Jason Covitz, the Vice President of Commercial Finance at Covetrus, possesses a wide range of expertise including CFO, Business Growth, Value-Based Pricing, Sales Effectiveness, and Product Management, among others.
In this episode, Jason shares competitive pricing strategies, emphasizing the importance of understanding both inherent and relative value when comparing products to competitors. He shares practical methods for gathering competitive pricing intelligence and highlights the need for combining analytical and creative thinking in pricing.
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Why you have to check out today’s podcast:
- Gain valuable insights into how to approach value-based pricing, understand competitor comparisons, and leverage features to maximize your product’s value
- Discover valuable methods for gathering competitive pricing intelligence and innovative techniques to help you make informed pricing decisions
- Learn to “ruthlessly prioritize” tasks based on their potential value to help you effectively focus your efforts and achieve significant business results
“Keep digging. Get your teams comfortable with learning. Be inquisitive, poke around, turn on the lights, and hopefully you find large piles of money.”
– Jason Covitz
Topics Covered:
02:11 – What led Jason into pricing
03:17 – Discussing how analytics at Capital One included evaluating factors like the cost of repossessing a car and its post-repossession value
05:01 – Explaining the difference between a private equity (PE) owned company and a public company
07:32 – Advocating for a detailed feature-level competitor comparison
10:45 – Think about ROI conversation
11:45 – The challenge of determining competitor pricing for value-based pricing
16:16 – Discussing strategies for competitive pricing and understanding relative value
20:50 – Important thoughts on the use of conjoint analysis in B2B versus B2C contexts
22:40 – Talking about the blend of skills required in pricing, noting that it’s not about pure numbers
23:44 – Jason’s best pricing advice
Key Takeaways:
“Competitive intelligence from pricing — people are like, well, I’m just going to ask them what the number is. Well, the number by itself doesn’t stand alone; you got to bring the whole story to the conversation in that case.” – Jason Covitz
People/Resources Mentioned:
- Capital One: https://www.capitalone.com
- First Data: https://www.first-datacorp.com
- Covetrus: https://covetrus.com/
Connect with Jason Covitz:
- LinkedIn: https://www.linkedin.com/in/jcovitz/
- Email: [email protected]
Connect with Mark Stiving:
- LinkedIn: https://www.linkedin.com/in/stiving/
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)
Jason Covitz
Keep digging. Get your teams comfortable with learning. Be inquisitive, poke around, turn on the lights, and hopefully you find large, large piles of money.
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Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the evolving relationship between them. I’m Mark Stiving, and our guest today is Jason Covitz. Here are three things you want to know about Jason before we start. He is the VP of Commercial Finance at Covetrus. Hope I said that right. He’s had a VP title since 2008, and sometimes the word pricing shows up in the title. And he’s a Michigan grad, living in Columbus, so I’ll have to talk a little bit slow, just so he understands me. Welcome, Jason.
Jason Covitz
Thanks, Mark. Last time we did this, I hadn’t won a title in a long time, so I want to know that Michigan has won a title. I wanted to come back on because I noticed you’re not wearing an Ohio State shirt today. And I’m still representing my Wolverines. So, what can I do?
Mark Stiving
Oh man. Sorry to hear that. I mean, that was painful for me. That was painful.
Jason Covitz
I always laugh at the people that try to root for teams in their conference, not when it comes to Michigan and Ohio State. People just don’t understand.
Mark Stiving
Yeah, exactly. I did have a favorite in the national championship game. It wasn’t Michigan. Let’s jump into something that’s more relevant to everybody listening. How did you get into pricing?
