing?
Raul: So I opposed this to you actually.
I would like, I'm curious about your experience here because what I can tell you is what I've seen is everyone's arguing about this, and that's one of the issues again, which leads to a lot of people not touching this problem, is nobody feels responsible. I know you've dealt with that. So how have you solved this problem?
Who owns this?
Toni: So I think this was one of the mistakes I made several times, and I think this would be one of the lessons learned here for today is like, um. I think in the absence of anyone owning it, um, probably it's gonna be the CEO that owns it or at least feels like he or she has the final say, which is something that just needs to be cleaned up.
I think one learning coming out of that for me is, you know, I had a product marketing team that basically kind of had someone doing research because we were like on five or six different markets and there was so much. Petition and so much comparison going on. So we needed to figure out what was the pricing point for each market.
So we actually started to develop and deploy lots of intelligence, you know, to make the right call, which by the way, made everyone feel more at ease. [00:10:00] Like it's, there's a lot of psychology in this and just feel like, oh yeah, no, this, you know, people thought about this. Um, but what I can say is, um.
Creating a pricing steering committee
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Toni: Whatever size you have, uh, in the organization, whether it's 50 people or 500, um, try and have a dedicated group of people, um, that is, let's just call it the steering committee on this thing.
Um, and it doesn't mean that you have five VPs that are full-time on this thing. It just means that it is a team that has authority in the organization that, you know, includes the VP of sales, includes maybe VP of Finance or something like this that meets on a regular basis and has some more junior person, um, you know, basically prepare material and, and keep them up to date.
And that committee actually should ha, you know, have the authority and have the drive. To change some of the pricing that then that then can spawn an actual project coming out of this. But basically kind of creating somebody in the [00:11:00] organization, um, that carries the authority and the, and, and the workload of, oh, oh, I think we need to, I think we need to adjust something here.
Right. And the thing is, you know, keep in mind those adjustments, you know, why do they come up? What, what kind of. Precedents do you have when adjustments come along? Well, could be competitive pressure. Um, it could be new products being rolled out. It could be new learnings about how people are. Uh, buying or consuming your product that, you know, leads you to reshuffle the packaging a little bit.
Um, it could be inflation, like, you know. Mm-hmm. That, that can be one of those things too. Um, it could be so many things. It could be you have an acquisition and to fold that thing in, and it's like, is it part of a plan? Is it an add-on? Is it a completely separate product that we're cross selling? There's lots of thought that needs to go into this, and I found.
As a CRO. Um, it was actually really good to be like, Hey, this sounds like a you guys [00:12:00] problem. Uh, when, when are you gonna come with a recommendation here? Right? Because otherwise it's, no one's gonna pick this thing up. Everyone is gonna tell you overrule. Um, you know, all of these things is pretty complicated.
We should do something about it, but there's just no one that that is doing it, right? Yeah. So, long story short, I don't think anyone in most organizations is actually responsible for pricing. Um, and I don't think it's useful to say like, use the VP of pricing, but I think it is useful to create some kind of a governing body to, you know, say it in even more weird terms.
It basically has the responsibility to look after it on a recurring basis.
Consulants in pricing projects
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Raul: And frankly, that's also where these consultants can come in, right? So that's part of the, uh, old trope of, well, we get a consultant and so someone has to own this damn topic, which nobody else will, and then we can also blame someone later on.
Right? Um, yes. Have you worked with consultants on this topic, or was it always, uh, on your own?
Toni: So one of the very successful consultants in Europe, uh, actually [00:13:00] pitched me back then when I was executing. Um, a successful pricing project in the organization. Um, and maybe I tell more about this, but, um, he pitched me back then he was quoting me and I was like, are you insane?
I just walked, just walked away from this thing. But ultimately, you know, the, the thing with pricing consultants is you can really see this as a cost benefit equation. Like you can, let's just say you take a, a lead gen consultant. It's like, ah, you know, yes, they're gonna maybe generate 10,000 leads, but how much revenue is that gonna be?
Right? You don't know, like, maybe it's shit quality, maybe it's good quality, you don't know. Um, go further, closer to the revenue. Um, our coach, a coach for the sales team, pretty close to the team now, but. Did he or she really drive that incremental, additional amount of revenue? Or like I, yeah, I'm not sure.
