David Brown is the author of “Banned Business Books, Volume 1, Pricing,” a fictional account that narrates how a marketer and a pricing guru stand up and optimize the pricing function in a company.
In this episode, David shares what his book ‘Banned Business Books’ is all about highlighting the “Nine Boxes” framework for organizing and executing pricing strategies effectively. He emphasizes the critical role of a Pricing Council in bringing order and clarity to pricing decisions within a company. Additionally, he highlights the value of understanding customers deeply and segmenting them to optimize pricing and business outcomes.
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Why you have to check out today’s podcast:
- Deep dive into the nine boxes framework, a comprehensive tool for organizing and executing pricing strategies.
- Learn the critical importance of understanding your customers as the foundation for effective pricing.
- Discover how to set up a pricing council and navigate the challenges of pricing in different organizations.
“Don’t start thinking that you’re going to figure out pricing by looking at margins; start with the customers.”
– David Brown
Topics Covered:
01:34 – Sharing his pricing journey
03:31 – Discussing the role of finance professionals in relation to pricing and how their focus is on defending and improving margins
06:22 – What made him title his book as Banned Business Books
08:51 – Addressing a critique from Mark about the applicability of his book’s content
10:26 – Elaborating on the origin and development of his “nine boxes” framework for pricing
14:09 – Discussing how different aspects of pricing, such as packaging and portfolio optimization fit within his “nine boxes” framework
16:02 – How he continues to use the “nine boxes” as a way to organize and prioritize pricing projects, especially when collaborating with a pricing council
18:07 – Sharing his insights on establishing and maintaining an effective pricing council
20:08 – Agreeing that pricing is a critical function and is often a new and somewhat undefined role
21:04 – Proposing the idea of a pricing council to a CEO
23:08 – David’s best pricing advice
25:29 – What the Volume 2 of his book series will focus on
Key Takeaways:
“Price setting is critical; that’s where you have the opportunity to start claiming the value that you deserve for your innovations.” – David Brown
“The main thing that the Pricing Council has to have is energy and a purpose; the ones that do the best have a clear mandate, meaning that the decisions that the council takes on price are carried out and are effective across the company.” – David Brown
“You want to speak with the leaders and the potential figures that are going to be in the pricing council first and understand what makes the company tick and what needs to be fixed before you start fixing things.” – David Brown
People/Resources Mentioned:
- Unilever: https://www.unilever.com.ph
- Mosaic: https://www.mosaic.com/sustainability
- American Express: https://www.americanexpress.com
- Netflix: https://www.netflix.com/ph-en/
- Blackberry: https://www.blackberry.com/us/en
Connect with David Brown:
- LinkedIn: https://www.linkedin.com/in/dbrown14/
- Website: www.bannedbusinessbooks.com
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.)
David Brown
Don’t start thinking that you’re going to figure out pricing by looking at margins; start with the customers.
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Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the intrinsic relationship between them. I’m Mark Stiving, and our guest today is David Brown. Here are three things you want to know about David before we start. He is the author of the brand new book Banned Business Books, Volume 1, Pricing. He’s the director of pricing at a major industrial HVAC company, and he has broad experience in pricing at Carrier and Amex Business Travel and Mosaic and Blackberry, everywhere. Welcome, David.
David Brown
Thank you, Mark. It’s a pleasure to be here.
Mark Stiving
Hey, I want to talk to you about your book. I read it, I loved it. But before we do that, how’d you get into pricing?
David Brown
So, I found my way into pricing through the door of finance, and it was a journey that made sense once I got there, but I didn’t know that I was heading that direction when I was on the way to it, if that makes sense. So I got a master’s degree in marketing shortly after that, moved to Spain and really I had a tough time getting a job in an entry level marketing role. I think the culture and the language might have not been in my favor, but I did get a role in finance where numbers make sense and numbers do not square up at the end of the month. So I started to work through these financial roles and ultimately when I got close to the pricing equation, when I got close to working with salespeople that’s when it started to really click for me.