Jason Covitz
Honestly, Mark, it came through analytics. So I did a lot of, before I did pricing, I was actually at Capital One, and Capital One does a really good job of analytics, and everybody knows that. I mean, obviously they do credit cards, they do mortgages now, I think at the time we were doing subprime auto loans. So subprimes are effectively… a four doesn’t give you, or one of the major manufacturers doesn’t give you a loan. Capital One is kind of level two, so they’re trying to figure out how to make sure that you pay them back. And in a lot of cases, 33, 40% of people don’t pay them back fully. So they’ve got, it’s worth a lot of money for them to identify whether they’re going to pay you back. So it was one of those things where we were learning about what’s the risk of individual people, and then as a result of that, leaked right into how do we price them effectively? So do we price them high? Do we price them low? What do we know about them and how do we use the different variables? So it was a kind of a natural lift or natural transition right into pricing from there.
Mark Stiving
Okay. So when you’re at Capital One, do you actually use, this is the cost of repossessing a car, and this is what we think the value of the car would be after we repossess it?
Jason Covitz
It comes into play, for sure. So you’ll get into things like LTV, at the time, again, I’m pretty old, so this is 20 years ago, but loan to value. How much money are you borrowing versus what’s the value of that loan? Things like income. Think about cars. A cool variable that I always thought that one of the things that we discovered was that in most cases new cars are less risky than used cars. Makes sense. But if you actually look at certain brands at the time, Suzuki was one of them. Mitsubishi was another one. They’re actually a higher risk on new cars versus old cars or used cars. So it actually flips the equation. So there’s something there about how marketing works. I don’t have a true understanding of what caused it, but you can get into a case where the risk is 50% higher on those types of cars versus effectively a Toyota or something like that. So, interesting dynamics.
Mark Stiving
Yeah. And the other thing I would’ve found interesting about that is I would think used cars would be less risky only because you’ve already had that depreciation of 25% for driving it off the lots.
Jason Covitz
Yeah. I mean, from a valuation as far as how big is the impact if they don’t pay you back? Yes, it is. But as far as what’s the chances of the person paying you back whether they borrow 8,000 or 20,000, the incident is actually less on a newer car.
Mark Stiving
Yeah, I guess that makes sense too. Okay, so in your LinkedIn profile, it says that the Covetrus is, I think I inferred they were just bought by a PE-owned company or PE firm. Is that a fair thing? What’s the difference between working for a PE-owned company and a public company?
Jason Covitz
It’s a really good question, honestly. So, I was actually going into Covetrus when they were going through a LBO, leveraged buyout. So they were going from a public organization to a private organization being taken over by a couple PE firms. And the great thing about PE firms, and it’s, I think it’s a little bit of a new development in pricing, Mark, is that they actually have pricing partners within these PE organizations that are going around to each part of the portfolio and helping to actually manage the organizations. And so you’ve got effectively a natural partner as you’re working for in the portfolio. You’re working within the actual company and they’re effectively consulting with you. And I’m seeing it more and more. I know KKR, I know somebody took a role at KKR doing the same type of role, and it’s a really good avenue because you’ve effectively got another executive partner there. And so one of the things that I’m sure you’ve heard on multiple podcasts here is you’ve got to get executive buy-in, well, when you’ve got the PE organization or the deal partner on your side, that really helps the cause. So it’s a really great partnership.
Mark Stiving
Yeah, that’s nice. I’ve been doing quite a bit of work with PE firms lately, and one of the things I didn’t know until I started working with PE firms is they have a division typically called portfolio operations. And so their job is to go around and help their portfolio companies at different roles. And what I’ve found in the ones I’ve worked with is that they have salespeople, they’ve got HR people, they’ve got accounting people, they don’t have as many pricing people. They don’t have people that know what we know to be able to help those companies out. So, I just found that whole thing fascinating that they’ve actually got these portfolio operations groups.
