Claire Wang helps startup founders and solopreneurs pick a pricing model that ensures their long-term success.
In this episode, Claire shares her journey of transitioning into her own consulting practice after her corporate job. She talks on the misconceptions about pricing, how people mistakenly equate pricing with just setting a price point when it’s all about understanding customer value. She emphasizes the importance of integrating pricing early on in product development, not as an afterthought. She also highlights the need for pricing professionals to be more visible and vocal about the value they bring, as many people don’t understand the full scope of their work.
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Why you have to check out today’s podcast:
- Discover the common misconception that pricing is just about setting a number and uncover how it is deeply intertwined with customer value and business strategy.
- Gain insights on what’s missing in the pricing industry and how professionals can elevate the value of their role.
- Learn how pricing should be integrated into product design and customer understanding aligning business goals with customer satisfaction.
“Understand your customers, understand their needs. And once you do that, then you’ll have a better understanding about their willingness to pay.”
– Claire Wang
Topics Covered:
01:34 – How she found herself in pricing
02:12 – Pricing as it relates to actuary
03:57 – Explaining the cost-plus pricing in the world of insurance
06:57 – Discussing about price sensitivity and willingness to pay with regard to insurance
08:09 – Reason behind starting her consulting firm
10:02 – The misconception about pricing and what it truly is
14:46 – How success of pricing strategies often depends on how integrated pricing is within a company’s overall operations
16:49 – Pricing being more than just setting a number
18:20 – Claire making her point that pricing should not be viewed as a zero-sum game
23:45 – Sharing her thoughts on building visibility for pricing professionals to raise awareness about the pricing profession
25:56 – Gauging perceived value of pricing professionals based on their visibility and content
27:34 – Claire’s best pricing advice
Key Takeaways:
“Most people have no clue what pricing really is. They equate pricing with setting a price point, which is completely untrue.” – Claire Wang
“Pricing, fundamentally, is all about value.” – Claire Wang
“Pricing has got nothing to do with the price point. You really need to go through the whole funnel. And once you’ve done that, then the price point is just a byproduct.” – Claire Wang
People/Resources Mentioned:
- Allstate Insurance: https://www.allstate.com
- Telstra: https://www.telstra.com.au
Connect with Claire Wang:
- LinkedIn: https://www.linkedin.com/in/claire-wang/
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.)
Claire Wang
Start with understanding your customers, understanding their needs. And once you do that, then you’ll have a better understanding about their willingness to pay. And then the price point will just be a byproduct of this process.
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Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the intricate relationship between them. I’m Mark Stiving and our guest today is Claire Wang. Here are three things you want to know about Claire before we start. She just started her own consulting business about six months ago, but she’s been in pricing since 2008. And her last real job, she was a VP of pricing at HSBC. Welcome, Claire.
Claire Wang
Hello, Mark. Nice to be here.
Mark Stiving
It’s good to have you. How’d you get into pricing?
Claire Wang
How do I get into pricing? It’s actually quite boring. So I started my career as an actuary and back in the days as an actuary, there are really just two paths. You either do pricing or you do valuation. So I remember the first day when I started with the insurance company, my boss just went, alright, Claire, you are our pricing expert. And that’s it. That’s how I started.
Mark Stiving
Okay. You’ve got to help me with this. Why is it that an actuary does pricing? By the way, I’ve been doing this for a very long time and I’ve never heard somebody say, actuaries go into pricing. So tell me why this makes sense?
Claire Wang
Okay. So I guess the special thing about insurance products is that we’re essentially calculating risk, right? And when I say pricing, obviously you need to understand the risk. So someone needs to be there doing all those mathematical calculations to estimate the risk involved before we can sell a policy. So using something that people will be more familiar with will be cost-based pricing. It’s very difficult to estimate the cost involved for an insurance policy. For example, when I started, the insurance product I was looking after was called CTP green slip. So in Australia this is basically the insurance policies that cover the car driver. If you hit someone, it covers the medical expenses of the person you hit. So imagine a lot of things can happen if you hit someone, that person can have a whiplash or become paraplegic. All of that comes with very uncertain medical expenses. So the job of an actuary is really to work out and to estimate how much that’s going to cost. And then we just add a profit margin. So I guess the early part of my career, it’s all about calculating how much it’s going to cost insurance companies to provide certain insurance policies.