Um, pricing consultants, dude. I mean, this is black and white. Yeah. It's like you [00:14:00] can, from one day to the next, you can say this incremental amount of revenue came from that person that, you know, suggested the change. Right. So, um, they can really go into this like, okay, if I pay this guy and let's just say, you know.
A small number, like a hundred thousand euros, which is basically what these guys are asking for. Um, yeah, but I make five euros on the back of it, you know, it's, it's kind of, I'm still good, you know, I'm, I'm, I'm in the green basically. And, and then people are like thinking like 25 million euros. I mean, how big of a shop do you need to be?
And the answer is not that big. Actually, the trick here is that, um, and this was one of my experiences. Uh, we were executing a price change, a really dumb one, a really dumb pricing change. We basically took every one subscription and increased it by 5% or something like that. Like that's what we did across the board.
Um, and, uh, we were 20 million. And then, you know, that 5% jump just made a lot of. Made a [00:15:00] lot of money, you know, across 20 million a a r, 5% from one day to the next was just a changed invoice basically that went out, um, was massive. Right? Um, I can talk a little bit more how we executed this and we basically had no pushback.
But while this was a dumb change that got a lot of money, if we had invested a lot more time instead of just increasing prices, but actually repackaging, putting way more thought on this and. And maybe even in some areas pushing the price even further up. Uh, because I think we could have done that. I think there would've been a 10 50% hike in there.
Um, so that guy, um, probably would've been been worth hiring in the end. So this is on the cost band I of some of those consults. I think the other thing is, um, you know, some of the fear, uncertainty, doubt that people are having with this topic. It's really well being answered, I think, by some of those consultants.
Um, that. Make you feel, um, confident about this change. [00:16:00] They present you with all kinds of numbers, all kinds of research, all kinds of stuff. None of that actually maybe matters. It makes the person, the decision making and feel better about the change.
Raul: And that's what gets the change done.
Toni: Yes, exactly. It's important,
Raul: right?
So the fact alone that someone projects that confidence, and maybe that's what you pay them for, is what gets your ass to move and then is what gets you the money. So at the end of the day, even though maybe the knowledge that they brought you is not that big and man, like the the, I've had this kind of project where just the fact alone that.
We were there, there was even another consultancy there. It was not a pricing project, but the fact alone that there was several people who were like, we know that this is what you need to do. This is the thing. We've seen this before. We've seen this and that. The other just made it so that people finally were okay, we, we, we need, we have to do this.
Like there's, this is what gets you moving. And, um, that was worth the money. What I think is funny about this, um. This whole pricing topic, [00:17:00] right?
Are we overcomplicating it?
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Raul: So at the end of the day, in this fear that we're in, we're actually making things so complicated that if you kind of put them into a. 10th grade economy or like business school book are so simple.
Little Susie here is uh, selling a lemonade at her lemonade stand, and she's buying the lemons for a dollar and she's buying the water for 50 cents and she wants to make some profits. So she sells it for $2. And then little Timmy, uh, down the street. Is also opening his stand and he, he lowers the price to one 90 and so Suzy goes to 180.
Right? Typically these kind of mechanics are, you can put them in a school book for, for high school kids and they'll kind of grasp the basics of it. What's different about the world we're in, and obviously this is a super simplification, is that we are in this kind of free for all. Everything goes VC funded world very often where.
Prices are not necessarily meant to make you profit, at least not for now. Prices are supposed to make you maybe grow or maybe [00:18:00] position yourself or maybe, I dunno, whatever package you so that you jump into the next tier, but. Because the business fundamentals are not necessarily you running a lemonade stand needing to make a profit.
That's what makes everything so muddy all of a sudden. I think with the move back to, and obviously there's many reasons I oversimplified this there, but I think with the move and a trend back to maybe a little bit less VC funding, or even companies running completely without VC funding and aiming for that to stay this way.
Maybe pricing will become a bit easier in the pure essence of, Hey, we're having 10,000 in our bank account. If we wanna survive for another year, we need to make profit. This is what that would look like on the pricing scale. Do you think that the move away from VC money or towards more austerity, uh, or towards more profit driven way, um, of growth will make pricing easier?