Jason Covitz
Yeah. And they’re great. They’re effectively internal consulting organizations. And, I mean, the one we were working with, they had a supply chain guy who was great at helping to negotiate internal contracts, helping to think about suppliers Covetrus as a distributor. So we put a lot of cardboard out, so we were negotiating our cardboard contracts, things like that. But you’re right, to your point, they do have these pricing teams as well. And sometimes they’re augmented by external consulting shops. Sometimes they’re just there. Luckily at Covetrus we are large enough being about 4 billion in revenue, that we effectively were able to build up a pricing team. So for smaller organizations or smaller portfolio companies, they might not have dedicated pricing people. We were able to kind of do it as a partnership, hey, we’ve got pricing people bring in their thought process and then partner on key initiatives. But it was a great help, honestly.
Mark Stiving
Nice, so one of the things I want to ask you, you gave me a list of a few things we could talk about, but one of the things I want to talk about is competitor comparisons. Now, obviously, when we talk about value-based pricing one way we think about value-based pricing is how much is our competitor charging? How much more value do we offer than our competitors do? And then how do we price for that?
Jason Covitz
Yeah. And the key is really doing that comparison on a feature level. I’m a big believer, and you see this not only in B2C products, but also in B2B products. I’ll usually build out a grid that says, hey, here are all our features effectively as rows, I’m a recovering engineer, so everything goes in Excel in my head, but rows effectively are your different features. And then columns are how are we versus competitors, et cetera. And you just really kind of map that out. we’re in 50 states, they’re only in 20 states. We have 24/7 customer service, they are only five by 10. So you can actually do that type of comparison at a feature level. And then that really helps you inform your pricing conversation. Because one of the things, especially in the B2B world, I find a lot of product managers kind of fall in love with their own offering.
They think it’s just the best thing ever. And they’re either, if you look at the feature comparison, they’re as good or better than the competitor. They’re never behind. But when you do a feature comparison, that actually comes true, and you actually get to find out whether that actually is true or not. So I’m a big fan of it, and it does exactly what you’re saying. It actually lets you say, well, hey, we’re better in these five areas, worse in these two areas. What does the customer care about? And then how does that reflect itself in our pricing? So it really gives you a structural outline on which to base your pricing.
Mark Stiving
Okay. So first question, I’ve never met a product manager, who said we weren’t as good as our competitors in anything.
Jason Covitz
Yep.
Mark Stiving
So the list always has our positives, but never our negatives.
Jason Covitz
Well, and so what you’ve got to do is you’ve got to call them out there. You don’t think about it as, am I better or worse yet. You think about it in facts. We’re in 50 states, they’re in 25, right? I try to put together a list of at least 30 attributes. You don’t focus on two or three. You actually try to go as deep as you can and then do the facts, and then do the comparison. The key, what most product managers I see is they do the comparison too early, and then it’s like, well, we’re about the same. Oh, we’re about the same. If you do it on a fact-based basis, and then what the cool part about that is, you can actually map it up against a conjoint analysis. So you can actually test and say, okay, well you think these variables are important? What does the customer say? And that’s really where the magic happens, because all of a sudden customers are like, well, I care about these three things. I thought they were these five. Well, they’re different. Okay, well now that helps drive our pricing conversation. So it’s really about deconstructing the problem first and then building it up from the component pieces.
Mark Stiving
Nice. And the other thing that does is when you understand the feature differences, and then you understand what’s the true value of those features to certain customers, in other words, what problem are they solving. Then you can ask yourself, well, which buyers have this problem? Those are the buyers we should be going after.
Jason Covitz
Well, yes. The other thing you can do is you can also think about the ROI conversation, right? So you kind of made the comment on pricing plus a lot of things in my titles, Mark. I’ve done pricing plus intelligence pricing plus finance pricing plus product management. Well, the pricing plus finance question is just an ROI. Hey, we’re not as good in this product or in this feature set as we are with the competitor. Okay, well then we should invest in that area. So it really helps you think about it from a prioritization perspective as well. So you can say, well, what do these map up against for our customers? Okay, those are the segments we target. If those segments are not large enough to hit your goals, well then let’s invest in this area and get better. So, it really helps you, again, structure the path forward as you’re thinking about these product organizations.