Mark Stiving
Okay, so you said pricing and by the way, I find that fascinating. We know that if we’re building a product, we actually know what it costs us. If we’re in the world of insurance, we still have a cost. It just happens to be an expected value or an expected cost, right? So we’re going to use statistics to do that. And so I just heard you say, the beginning of your pricing career was all about cost-plus pricing.
Claire Wang
I’m oversimplifying that, but just to give you a more concrete example, once we know.. Actually let me take a step back. Let me actually take you through exactly what I did as a pricing actuary. So it’s really just lots of statistical modeling. So back in the days we call that regression analysis. In today’s world, we would call that machine learning, but it’s essentially the same thing. We basically just try to calculate what sort of people are more likely to incur a claim. And then as an insurance company, we’re going to try to avoid those types of people. And the reason being CTP again, as an example, it’s highly regulated because it’s compulsory. If you’re a driver, you need to get that. So the government sets rules around what’s the ceiling that you can charge just to make sure affordability for everyone. So obviously to improve your profitability, the only way to do that is to manage your cost. And the way to manage your cost is to send what we call bad risk to your competitors. So if we have someone, let’s say a 21-year-old young guy driving a red Porsche, we know for sure that person is more likely to get in a car accident, right? So we don’t want that type of customer. And what we do is we’ll intentionally price a little bit higher hoping this customers will look at our price and decide to go to our competitors.
Mark Stiving
Okay. So that makes a lot of sense. But you could still say it was cost-plus pricing, right? I was looking at the cost and I wanted to price. So did you ever and this is what’s fascinating to me in the insurance world, when I buy insurance, I have no idea what your costs are. And so I just say, am I willing to pay this price or not? Did you ever do price segmentation based on willingness to pay as in which customers are willing to pay us more?
Claire Wang
Not so much, because to be honest, no one is willing to pay for an insurance policy. So I think it’s going to be quite a tricky conversation to be had.
Mark Stiving
So let me disagree with you if I may. When I say willingness to pay, I never mean want to pay. Nobody wants to pay more.
Claire Wang
Like an acceptable price range. That’s what you meant.
Mark Stiving
Yeah. So, I could argue that I actually don’t even know what insurance company I use. Sorry, but let’s pretend I use Allstate Insurance, right, for my automobiles. I don’t know if progressive is cheaper or not. I just paid my Allstate bill. And so I’m willing to pay whatever Allstate charges me. When Allstate raises my price, I just write them another check. That’s a bigger check. And I don’t go shopping because I don’t want to waste the time and the energy to go do all that. So that has to do with willingness to pay. Right? And so I would be thinking that even in the insurance company, different people search differently. Different people value Allstate, the name Allstate versus Progressive. So there’s this willingness to pay that we want to be thinking about as we price our products.
Claire Wang
There is a little bit of a component of that. So I think the benchmark will be, one, most people are very lazy when it comes to insurance policy. So unless your insurance companies do something really bad and you’re like, okay, I’m quitting, and you start shopping around, most people will just be happy to pay the yearly premium without really looking around so much. So the trick is sort of like winning in that business is you really want to get customers in their first year. So taking car insurance, for example, some insurance companies will pair up with car dealerships. So your first year you will always be buying insurance from a particular provider. And then it’s like set and forget like auto debit from your bank account, you don’t really think about it. Yeah. And that’s kind of how it works. So I suppose the willingness to pay it becomes more apparent when customers are already considering switching. But if that never enters their mind, then I guess they will just stay there.