Toni: No, I don't, I don't actually, I don't, yeah, I know. I let you walk right into that door. No, [00:19:00] no, no. I, I, I, I, I don't think so. I think, you know, many of the fundamentals kind of stay the same. I think we've, you know, been for a long time at value-based pricing anyway. And what is value-based pricing, right? Kind of.
You can maybe have an anchor. Um, again, what I think is super crazy, you see those companies rep it and, and lovable and so forth, getting to a hundred million. AI in like, I dunno, 20 minutes or something like this, but they're operating at a loss. You know, they're 30 people. Yeah. You know, $70 million of revenue and they're operating at a loss.
It's like, okay, so, so your pricing must be weird then, you know, but you know what? This may as it, as, as it be, be as it may because you know, they wanna grow and, and, and what have you. I think what.
Churn and pricing relationship
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Toni: What I think is a little bit more tangible for people is this logic that we talked about in the beginning of the show.
It's like, there is, there are kind of different levers you can look at, right? Kind of to smell out am I pricing too expensively or not [00:20:00] right? And one of those guys shout out to Roy. Uh, you know, we were over beers talking about this and he was like breaking it down basically. Super, you know, soothe in, in the lemonade stand could probably also tell that story.
But he was saying. What's your churn? Is it, um, uh, what's your jha? Is it more or less than 93%? And I was like, whatever. It's more, it's like, okay, if it's more, you need to increase pricing. Like, like very, very simple. Basically kind of saying, and you know, he oversimplified and it's a great way to pitch it in a simple way.
But there is a relationship between, um, the pricing you charge and you know, the, the retention you see, right? If you seeing too many people being too happy with your product, that gives you an opportunity to increase prices. If you then on the back of that see a little bit of churn drop, um, that's kind of okay, but probably in the grander scheme of things, you will have made more money, period.
Right? Um, and I think for people that are worried about getting [00:21:00] going with this. This can be, and I know not everyone has, you know, gr greater than, than, uh, 93% or something like this. But this can be a way of thinking about like OGs. Um, we do have an opportunity to do something about it. We see it in our gross retention rate numbers.
We see it in how happy people are. We see it maybe on competitive side. I think those three things together bring us to the point that we should do something about pricing. Right. That will be a complex, you know, project afterwards coming out. Because the first thing you're going to, you know, do, if you haven't touched pricing in, I don't know, five years, is collect the data, you know, clean up all the data.
Um, and alone that people will just be like, you know what, actually I don't wanna deal with this thing. Can we just move on and do something else? But like, there, there will some, you know, some complexity comes out of that, um, VC backed or not. That's, I think that's, that's my thinking here.
Raul: So what I like about that is.
I think again, the simplicity of things. Yeah. Is what in this topic is [00:22:00] really what can get people to move and, and to actually act. Um, and not in every topic, actually, this kind of simplistic advice is really helpful. But I think in this area, this is sometimes exactly what the doctor ordered. Yeah. So.
Something simple as, Hey Susie, you're selling out every single day at $2. How about, or you're selling out even before 5:00 PM so you're even running out of lemons every single day. How about you go to two 50? It's like, oh yeah, that makes a lot of sense. Thanks uncle. Right. So just the simple advice here.
Obviously in the execution it's a bit more difficult, but um, I think it's actually maybe exactly what the doctor ordered there, just as a mental model.
Toni: All the CROs listening right now. Ah, now I get it. Now I get it.
Raul: So, no, but okay, so it sounds like I'm, I'm making everyone sound dumb. I don't think so. I think these are all smart people, but it is very easy and especially this topic to just blow everything up so much that you forget the fundamentals.
Yeah, I think you're right. And, and, and to be also so scared of the execution.
Toni: What is the paralysis analysis? Something like this? Yeah. I think we had, um, a couple of other things we wanted [00:23:00] to tick off, like lessons learned from some of the projects we kind of took out. I think the first one we talked already about, um, churn pricing, LTV.
There is a relationship here. I saw a pretty nerdy post the other day from Ulrich, from willingness to pay, um, and he was talking about. Our net present value calculation, and it's better to get money now versus later. There's some math shit that you can do if you really want to. Um, but there certainly is relationship.
Um, my pushback to him, by the way, was, well, churn is not only a function of pricing. You can't just, okay, more pricing goes up, churn goes, uh, up too. That's not necessarily. It's not a direct relationship. Right. Um, we talked about consider external help. Um, I think, I think that's a thing. Um, another thing that I just wanna kind of take off on here, people should realize that there's a difference between a packaging change, which can come with a pricing increase and just a pricing [00:24:00] increase.