Mark Stiving
Yeah. Nice. One of the things I always have the hardest time answering when I get this question is, I don’t know my competitor’s prices. Do you have any brilliant insight on the answer to that question?
Jason Covitz
Well, I’ll throw a wild card at you. Who cares?
Mark Stiving
Okay. So before you go on, I’m going to tell you I care. And here’s why I care, right? I’m trying to teach you how to do value-based pricing. And so value-based pricing, a big chunk of it is if you’re choosing between my product and a competitor’s product, I need to know what my competitor’s price is. And what’s the value of the difference in what I’m delivering or what I’m going to sell to you. And so if you’re charging a hundred dollars and I’m having an extra $50 in value, I’m going to charge 105 hundred 10 bucks. If you’re charging $50 and I’m adding $50 in value, now I got to be in the 55, $60 range. So that’s why I care.
Jason Covitz
Yeah, I kind of said it a little bit tongue-in-cheek. but the challenge you get on this, is how do I actually measure the price? Because any price that you get, unless you’re in a pure B2C environment where you’re selling a million products, think about all the different variables that could go into that. Well, what geography are we talking about? What timeline are we talking about? Is it part of a bundle? Is there a backend rebate there? If I actually ask you the price, the price by itself doesn’t tell me anything. I need to ask you all those other variables because they actually impact what that price point is. So I think that’s the key that competitive intelligence from pricing. People are like, well, I’m just going to ask them what the number is. Well, the number by itself doesn’t stand alone. So you got to bring the whole story to the conversation in that case.
Mark Stiving
Okay. Way to make an unanswerable question even more unanswerable.
Jason Covitz
Well, I can short circuit it for you though. Think about it this way. Maybe I don’t care about what the price is. I just want to know, am I winning or losing the right share of the transactions? Because if, let’s say my price is a dollar. Well, I’ll use your hundred dollars like competitors at a hundred. Do I need to be at 90? Do I need to be at 80? Do I need to be at 70? To some extent, the win rate will tell me what the right answer is. Am I winning effectively my market share or not? That’s the question. Because if you understand that, that then you know where your value perception is versus the competitor. Does that make any sense?
Mark Stiving
Yes. But I hate it.
Jason Covitz
Not easy. This pricing stuff’s not easy, Mark.
Mark Stiving
Yeah. I get that here. Here’s what I don’t like about what you said. But by the way, I think it’s true. So I can go test it and see what’s happening with my win rates and see if I should be moving prices up or down, to move that win rate up and down. But I’m going to tell you right now, I don’t think your salespeople are doing a good enough job at selling value.
Jason Covitz
Sure.
Mark Stiving
And so the reason our win rates are low is because we’re not selling value.
Jason Covitz
Correct.
Mark Stiving
And so if we learn to sell value, we get the win rates up without having to lower the price. And so that’s what I struggle with in just using the metric of where’s our win rates?
Jason Covitz
No, that’s fair. I mean, you can’t attack these problems from only one angle. And I completely agree that you’re starting from the right spot. Let’s understand our value. One of the things I actually like to do, and this works really well in B2B conversations with customers, is actually generate a quantifiable value to the customer. So what’s the revenue I’m going to generate? What’s the cost savings I’m going to generate? What’s the better reach that I’m going to get? You can actually quantify those. Again, maybe not to the penny, but to the dollar, to the $10, Mark. Quantify those and add that up. And effectively think of it as a stack bar, again, recovering engineer, right? Stack bar. Then the question is, okay, well if I’m going to generate a thousand dollars of value, how much should I charge you for that? Because the customer, if they buy into that, they should be willing to pay 9.99 for that value, right? So getting that on a piece of paper, it’s one of the things that I find very powerful with customers to say, hey, here’s the quantifiable value. And then you can debate it. Because if they say, well, it’s not worth a thousand dollars to me, it’s only worth 900. You’ve won the conversation. And then to your point, you can coach your sales team with that conversation in mind.
Mark Stiving
Okay. by the way, I agree with you completely. I just love pushing on the edges here.
