Impact Pricing Podcast

Bill Diggons, managing partner at Qittitut Consulting (yes, named after a fast-growing, healthy Inuit bear), shares 24 years of pricing wisdom earned across 182 projects in 57 countries. A disciple of pricing legend Tom Nagle and former oil industry marketer at Schlumberger and Halliburton, Bill reveals why single-column bids are leaving 3-5 margin points on the table and how tiering transforms B2B pricing.

From Wagyu beef pricing psychology to semiconductor de-specification strategies, Bill and Mark debate whether prices should be easy or hard to compare, why “Boss Hog” beats techno-nerd names, and the counterintuitive power of ending prices in odd numbers instead of zeros.

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Why you have to check out today’s podcast:

• Discover why tiering consistently delivers 3-5 margin points minimum—and how three-column bids with strategic naming force buyers to make trade-offs instead of price comparisons.
• Learn the “no zeros” pricing rule that generated $8 million in three months by making prices look carefully calculated rather than negotiable.
• Master the art of non-compliant RFP responses with alternatives that disrupt tender processes and win on value instead of lowest price.

“Not profound, but no zeros on the quote. It’s so often that we can get half a margin point just out of stuff like that. And then beyond that, try some naming and tiering because it’s going to work for you.“

– Bill Diggons

Topics Covered:

02:09 – The Qittitut Origin Story: Why a dancing bear beat “Bill & Bob’s Consulting”.

05:39 – What is Tiering? Moving beyond single-column bids.

10:07 – The Restaurant Menu Masterclass and Boss Hog’s Emotional Appeal – How to decide what features go in what tiers.

19:02 – Responding to RFPs with tiered alternatives and non-compliant bids.

20:02 – The Power of “Networking Best Practices Meeting” vs. “Presentation”.

26:23 – Final Advice: No zeros on the quote (and why it generated $8 Million).

Key Takeaways:

“Tiering to me is having at least a three-column bid, naming the columns, and then having some names on the products or services to imply added value. Whenever we’ve introduced this, it always results in three to five margin points minimum.” – Bill Diggons

“I demand the right to segment that price to the outcome, the value the buyer gets. Even though the variable cost of the motor is identical, I want to be able to sell it at an economy price in a benign environment and at a premium price in an extreme environment because I put billions of dollars into creating this thing.” – Bill Diggons

Resources and People Mentioned:

• Tom Nagle: Author of “Strategy and Tactics of Pricing” – pricing authority who transformed Bill’s approach in oil and gas.
• Schlumberger: Oil company where Bill worked in marketing.
• Halliburton: Oil company in Bill’s background.
• QSales: Where Bill was practice leader for 20 years.
• A.T. Kearney, McKinsey, Deloitte: Consulting firms mentioned in the RFP rejection story where Bill’s price was “too low”.
• Starbucks: Referenced for tall, grande, venti tiering strategy.
• iPhone/Apple: Used as two examples – 99-cent pricing psychology AND customers not comparing to Huawei when upgrading.
• Huawei: Mentioned as iPhone competitor that iPhone users ignore when upgrading.

Connect with Bill Diggons:

• Company: https://www.qittitut.com/ 
• Linkedin: https://www.linkedin.com/in/billdiggons/ 
• 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.)

Bill Diggons

Not profound, but no zeros on the quote. It’s so often that we can get half a margin point just out of stuff like that. And then beyond that, try some naming and tiering because it’s going to work for you.

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Mark Stiving

Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the dynamic relationship between them. I’m Mark Stiving, Chief Educator at Impact Pricing, and we offer programs to help your company get paid more. Our guest today is Bill Diggins. Here are three things you want to know about Bill before we start. 

He is the managing partner at Qittitut Consulting. He’s been doing this for only 24 years. He was the practice leader at QSales. He’s been doing that for 20 years. And before all of that, he spent most of his time marketing in the oil business, companies like Schlumberger and Halliburton. Welcome, Bill.

Bill Diggons

Oh, thank you very much, Mark. Happy to participate today.

Mark Stiving

Okay. I am sure everybody else is as curious as I was, even though you already gave me the answer. What is Qittitut?