Uh, I worked with a company that, um, basically kind of raced this series. B on the back of this, um, they, over the course of two years implemented eight pricing hikes. Like every quarter. They just increased pricing for everyone and obviously the net retention looked wow. Crazy goods and everyone was like, you know, we need to give these guys money right now.
Um, but they overdid it like they totally over and they kept pushing because they wanted to have this funding round obviously, and then funding was in another quarter and suddenly churn just broke loose like crazy, right? Because they just overdid it. Um, I think if that would've spent more time in thinking about repackaging instead.
Uh, because they were underpriced, like that was clear. But if they had thought somewhat, you know, time on, on thinking about packaging instead, I think they could have probably maintained that revenue and pushed it even further up without kind of running to this other issue. Right. Um, what are other things you've learned from, from, you know, pricing [00:25:00] and packaging projects you run
Raul: what you just talked about?
The external and internal narrative
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Raul: I will connect this kind of to my story as well, which is pricing a lot of times is also about narrative. So you, you can't, or any kind of change in pricing, any kind of packaging, there has to be a narrative behind it. And first of all, the narrative internally, of course, I think we've talked at length about this right now, but the, the narrative outside and that is what pricing and packaging reflects.
So, uh, hey, we're moving up price, but this is what you're getting for it. That's the base narrative. Uh, or we are actually changing strategies within the company. Look how much more premium we've become. Look how much more strategic we now are. Yeah. Look how much better we are in actually now this thing, or we've introduced a new feature, this is gonna blow your mind.
It's gonna change everything. Right? So the narrative, it's what? In the, it's what's in the front. The pricing is kind of just the, the, the, the music behind and the, the scenes. Right. So, and I think this is what's really important when you roll it out, the successful pricing projects. And again, I'm not a pricing expert like at, at complete depth, but the things that I've really seen [00:26:00] work well, were always a narrative driven thing towards the customer.
Where the pricing was just, oh, by the way. Now this costs 3 99 instead of 2 99. Yeah. And this is kind of like the Apple Cana way, right? So, uh, the, here's one more thing. The turtleneck sweater presentation. Yeah. The big announcement and everyone gets excited for the thing and then the pricing is just an afterthought.
Toni: I gotta say, I gotta say kind of as you have the external story, actually, because you said that it triggered, um, in me the, there's, there's usually also a need for an internal story. Right? And, uh, basically kind of last time I rolled out a big pricing change. I stood in front of the whole org and had to, basically we ba I basically had to defend why we're doing a pricing change because everyone was like, you know, why the fuck?
My main point was actually we haven't, we hadn't done any pricing change in like five years. So like a lot of time. Um, and I basically kind of asked everyone in those five years with all the development resource we put into this, by the way, is a team of 50 people. [00:27:00] Um. Did we improve our product by 5%, yes or no?
And like everyone was like, yes, more. More than 5%. Actually. It's like Exactly. And that's why kind of increasing prices by that amount. It's totally justifiable. Right? And I think bringing, um, a story that is, uh, internally also because people need to, they need to buy it in order to sell it, right? Um, internally, it needs to be connected to true value improvement.
Um, that then, you know, makes this a fair fa uh, uh, a bargain for them, right? Um, in, you know, in their minds. And then kind of also presenting that to customers.
Raul: Here's another word for story, and that's one of my two, uh, learnings there. Uh, strategy. Right. So the, the pricing narrative link is as strong or even stronger maybe than the, the pricing, uh, strategy link.
And so that's the first story that I've seen where typically everyone is like, and you just talked about that too. It's like, oh, our product became better. That's why we are [00:28:00] improving pricing, or We haven't done so in a while. That's why we're improving pricing. I've actually seen scenarios where a company were deep in the gutter.
Like fighting for survival, uh, barely making it to the next round. Maybe asking for a transit transitory round, just to make it throughout the year. And thinking about Correct. Correctly, in my opinion, in increasing prices. Now, why was that? Uh, part of the reason in this particular case was that the company after two, three years just realized that their product was not suitable for the segment that they were really thinking about.