Jason Covitz
All good, all good.
Mark Stiving
What you just described, I would call inherent value. So what’s the value of solving the problem? What’s the value of buying my product so that you can go solve these problems that you have? But when a buyer is choosing between my product and a competitor’s product, it is no longer about inherent value. It’s about relative value. So what’s the value of my product relative to my competitors? So now we might go back to that feature list where that says, hey, we’re better at this feature and this feature, and now how much money is this feature going to make you? So what’s the incremental revenue or profit we can make you? Because you have this feature and you and our competitors don’t have this feature or capability. So I buy all that. We still came down to, I got to put a number on it. And I really, really, really want to know how much my competitor’s charging. Do you have any guesses on how I can go find that?
Jason Covitz
Well, so, I think the step makes sense, right? Start with the… because you want to start with the product manager, make sure that they’re comfortable with the value. Then you do want to say, hey, what’s my feature as well? What I usually do is you’re going to get that information from a lot of different people, the sales team, right? That’s always a great input for value. But you’ve got to ask those qualifying questions. Is there a bundle here? Are there other pieces, et cetera. And you need more than one piece of data. You can’t just have one, you’d be like, if you’re here, here, here, here, here, okay, fine. You’re comfortable that that might be the right number. I think the other thing is, I am a big fan of conjoint analysis, making sure that you actually plug that into the conversation because that brings the value part into this from a customer trade-off perspective. And then the third thing is a lot of times calling, you can do the shopper mentality of having somebody call a competitor. Again, you don’t want to misrepresent yourself, but you can absolutely get pricing either online through a quote machine or through a phone call. You can often get a quote. And again, you’re trying to triangulate in on what the right number is from a competitor perspective.
Mark Stiving
Yeah. Nice. Back when I was in the semiconductor industry, one of the things I did, which was really fun, was we went to one of the distributors — priceless. And we happened to know what price we sold to the distributor and what price they quoted to the end customer at which volumes, and just making the assumption they’re using the same markup at the same volume. We then went back and deciphered the prices that our competitors were selling to the distributor for each of those individual parts.
Jason Covitz
I love that. So, I was at Texas Instruments in a former life, so I totally get the semiconductor reference. The other thing you can do is you can actually try and lay it across products with that same approach. So as you think about discounts for volume curve. Hey, I’ve seen this volume curve given in other products, well, they’re probably applying a similar volume curve there, or a bundle discount. Same thing. So you’re right, you want, you’re not going to know all the information at a depth level. So you’re trying to take pieces. And that’s honestly what price segmentation does at the end of the day. They’re trying to fill in the gaps in the line, because I have a couple of the dots. So, I love that approach. and honestly, distributors do give a lot of information away. They’re not supposed to in a lot of cases, but I’ve seen a lot of people, you get people on the phone and people talk.
Mark Stiving
Yeah. We used web scraping. I wish they would’ve just given me the Excel file because it would’ve made my job easier. But we had to scrape it all off the web.
Jason Covitz
Yeah, you can do a lot, we used to do backend regression on deals in the IT space. And you would just, you’d have a model like, well, we know this. We know if you’re going as an example of call centers, Hey, I know I’m doing five by 10. Okay, well if I go by five or seven days a week, okay, or 10, 10 hours seven days a week, that’s going to be higher value. If I go 24 by seven, it’s going to be higher. So I know the relative levels, right, as far as what’s in order. And then I can actually start to say, well, let me see how I can basically re-engineer the model. It becomes a regression test. So for those of you guys that are old like me, and that have done it by hand, it’s doable. computers are way faster now though, so use them.
Mark Stiving
Yeah. And just ask AI, you don’t even have to know anything.
Jason Covitz
Yeah. That’s one of the trends. I mean it’s amazing how much you can learn as a result of just asking questions.