Mark Stiving
Yeah. Absolutely. Okay. So let me ask, why’d you go out on your own? Why’d you decide to start a consulting firm?
Claire Wang
Well, my job was made redundant early this year, so I think that was the big driver. And, I’m still kind of exploring, to be completely honest with you. Initially I saw, okay, starting doing my own thing, be a freelancing consultant is the smart way to go. But then at the same time, I also want to take time to really consider if this is what I want to do for the second half of my career. I’m 41 this year. Hopefully I will still have a lot of years to go. So, I really want to craft something that I love doing. Even if I win a lottery, I’ll be continuing doing exactly the same thing. So, yeah, I guess I’m sort of like, right now I’m just trying to help people to hear about their pricing problems and then really trying to craft out what will be something that will keep me going for the next 20 years.
Mark Stiving
Understood completely. I live in that world as I retired several years ago, but I just can’t leave it because I love what I do.
Claire Wang
Yeah, exactly. I guess that’s our aspiration, right? We all want to work a job that even if we don’t need the money we still want to do every day.
Mark Stiving
Yeah. But, as a really good pricing person, I’m going to tell you more money is better than less money. Just always.
Claire Wang
Yeah. There’s a problem that comes with having money and there’s a problem that comes with having no money. But I think the problem with having too much money is easier to solve than problems with…
Mark Stiving
Those are the problems I want to deal with.
Claire Wang
Yeah, exactly.
Mark Stiving
Okay. So let’s talk about the pricing profession because you think that we should be talking more about ourselves and I got to say, I think most pricing people… What do you think is missing in the pricing industry or pricing world?
Claire Wang
Okay, so I’ve been working in this field for like almost 20 years, right? I started like, probably, yeah, 21. and I’ve always been working in the pricing teams or sort of in a pricing environment. So everyone I talk to, they all know a lot about pricing. And this year when I started doing my own thing, I started talking to a wide range of people. And that’s when it hit me that actually most people have no clue what pricing really is. They equate pricing with setting a price point, which you and I know is completely untrue. But when people hear that I do pricing, the first question they ask me is often, ‘Hey Claire, I have this product, what price should I charge?’ Which is completely the wrong question. So to me, I suppose that’s really just like, hit me. I was like, ‘Wow, we really need to educate people a bit more about what we do because we bring so much value to the business.’ But unless people have this awareness about what we can bring, they don’t really see our value. And this is something that I’m really trying, if you like, like creating a movement, trying to get people to be more focused about what we do. And pricing, at least like most people I have ever dealt with, I guess by nature we are quite mathematical minded. We don’t like to talk about ourselves, we’re introverts. But I think that needs to change. We really need to voice up to tell people more about what we do.
Mark Stiving
Okay? So first off, I’ll get in line behind you to help with this, but I have to tell you that I think I do this all the time. And I have no idea how to be successful at it.
Claire Wang
Well, we can bring some ideas together.
Mark Stiving
One of the problems… I’m totally with you, that when you say the word pricing, people think it’s, ‘Oh, I got to put a number on a product.’ And it’s so much bigger than that in so many ways.
Claire Wang
Exactly.
Mark Stiving
But once you go inside a company and you start talking about… By the way, if we were going to define pricing, it would be: charge what a customer’s willing to pay. So therefore, how do we figure out how much a customer’s willing to pay? And we start looking at what’s the context that they’re buying under? How much do they know about our product? What’s the value we’re delivering? Right? There’s so much to know and do. But once we start saying, ‘Oh, let’s talk about how much they know about our product?’ Well now you’re talking about sales training. Or now you’re talking about marketing. And that’s not pricing is it?