I was working at Unilever at the time as a business partner for their key account managers. And it was fascinating. I really loved the negotiations, the setting of the prices. And I think ever since then I was really on the path towards pricing. But it didn’t happen until I was at Blackberry. And at Blackberry I was working in finance and a job for the director of EA pricing came up and I was lucky enough to get it. And ever since I’ve been working in pricing roles, like you mentioned, for Blackberry, for American Express, for a company called Mosaic, which is in the advertising field Carrier, so forth and so on. And that’s how I got into it. So I think that it’s not for some of us that have been around for a while, it’s not exactly the first step. I think a lot of people kind of got into it secondhand, but for people that are coming out of university now, it’s a great option. And a lot of people are starting to choose to go straight into pricing, which I think is also…
Mark Stiving
I think it’s pretty rare that people actually choose to go to pricing. No one grows up saying, hey, I want to be a pricing person.
David Brown
No.
Mark Stiving
So I’m curious about your background in finance for just a second. In my mind, naive as it is, I imagine finance people focusing on cost-plus pricing a lot. Is that a true statement or not?
David Brown
I think finance people fight for margins more than almost anything else. And they think because they have the visibility and they’re the first to see the margins at the end of the month after all the trading is done, that it’s their job to go after and to defend them and to fight for better margins. So I don’t know if that directly translates into cost-plus pricing or not, because pricing is not always done or not effectively done by finance people, typically speaking. It’s usually somebody from product management or from marketing. But finance people have a real grip on defending the profitability of the company. And I think that they see that as their territory first and foremost. That doesn’t make them oblivious to value. I think that it simply provides them a place where they feel comfortable and I think where they tend to come from that it’s pretty much indicative of the profession.
Mark Stiving
And that it’s actually a really interesting thought. I could see how they care a ton about margin, right? I mean, they’re reporting it to the street or they’re reporting it to somebody. Margin matters a lot. And so they want to push for higher margin because we get higher valuations, we get higher margins. There’s no doubt about that. And I think my experience is that they don’t know how to do that, right? They don’t know where inside the company to go to push to get higher margins.
David Brown
So, I think that a lot of times financial professionals struggle getting their arms around the right data, first of all. And that happens in a lot of companies. So that’s the first thing, is making sure the data squares up and is correct. In my experience, I remember spending a lot of time chasing down and trying to understand the data and that didn’t leave a lot of time to really think through what the right decisions are and what the right next steps are in terms of which way you should go to create more value. So that’s always a challenge. I think that’s unfortunate, but it’s something that the financial profession needs to look at to make sure that they’re not getting bogged down with analysis, getting paralyzed by not having the right data. But I think that financial folks know where to go to create value, too. I think there’s obviously some that are very good at it, and there’s much to be said for those that do it well.
Mark Stiving
Nice. Very nice. Let’s jump into talking about your book, if we may.
David Brown
Sure.
Mark Stiving
First off, it’s called Banned Business Books. Let me just tell the listeners I get quite a few books, pricing books sent to me, and I rarely read them cover to cover. I actually read this entire book. It was really good. And I think it was so good because it’s written as a story. It’s not written as a bunch of pricing knowledge. and by the way, I love pricing knowledge. I love all this, but I thought the story format was really interesting. So let’s start really quickly with the title. Why did you call it Banned Business Books and what’s the title have to do with the story?
David Brown
In reality, Mark, the title doesn’t have much to do with the story per se. The title came to me when I was in the middle of writing it. So at some point, the idea simply came to me that it needed to be called Banned Business Books and Volume 1, I’m thinking about doing other volumes in the future. I wanted to create something for, first of all, thank you. I’m glad you enjoyed reading it, but I wanted to create something for business folks that they could really enjoy reading. Something that’s a pleasure to read. Something that they felt fed their intellectual curiosity as well as taught them something. So it’s really an educational book. And I didn’t really have it clear where I was going to go when I started, but as I started, I knew I wanted to describe the process of somebody taking the fundamental pieces of pricing and putting them together in a logical way.