Mark Stiving
Hey, one of the things you just brought up, and I often hear this, so I just want you to give us an example, is, I’m often asked, is conjoint used in B2B? Now, I know it’s used a ton in B2C, but how would you differentiate or do you, in using conjoint in B2B versus B2C?
Jason Covitz
We used it in a small B2B. So when A, the question on B2B versus B2C in my mind isn’t really, is it a business you’re selling to, but it’s the amount of transactions? So if you can get, as an example, I’ll use when we were at First Data, we were selling credit card processing to small and medium businesses. So effectively we might have had, I don’t know, 5 million customers. When you have that many customers, the law of numbers takes over and then you can use conjoint against that. You can effectively start to value it. So the key on conjoint in my mind, isn’t the channel B2B versus B2C, it’s the number of transactions that you can segment out. And then you can see the value of each individual component or feature set. Does that difference make sense?
Mark Stiving
Yeah, that makes a lot of sense. And in fact, I would even tie that to something else that I often think about in the world of B2B, we tend to have two different types of prices. One type we’ll call negotiated and the other type will call ToLi or take it or leave it pricing where we set a number and people either buy or they don’t buy. And I would say conjoint works really well with ToLi pricing, but with negotiated pricing, it’s like the salesperson’s job is to figure out what’s the value of our product to that customer? How do we get that price?
Jason Covitz
Yeah. And I think that’s a fair differentiation. I think the other thing we would often do is sometimes we would set initial pricing using a conjoint with some discretion for discounting, as well, because you can, I mean you can like anything else, right? Like you can measure sales discounting and see, hey, who’s doing a good job and who’s doing a bad job? So it’s not a pure conjoint analysis anymore, but it is analytic, right? And it does have a normal distribution usually to it. So, I think you can, again, have fun with Math, but you can use both in combination, I guess.
Mark Stiving
Yep. There’s a lot we can do. In fact, I think the reason some of us get into pricing is because it looks like it’s a number, even though once we get in and we realize it’s not.
Jason Covitz
Well, and you find people, it’s funny, I’ve told this to a lot of people, but I’ve had people that were history majors working for me. I’ve had psychology majors working for me, because it’s not just a left brain right brain thing, right? It’s, you’ve got to be thinking about the creative side, it’s kind of the old art science conversation that you hear a lot, but it really is true because you’re trying to apply principles mathematically. But why they work and what you’re actually seeing, what the insights are often aren’t just a pure math answer, right? You really want to understand what’s driving your segmentation, why do customers behave this way? And that often takes the other side of the brain, I guess.
Mark Stiving
Yep. Yeah, exactly. Jason, we’re going to have to start wrapping this up, but here’s your final question. What is one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?
Jason Covitz
I think number one is keep digging. Get your teams comfortable with learning. The analogy I use is you’re in a really dark room. No one’s been in there for a couple of years and you got a flashlight, start poking around, let’s see what’s in each corner. Get the light, let’s flash it, and then start to prioritize them. I call it ruthlessly prioritizing. And my team gets sick of me saying that, but hey, if this is worth a hundred thousand dollars and this is worth a million, go get the million first. Right? And you’ll get a really good sense of where that is because that really starts to build on itself. So be inquisitive, poke around, turn on the lights, and hopefully you find large, large piles of money.
Mark Stiving
Nice. Jason, thank you very much for your time today. If anybody wants to contact you, how can they do that?
Jason Covitz
Email’s the best. It’s jascovitz all one word @gmail.com. I’m always willing to get on the phone. I’ve been laughing lately. I’ve just been trying to catch up with my network and it’s amazing what conversations you can get into. So if you want to just have a brainstorming session or just talk about what challenges you’re going, hey, if I can help you avoid a pothole, I’m more than willing to do so.
Mark Stiving
Excellent. Thank you. And to our listeners, thank you for your time as well. If you enjoyed this, would you please leave us a rating and a review? And if you have any questions or comments about the podcast or pricing, feel free to email me, [email protected]. Now, go make an impact!
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