Bill Diggons

Well, Kitatut Consulting is a growth strategy company, but we used a name to develop curiosity about our firm because in the early days back in 2001, we could have been Bill and Bob’s Consulting Company, but our first project was up in Hibernia and I bought a dancing bear sculpture for my wife, and the Inuit artist said, the Qittitutis a fast-growing, healthy bear. 

And sometimes we see them dancing on the ice floe. And immediately I thought Qittitut Consulting would have more percepted value than Bill & Bob’s Consulting Company. But my partner at the time wanted to call us Brass Monkey. And I lobbied hard for Qittitut, and I won the argument.

Mark Stiving

Nice. You won the coin toss. That’s a fabulous story. I love it. And I love the idea of the dancing bear. I don’t know if you call yourself into pricing, but how did you get into pricing?

Bill Diggons

Well, my partner, Ivor Kaklins, was a disciple of Tom Nagle. And Thomas Nagle wrote a very authoritative strategic pricing book, I think back in the 80s. And I got to meet him one time because I was a client and our pricing in oil and gas wasn’t very sophisticated. 

But as a result of working with my partner as a client at that time and reading Nagle’s book, it really transformed how we went to market, how we sold, and how we priced. And since 2001, we’ve done about, I don’t know, 182 pricing projects in 57 countries. So it’s been a lot of fun. And as an engineer, I really enjoy the number side. But of course, the psychology of pricing is, I think, equally as important.

Mark Stiving

That’s pretty fascinating. I was always a fan of Nagle. I taught from the second edition of his Strategy and Tactics of Pricing book when I was a professor at Ohio State. And I just always never had a chance to meet him, always wanted to. And about a little over a year ago, he was a guest on the podcast. And it was fabulous. I loved getting a chance to interview him. 

I feel like a giddy little boy just thinking about it. So today we’re going to, I always ask my guests, what do you want to talk about? What are you passionate about? And you wrote tiering and naming. And I think I know what you mean when you say that, but let’s just toss out the softball and tell me what did you mean? And then we’ll dive into that.

Bill Diggons

Well, all of our work is in business to business, either industrial equipment, product services, software, whatever. And in working with many companies, to me, a real issue is when there’s a single column bid. There’s generic descriptors, there’s one number, and the buyer looks at a generic term and a number. And so, tiering to me is having at least a three-column bid, naming the columns, and then having some names on the products or services to imply added value. 

Whenever we’ve introduced this, it always results in three to five margin points minimum. And so tiering to me is like a basic, a standard and a premium, but let’s make those names even more powerful. And then let’s make the jumps between them something compelling so that, you know, if I’m a price buyer, basic is okay. If I’m a value buyer, I might be on the premium side and others might be in the middle, but it’s all about getting a higher contribution margin and it’s very effective.

Mark Stiving

Yeah, I’m totally with you. So I write about and talk about or think about good, better, best all the time. And I assume that’s what you’re talking about. Or is it something different than that?

Bill Diggons

Well, good, better, best, I think is exactly right, because, you know, in a consumer sense, you have to know the category, the aisle, the shelf. But the best analogy for managers and people that are not familiar with this concept is when you go to a restaurant, you don’t see beef kept in a freezer for 30 days. 

You don’t see beef kept in a Ziploc bag for two days, and you don’t see beef with fungus. So you see Wagyu beef dry-aged, $60. Wagyu beef wet-aged, $48. Angus flank steak, $38. And, you know, the variable cost per pound of beef isn’t that different. No one knows what Wagyu means. Very few consumers know what dry aged meat is. But if they looked at the menu and saw beef kept in a freezer for 30 days or two days in a Ziploc bag, they’d never order it. 

So, you know, Starbucks is the obvious, you know, everyone knows the Starbucks story, tall, grande bente. But I think restaurants are really good at having four and five tier menu items to get buyers to appreciate that the Wagyu steak dry aged tastes better than the wet aged. And Kobe beef, if it’s on the menu, is like a super premium.