Because in my experience, when I read nonfiction books about pricing, it’s hit or miss. I always pick up a couple good nuggets in any book that I read, but I don’t enjoy it cover to cover, and I don’t feel like I’ve been told the story of how I need to go implement it as a pricing leader. So, it was really important to me throughout the writing of the story to make sure that it gelled, that it made sense to the person who’s reading it, that they can immediately take it and take some ideas and start to put them to use. So to answer your question, in a very roundabout way, the title doesn’t have much to do with the story. It’s a fictional story about a pricing guru that comes in and starts to help a company with its pricing problems. It,not a political story. I’ve got no political stake in the title itself except for the fact that it sounds like something that I would want to read, and that’s what I want to share with the reader.
Mark Stiving
It’s a sexy title, so let’s put it on there. That’s pretty good. So I like the description that you gave. Let me tell you the only thing I didn’t like about the book, if that’s fair. And it has a lot to do with what you just said, right? So you’ll read a business book and you grab a couple nuggets out of it. And so when I read this, it was fun to read. I mean, it was actually well done, so I enjoyed reading the book, but as I got done, I said, well, this applies to that specific industry or this specific situation, right? It doesn’t apply to all of the situations I deal with, which obviously I didn’t expect it to, but it’s the exact same thing that says, hey, you should be able to grab a couple nuggets out of here, but you’re not going to go apply everything we just talked about.
David Brown
Sure. Well, so first of all, pricing is like that. Pricing is, you get more down in your career, or you get more and more specialized, or you find things that you like in pricing. You look around and you realize that your pricing situation is very specific, and it might not have anything to do with somebody who’s doing software pricing over here or somebody who’s doing a new website over here or somebody who’s building widgets. So there’s almost nothing to do sometimes with the very specific narrow view. And I struggle with that as I wrote it. But I also provided a framework, which is the nine boxes, which I think applies to any pricing situation. So the nine boxes are governance, price setting, and price defending. And each one of those pillars has various panels that you use, various processes that you build up on. And so that does apply across, I think, the entire pricing spectrum that you can take that thinking you can, and you can take the different things that you have to do in pricing and fit them into those boxes. And once you’ve got that sorted out, then you can start to create a path forward and turn it into your pricing practice and start to improve. And that’s really what it’s all about.
Mark Stiving
Okay. I was going to say the exact same thing. I love the nine boxes, and I thought the nine boxes were a really nice framework for people to take a look at and say, hey, this is a way to say, are we covering all these pieces? People often ask, what is pricing? And pricing is this huge, huge thing. And when you start with the nine boxes, you’re actually getting your arms around most of what pricing really is which is really nice. So where did you come up with your nine boxes?
David Brown
It was a process that occurred when I was working in an advertising firm in Chicago called Mosaic. And Mosaic at the time was, I think, very ahead of the times. It was looking for somebody to come in and lead pricing for the organization and being in professional services. There were not too many opportunities at the time to go in and work as a pricing leader for a law firm, say, accounting firm or an advertising agency which is a service company, which is traditionally based on the hourly function. And so, so Mosaic needed a way to explain the path that we were going to go down. And it really came to me just by playing around with a PowerPoint one day. But I saw it clearly the same way that I see it today, which is, you need to do some of the basics, which is the governance.
And a lot of that starts with your pricing council, but it also has to do with your IT systems that you have to support and has to do with your incentives. And then you work your way down and you start thinking, well, once I’ve got this governing structure, this group of people that talks about pricing going, what do I do next? I need to set prices. Well, that’s the three Cs of pricing, which shouldn’t be doing the most pricers. It starts with your customers and it goes through your competition and looks at your costs in that order. And so there’s that, which is you can either do price setting for old products, which I call optimization, or you can do it for your new products, your NPIs, which is typically like an NPI pricing new to the world pricing scenario.