They had to move up market. So they had to move into more enterprise, or whatever you wanna call it, corporate sector. With that also coming an increase in the demand of the product, but also the service that came with the product. So meaning the, uh, onboarding, the customer success service and all that. So.
What happened was that they basically, over a year or two, without actually realizing were moving upwards, the, the kind of corporate and enterprise, [00:29:00] uh, realm. Um, also moving their product strategy upwards, moving the value that they were living upwards, but not pulling up with the pricing at the same time and.
That kind of the pricing was what then triggered the whole, well, this is actually what we're doing now, and now let's go full all in on this. Yeah. For a year. And if we don't make it cool, but this is what we do. Now, in this particular case, I'm not sure that it was only the pricing, but the pricing is what actually triggered the whole strategic shift up market and the company did survive at the end.
Toni: So the thing is, I think this is a much deeper, you know, piece actually, because that was really a go-to market motion change, go-to market fit change. That then was accompanied by a pricing adjustment tool. Right. I just wanna, um, tick off two quick other things that, you know, I wanna make sure we get in here.
Phasing pricing changes
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Toni: One is, if you're worried about rolling out pricing changes, um, especially in the sales led motion with sales teams, um, think about, uh, phasing them. So instead of sh shifting everyone on your customer based [00:30:00] on to new pricing, maybe you start selling in Q1 on your pricing and maybe then renewals in Q2, get new pricing and so forth.
Kind of as you layer this in, you will, you know, learn a little bit more. You don't bet the whole farm on this one change. And it will probably go through with less uproar, uh, most in your own ranks, I would say, right? Because salespeople are always worried that they're then gonna lose on price or something like this. And then my last one, I'm not sure if you have one more, but my last one is like, um, you know, you can also test it out in different markets. Um, you can, you can go to a smaller market, different segment, different industry, however you break up your, your go to market and maybe try the new pricing out there first.
Do that. Maybe first see how people are reacting, ideally record those calls. Ideally kind of get intelligence from this. Maybe you look at, you know, buying active now that I'm at it, but basically kind of using that intelligence to see like, did my pricing change go through? Kind of is it triggering issues?
Are people. Shouting back at our [00:31:00] reps, um, and having that, uh, kind of do some, do some more intelligence on that stuff basically. Did you have 1, 1, 1 more story item? Yeah.
Raul: It's the last story here, and I think this is, uh, a short but big one.
Pricing moves in PLG
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Raul: One of the most beautiful pricing projects that I've seen where I wasn't even involved, I just saw it from the outside because it was a portfolio company or a company of the, that I was working with was accompanied by a strategic move towards PLG and the.
Idea here is that the company that was previously not sure, like how do we sell this thing? It's kind of a SaaS thing, but it's also not necessarily SaaS. What are we doing here? Was breaking up their product into more of a PLG motion that would then be upsold. Yeah. Into, uh, more enterprise or like bigger accounts.
And with that obviously came a move towards, uh, a little bit of a different pricing with kind of a over the counter credit card pricing for, uh, single movers. Uh, single users and then more enterprise pricing. This whole thing, people were really scared of because they were like, well, we can't sell the [00:32:00] thing we've sold before for 500 bucks now for 50.
But it was beautifully executed and I'm still convinced to this day that the, that that company really went very well, by the way, after. But I'm still convinced to this day that actually one of the major things, the major levers of the. The CEO would accredit the growth to PLG. I'm not sure it was actually PLG or the marketing motion about that and the channels and all that.
I'm pretty sure it was the pricing. Yeah, because what actually happened was that the product was set up in such a way that there was very clearly distinct packages where one was so small and so useful, so fast with time to value short that it was a 50 bucks a month thing. Credit card, let's get it done.
And then the other thing was more of, okay, but now we need to make it bigger. We need to make it 500, a thousand per seat, uh, get 20 seats per customer, and now all of a sudden we're talking 20 k. Yeah. And there was both of these realities within the same product that they had built. And the way that they did it was the only way to really replicate this.
And that was by pricing also differently.
Conclusion
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Toni: Let's [00:33:00] stop it here. Raul, thank you so much. I hope everyone got some really good insights. And yes, you should definitely look at your pricing a little bit more. Maybe send this episode to your CEO or CRO to kind of understand what's going on and otherwise, uh, see you next time and thanks Raul.
Raul: See you, everyone.