Claire Wang
Exactly. But me being a pricing person, I can be biased. Right? To me, pricing is everything. Because the reality is we are like the bridge connecting all these different departments. We sit close with finance because we need to look after profitability, we sit close with product because we need to know all the features, have monetization value, we sit close with sales because we need to make sure the pricing communication is put out there correctly. And we sit with data analytics because we want to see how things are performing. So in a way I see pricing as the, what’s the right word? We’re sitting in the command center, if I may say that. Right. We’re really looking after all the departments trying to balance out the needs of each of those departments and then find a solution that ticks for everyone. And that’s how I see pricing, which is why it’s common that people think that a sales job that’s like a marketing job, whatever. But at the end of the day, someone needs to link them all together to make sure it’s delivered to customers in a nice way.
Mark Stiving
Yeah. So by the way, I agree with you a hundred, maybe 110%, right? I mean that was perfect. But here’s the issue that I often see or, let me offer a different way to think about it for a second. As pricing, we think about putting a number on a product. And how big of a number could we possibly get away with? Now we start thinking about, well, if we didn’t get this big number that we should have gotten, what kept us from getting that And it could have been the product wasn’t right, it could have been the sales wasn’t right. It could have been that the marketing wasn’t right. And so we have this unique perspective that says we’re focused on how the customers value our products. Everybody else in the company should be focused on that, but they’re not. And it’s like, we’re measuring it. How well did we do? Now, let’s go back into the company and figure out how we get that better?
Claire Wang
So I think this comes down to why I think it’s really important to elevate the awareness of pricing. Because in my experience, unless that comes from top down from the CEO level saying that pricing is important, it should be at the center of everything we do, then people will start paying attention. And then they want to understand the customers more because we are building a product for the customers. Unless the customer thinks something has monetization value, they will not pay for it. Right? But if product is driving the conversation, then what you often end up with is something that’s already been built and then you are responsible for putting a price tag on top of it. It’s a bit unfair because if there’s something that you just know customers don’t value, then how are you going to convince your customers to pay for it? So I think there’s this dilemma, like to me, pricing and product design needs to happen at the same time. Pricing can even happen way before the whole product, like ideation. I don’t know why people are not thinking about it this way. And again, this is why I feel like we as pricing professionals really should put out ourselves out there so that people wouldn’t really see the value about what we can deliver.
Mark Stiving
I think it’s almost always language that gets in our way. Almost always. And the word pricing as we’ve already discussed to so many people means, ‘Oh, we have to put a number on it.’ Or you’re the person who puts a number on it. It isn’t, ‘Oh, you’re the person who does product design’, by the way, we don’t, but we can at least figure out if there’s value in the product before we go build the product. But the word value is so confusing to so many people. It is tough to sa’y, ‘Hey, we focus on value.’ Right? And so is that corporate values, is that economic value? Is that emotional value? What’s the value? Right? Yeah. And how do we do that?
Claire Wang
Yeah. I mean, pricing fundamentally is all about value, but I agree with you. It’s quite difficult just to say, ‘Hey, I’m a value expert.’ Then that probably brings in more questions, what is a value expert? What do you really do? I think, well, I don’t have a solution, but I guess one way is we just have to keep repeating. Pricing is not always about the number. Pricing has got nothing to do with the price point. And in fact, I’m actually planning to write a book and the title will be pricing without numbers. Because I’m just so sick of hearing people asking me, what price should I charge? And I’m like, okay, you really need to go through the whole funnel. And once you’ve done that, then the price point is just a byproduct. It shouldn’t be where you start, it should be where you finish and hat message just needs to be repeatedly being put out there.
Mark Stiving
Yeah. While we were having this conversation, I wrote down a quick phrase. You had said CEOs don’t need to elevate the pricing function. And we’re back to that issue. We have to use the word pricing. But what if we ask CEOs to focus on realized price.
Claire Wang
Can you elaborate your question a bit more?
Mark Stiving
Absolutely. So the words realized price implies what price we were able to get from our customers which implies how well did we do everything? It wasn’t how well we set the price. It’s how well did we design the market, sell the product and price the product?