And then the final and perhaps most important pillar is that of price defending. And that’s once you’ve set your price, what do you do with it? You don’t just put it out there in the street. You have to go out there and you have to defend it. And I’ve heard the term price getting, as well, which I think that it’s not quite so simple as getting a price. There’s more to it than that. It’s actually going out and defending the value that you think that your company’s products or services are bringing to the market. And so that’s critically important and there’s a whole series of thoughts around how do you defend a price, whether it’s value-based selling, whether it’s looking at your wins and losses or doing training with your sellers and your organization as a whole.
And so once you start to pull those items together, then you’ve got a comprehensive practice. And by the way, I call it a practice in the book rather than a strategy. I don’t like to go with the term strategy because it’s too easy of a word and people think that it means more than it does, but practice means that you’re getting better. And lawyers practice doctors practice. Why can’t business people practice with their pricing and get better at it? So you’re always trying to improve and get from good to better to best with those skills.
Mark Stiving
Nice. I often talk about value-based pricing. I define value-based pricing as charging what a customer is willing to pay, but I often talk about it as though it’s a goal. Because you can never be perfect, right? And so using the word practice is a great word for that. This is a practice. I agree. So, I love the nine boxes. I thought they were really good. It was a nice way to think about the three different pieces. And I have to say, in all honesty, the one that I hate is governance just because I don’t like dealing with it. That’s where all the politics are, and you have to get all these people in the company to decide, hey, we’re going to go do something different. And oh, ugh, it’s such a pain that the price setting feels it’s like what we’re supposed to be doing is pricing, but it feels really small, right? It’s not as big where price defending feels to me like that’s where all the magic is. And what we do as pricing people and what we do as companies. How do we actually go get the prices that we think we should get right in the marketplace?
David Brown
Well, you’re right about the price setting. A lot of times in companies pricing is an afterthought. You see these multimillion dollar developments coming through and there’s this little box on one of the charts that says ASP average sales price. And what went into that average sales price? Because the whole business case functions as from there and the volume that you perceive that you’re going to get. And when you start to prod around and ask questions, you find out that there was not a whole lot of science or thought or critical thinking that went into it. And so price setting is critical; that’s where you have the opportunity to start claiming the value that you deserve for your innovations.
Mark Stiving
Yeah, absolutely. So, there’s something that seems to be missing in my view. Let me ask you where you would put it and how it fits. And I work a lot with software companies and one of the things that we do a ton is package features into different products or create a portfolio of products. And I don’t see packaging up here at all, or I don’t see portfolio optimization. What do you think about that? And I could imagine that as hardware companies, it’s much harder to do that.
David Brown
Sure. That would fit squarely into the price setting, for sure. Admittedly the case that we walked through in Banned Business Books is a little bit more simple and that’s on purpose, but packaging for sure is price setting. That’s where you go through the process and you start to look at your overall competitive environment, your customers, your customer segments, and you bring that down into the different features that the customer will derive value from. And so that’s the process for some of those software applications that you’re referring to. I think it fits there.
Mark Stiving
Yeah. So, if it’s okay, can we talk about your pricing world nowadays? Do you use the nine boxes, do you think through the nine boxes when you do pricing?
David Brown
It’s a way of organizing all the thoughts? I think so. So, yes. And it’s something that I’ve carried with me from one company to the next. And I think that it’s a way to get people organized around the thought process, the different projects that are going to come up. And it’s a good way to really get your projects all in one piece of paper with headings. So you can start out with an Excel sheet and put the different boxes down there, and then you work with the pricing counselor to decide what are the most important projects that you want to execute in the short term. And you start to work through those, and then you have your more aspirational goals in the long term, and you work towards those. So, the answer to your question, yes.
Mark Stiving
Yeah. And so I could see you as a director of pricing using these nine boxes. What about the people who work for you? Or what about the pricing analysts or people who are coming up in pricing? Are they using the nine boxes? Because it feels to me like they’re not running a pricing council, right? They’re not trying to convince sales to change incentive plans.
David Brown
Sure. I think that overall it depends, is the answer to that question, Mark. It depends.
Mark Stiving
Is that the answer to all questions?
David Brown
Yes, because I’ve been in situations where I was the only pricing person in the company. So in that sense it was totally embraced by the nine boxes, and I’ve been in situations where there’s many more pricers. So I think it makes sense that everybody understands what it’s all about and how it’s used. And it’s also beyond the pricing department as well. So, people outside of pricing form the pricing council that’s critical is that you have folks that are communicating about price at a high level. And so perhaps the price, the nine boxes in and of itself is more of a high level sort of executive tool to get the practice started. But it doesn’t make sense that people would not be aware of it or make use of it.
Mark Stiving
Well, sure it makes sense that they’re aware of it. Absolutely. So, Let’s talk about pricing councils. I’ve seen many of these works. What do you advise for a pricing council? And, well, what do you advise?
David Brown
So the main thing that the Pricing Council has to have is energy and a purpose for sure. And I’ve started several of them for different companies, and I’ve seen some of them do better than others, to be honest. The ones that do the best have a clear mandate, meaning that the decisions that the council takes on price are carried out and are effective across the company. So that fulfills the purpose of the Pricing Council. That it does its own pricing. It does effectively influence the company and that has a lot to do with the company’s profitability. So people that are part of the Pricing Council have a vested interest in making sure it does well. So that’s the purpose. The energy part is a little bit tougher because people, when they’re not used to these concepts of a pricing council.
Why do I keep on showing up every month or every other week or however long, often do you want to do this. That really depends on, I think the pricing leader, that’s his or her job to make sure that they’re always bringing relevant projects to the table and always making sure that there’s good communication happening and a good flow of information. If pricing doesn’t doesn’t start because the pricing council arrived and it doesn’t stop because the pricing council disbands, if that were to happen, it’s always going on. So I think if you’re smart about it, you can keep the energy going, you can keep the purpose going, but you don’t want to start a pricing council sort of from the bottom up. You definitely want to start from the top down. You want to make sure that you’ve got CEO executive buy-in before you start to layer in processes like these. Because if people get the sense that it’s not relevant, not purposeful, then it’ll start to wither.
Mark Stiving
Well, it seems to me that everybody in the company cares about pricing, but nobody actually owns pricing. And so without a pricing council, you have this massive confusion, and if you have a pricing council, it can at least bring order communications input from different departments into these major pricing decisions. So pricing councils make a ton of sense.
David Brown
Right. I definitely agree. I think that pricing is often a new function. It’s a new idea of pricing departments, new pricing managers and directors that come into companies often come in with a different set of expectations, and perhaps an accountant does, or somebody that works in HR. they typically have a number or an expectation that they have to reach in terms of bringing value to the table. And they do this through optimization, through price setting, through different tactics. And that makes the job quite difficult. It makes it quite challenging to think that in reality this job wouldn’t exist if I weren’t able to bring past a certain point of ROI and, and so it is a real challenge for those that come in and start up a pricing department.
Mark Stiving
Yeah. So you said you’ve started up a few of these, you go talk to the CEO. How do you get the CEO to say, yeah, let’s start a pricing council?
David Brown
I think that it’s just a matter of sharing with the CEO the nine boxes and telling them what the pricing council’s going to do. I think that you can bring some examples of the past price increases that have happened in the company and the challenges that those pricing increases have brought. I think that you can give examples of the type of work that the pricing council’s going to do. Typically what I’ve done is to show a couple projects that will bring to the table a certain return on investment for carrying out that project. So there’s lots of different ways to convince somebody that a pricing council’s a good idea. But it’s just a matter of getting your bearings around you. I think that probably you want to make sure that you’ve got a good idea of where the challenges are in pricing before you go have that conversation with the CEO, you want to make sure that you’ve got a really good idea of what the pain points are. And so typically, you want to speak with the leaders and the potential figures that are going to be in the pricing council first. And so you really understand what makes the company tick and what needs to be fixed before you start fixing things.