Claire Wang
Yeah. I think I would probably suggest rather than using the word realized price, right? Let’s just say we focus on the customers. And that’s actually I’ve worked for several organizations across different industries. The one company where I enjoyed the most was with Telstra, which is the largest telco in Australia. And at that time, the CEO really put a lot of emphasis on delivering the best customer experience. So our bonus is tied on to dissatisfaction. So everything is about delivering value to the customers. And because of that, we did a lot of really cool things like design thinking workshops, like really trying to understand our customers about what they want. And because pricing was in fault with this entire process. So we had a very clear understanding what component people are more likely to pay. And at that time I was pricing postpaid mobile plans, right? So we know, okay, this group of customers might value international calling more. This other group of customers they might value like movie streaming or Apple Music, whatever. So I think you really need to have that understanding at customer level. Then everything follows. And this is probably an easier approach in my opinion, but I’m very keen to hear your thoughts as well, Mark.
Mark Stiving
Oh, I’m a huge fan of saying we’re customer-centric. I mean, I think that’s a brilliant thought. It feels like it was overused several years ago. And the people don’t know what that means. And the last thing I’ll say about ‘customer-centric’ is that pricing is the only thing inside your company that is a zero-sum game. Right? Everything else is a win-win game, right? I want to build better products because it delivers more value to my customers. But in the end, when I put that number on a product, I want a bigger number. My customer wants a smaller number. Always. And so customer-centric pricing implies lower prices, which is not what I propose at all.
Claire Wang
Allow me to disagree with you a little bit on that.
Mark Stiving
Of course.
Claire Wang
Well, firstly for me, pricing should never be seen as a zero-sum game, right? It’s always about how we can grow bigger the size of the pie, even when it feels like if we charge customers more, they are paying more and there’s more in our pocket. But at the back of it, it should always be, can we introduce a new feature that customers like and will be willing to pay for? So I’m just trying to think of a concrete example to give you.
Mark Stiving
So Claire, I understand exactly what you’re saying. But here’s what I would say to you. Take whatever features you want. I don’t care what they are. Add new features to it. I don’t care what you want and charge a dollar more. And I took a dollar out of my customer’s pocket. The customer would prefer to keep the dollar, we would prefer to have the dollar. And so that’s why it’s always a zero-sum game at the transaction.
Claire Wang
Imagine an alternative scenario. Let’s say it costs customers $15 per month to get Apple music. And we have an exclusive deal with Apple and we can manage to offer customers Apple Music at $10 if they buy our mobile plan. So customers still get that. And from the customer perspective, they sell $5 per month. From our perspective, we get $10 per month. So I think it’s about finding this kind of opportunity. It’s not so much, I think value can be perceived in many different ways. But it’s not always like that, because it’s perceived. So it’s not necessarily like a concrete number. It can just be like Apple Music. I don’t know if I’m making this more confusing.
Mark Stiving
You are, but I’m going to disagree with you completely. Sorry.
Mark Stiving
This is going to be a very fun conversation.
Mark Stiving
Exactly. I think it is perfectly legit. In fact, it is important that we always look for win-win situations. Right? So if there’s a way that I can personally make more money and lower your costs, lower your price at the same time, I’m a huge fan. Right? That’s great. I love that. Right? That’s a win-win situation. But the argument I’ll make is at the specific time of the transaction, no matter what product you’ve developed, no matter what things you’ve designed, the customer wants to pay less and you want the customer to pay more. Always. And any dollar that we add to the price comes out of the customer’s pocket. And by definition that’s a zero-sum game. So at the point of transaction, it’s a zero-sum game. Now, we should be looking for things that are win-win all over the place. I’m totally with you on that.
Claire Wang
Yeah, that I agree. But I suppose pricing is always about the nitty gritty details on how we actually achieve that, right? Because as we all know, in theory we all know it sounds easy, but in practice it’s very hard to implement.
Mark Stiving
Yep. okay. So one of the things you mentioned to me is that you wanted pricing professionals to use their channels to build their brands and enhance visibility. Do you have any thoughts on how to do that?