Mark Stiving
And who all has an input or an idea. one of the things one of my mentors taught me once, which I thought was phenomenal, is, whenever you start a new role, or even if you’re just going to up level your own role today, go have interviews with everybody, right? Go talk to them about what their problems are, what suggestions they would have in pricing and just start gathering as much information as you can. And then when it’s time to go back and say, hey, we’d like to go try this, talk about how that helps them achieve their goals, whatever their goals happen to be. and they know you listened. And I mean, it’s just so much more powerful when we can do that.
David Brown
Right. A hundred percent agree with that, Mark.
Mark Stiving
So, David, this has just been a ton of fun, but we’re going to have to start wrapping this up. Let me ask you the final question. What is one piece of pricing advice you could give our listeners that you think could have a big impact on their business?
David Brown
That’s a good question. I think there’s lots of it. Ultimately, probably, the most powerful thing you can do is understand your customers well. And there’s lots of different ways to go about that. The word segmentation comes to mind. So what’s a segmentation? And I talk about segmentation in the book and using quite a novel concept, which is talent versus process. So really, and how do you understand talent versus process? Well, the protagonist of the book goes out and starts talking to customers. And so through talking to customers, they start to get an idea of what’s really important to them, how the company does versus the competition, what they have to offer that the competition does or doesn’t. And they start to get a really good idea of what their foundational value is in the market. And so that’s just one idea that you can do from a pricing perspective that I think is very, very powerful, which is to go out and to start to really understand customers and start to understand how you can group them into different groups that derive different value from your products.
And so once you’ve done that, then you can start doing some of the more foundational pricing techniques, which is, do I charge this customer more or less because of the value they derive from my product? And so I’d say, without a doubt don’t start thinking that you’re going to figure out pricing by looking at margins; start with the customers and that’ll help you get out of the confusion and start to put a lot of sense behind where the business is going. And I think that that’s something that anybody can do in a business and anybody should do. but from a pricing perspective, it’s really, really powerful when you’re able to provide folks inside the business with that perspective. And so I’d say without a doubt, the best thing you can do from a pricing perspective is to get to know your customers.
Mark Stiving
Can I just say I a hundred percent agree with you? I think that not enough people understand their customers, why they buy, what they care about, what they value. And so the more we do that, the much better we’re going to be at pricing and helping the company everywhere. So David, thank you so much for your time today. If anybody wants to contact you, how can they do that?
David Brown
Sure, you can go to www.bannedbusinessbooks.com, that’s the website for the book, and there’s a form on there. You can shoot me an email and I’ll be happy to respond to you.
Mark Stiving
Excellent. David, I forgot to ask you one question. What is volume two going to be?
David Brown
Volume two will most definitely be marketing. I don’t want to let anybody know what happens at the end of the book before time, but definitely there’s a need to go do some marketing work at Netflix. So that will be where the focus is and certainly be a challenge to write to. I’m looking forward to doing that.
Mark Stiving
Alright, thanks. To our listeners, thank you for your time. If you enjoyed this, would you please leave us a rating and a review? Geoffrey Radcliffe had left a really nice review on LinkedIn for me. He said:
‘Mark’s philosophies on raising prices and the data to support the actions is some of the most comprehensive, well thought out and actually easy to comprehend I’ve ever seen. I highly recommend booking a consultation or even a presentation to your team from Mark. I learned so much and I’m a lifelong believer in getting the best price for the value of my products & services. Thank you, Mark.’
And I would’ve to say thank you Geoffrey. And finally, if you have any questions or comments about the podcast or pricing in general, feel free to email me, [email protected]. Now, go make an impact!
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