Claire Wang
Well, these days I’m basically like a LinkedIn page, right? I’ve been posting every day talking about pricing and the only reason is I want to put this profession out there so people know what we do. And I don’t have a lot of followers, but I do have people send me DMs saying that, ‘Hey, Claire, I would not have heard about pricing if it wasn’t because of your post.’ So that gives me a little sort of like, woman fuzzy feeling and I’m just going to continue to do this. And Mark, I know you do, like you’ve been posting and there are a lot of pricing leaders, they are doing exactly the same thing. I think we just need to do this more and maybe just make it more fun and engaging because what I have noticed is that most pricing people, we like to talk about theory. So when people read theory automatically in their mind it’s very dry. Okay. I don’t know how to apply that in my daily life. But what if we can make pricing very practical like when we go out there, we see something, we’re like, ‘Oh, this is decoy pricing.’ Or you try to bring all the theories you learn in books and put them into practice and kind of educate people on pricing in this sort of firm and engaging way. So, that’s what I’m trying to do. I’m just starting. So long way to go, but that’s kind of the long-term aspiration.
Mark Stiving
Nice. So I’ve been blogging every week. I haven’t missed a week since 2010.
Claire Wang
I’m going to look up to you as my aspirational model.
Mark Stiving
In the first year or two. I think my mother was the only person reading my blogs. So it just takes a long time. And in the end you do this to build your own thought process. You do this to build your own brand. Eventually, someone will go back and say, ‘Hey, does that Claire Wang know anything about pricing?’ And they’ll see your plethora of posts. It’s like, oh yeah, she really gets it. She knows what she’s talking about.
Claire Wang
I think that’s also the reality. Because I feel like an expert these days, it’s not so much about what you know, it’s more about how much people think you know. And I think it’s a bit unfair, but unfortunately this is the reality we are living. Like if we don’t put ourselves out there, no one will ever discover you. And as pricing, we can only improve our values if the value of the profession improves. Right? So it has to be a group effort.
Mark Stiving
Yeah. If you’re going to sell a product to somebody, a customer only buys because of the value they perceive in your product. If they’ve never owned it before, they have no idea what the value really is. They just have these perceptions. And the exact same thing is true for us pricing people. Right? If someone’s going to hire me, they’ve never hired me before. So the only thing they could use is their perceptions of what I know. And where does that come from? Comes from the stuff I’ve written. The podcasts I do. The conversations we have.
Claire Wang
Absolutely. Yeah.
Mark Stiving
Yeah. It always comes down to that. Claire, this has been a ton of fun, but we’re going to have to start to wrap it up. A final question for you. What is one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?
Claire Wang
On their business? So giving advice to non-pricing people.
Mark Stiving
Oh, you think they should give advice to non-pricing people?
Claire Wang
Well, that’s just how I interpret your question, but I mean, I’m happy to give you two pieces of advice. So one to non-pricing people, one to pricing people.
Mark Stiving
Go ahead.
Claire Wang
So for non-pricing people, I would say start with understanding your customers, understanding their needs. And once you do that, then you’ll have a better understanding about their willingness to pay. And then the price point will just be a byproduct of this process. To pricing people, I think it’s all about improving our communication skills. Most of the time when people, like product people, finance people, whatever, when they come to us, it’s often not a price point problem, it’s just a communication problem. We need to understand what the problem is before we can solve them. Too often we’ll just jump into solution mode without having a proper deep dive into the real problem. So that’s what I will give to pricing professionals.
Mark Stiving
Nice, nice. And by the way, I would give that advice that you gave to pricing professionals to everybody. That’s true. And that’s, try to understand what the problem is before you jump to conclusions and solutions.
Claire Wang
That’s very true.
Mark Stiving
Excellent. Claire, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Claire Wang
The best way is on LinkedIn. Just drop me a message on LinkedIn.
Mark Stiving
Excellent. To our listeners, thank you so much for your time. 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 in general, feel free to email me, [email protected]. Now, go make an impact!
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