Mark Stiving

Yeah. So it’s certainly interesting that they give it. Restaurants are fabulous at giving interesting names to products to make them sound way more attractive than they really are. So I definitely buy that. But let’s apply this to B2B. And I know how I do this all the time, but I’d love to hear your thinking. Is it just a fancy name or is it something else?

Bill Diggons

Well, I think, you know, in business to business, we’re trying to develop a long-term relationship with clients. We’re never trying to have a name to trick the buyer. And, you know, when you said the restaurant makes something sound more appealing than it is, that hurts me a little bit because I think an honest restaurateur doesn’t want that to happen because they want him to come back next week. 

So in business to business, if you have a compressor or a generator, or even if it’s some, you know, software that’s sold on a SAS model, you want to have a name like EP, S-P-X-P as a tag. And one might be, you know, economy performance, standard, extreme performance. But then when you look at the specifications, you do see a difference. And I will have a caveat. 

If as a supplier, we engineer a motor or a generator, which is exactly the same, but it’ll operate at 100 degrees or 500 degrees or, you know, 5,000 PSI or 25,000 PSI, we engineered that flexibility. And even though the variable cost of the motor is identical, I want to be able to sell it at an economy price in a benign environment and at a premium price in an extreme environment because I put jillions of dollars into creating this thing. 

And I get more contribution margin by doing that. And it doesn’t matter if it’s a butterfly valve that’s used offshore, it gets a high price, or a butterfly valve that’s used in Starbucks. I demand the right to segment that price to the outcome, the value the buyer gets.

Mark Stiving

Yeah, and what’s often true is that the buyer doesn’t know that it was capable of doing that. So I was in the semiconductor space a lot, and we would frequently create semiconductors and just de-specify it on the spec page and give it a different part number, even though it was the exact same silicon, so it would perform the same as something else. But it was only guaranteed to perform at some lower level, so we could sell it at a lower price.

Bill Diggons

Good. I think that’s ethical. I think it’s correct. You made the capital investment. You’ve taken the risk. You’ve got the sales force. You’ve got the support. The whole bag of beans. I need this chip to perform this function on a transistor radio. I also need the chip in a spaceship. And I don’t want the Apollo astronauts to go up and smoke. 

So I’m going to, you know, pay a lot for that chip and I don’t want it to fail. Now, you know, over here in this transistor radio, it might fail, but at the end of the day, you know, what’s the value? What’s the outcome? That’s what the buyer should be compensating us for.

Mark Stiving

Yep. Obviously we think exactly the same. So let’s talk about naming for a second and let me share with you how I try to teach naming on my good, better, best, right? And so the first thing I try to do is make sure we’ve identified a set of features or outcomes or specifications that solve a specific problem for a buyer, right? A reasonably important problem. 

And so, I make that the better product. So I think of good as a minimum viable product, somewhere in that ballpark. Better is that plus I’m going to go solve another important problem. Best is I’m going to go solve another important problem. And I like naming the different tiers based on the problem sets I’m solving, as opposed to, you know, XPSP, you know, whatever, something that has true meaning. What do you think of that?

Bill Diggons

Oh, I like that. You know, you might have low ROI, medium ROI, high ROI. I think the product itself deserved to be named, not only the tiers. And unfortunately, when we do the naming work, there’s about 10 different ways to name based on curiosity or evocative of a feature or benefit. I’m sure you’re aware of that. And analytics tend to think that feature evocative names are really ideal. 

But amiables and expressives are about half the population. And sometimes they like curiosity names. So one of the projects we were involved in, we fought hard to kill off a name called Boss Hog. And we thought, wow, this is a terrible name. But actually, Boss Hog was very evocative to the field buyers who were buying this product. And it really made a great deal of sense in terms of how it was tiered. 

So even though technically it didn’t convey anything, it made an emotional response to the buyer, which was very important because it was rather generic in some ways, but it did have some reliability features and it was the boss. And it was big and it was a hog and these guys are all hunters and they, you know, they had boss hog caps and the whole bag of beans. And it was completely different than some of the other techno nerd names that were out there.

Mark Stiving

Yeah. Especially, it sounds like they’d built a really good brand where people loved it. So, you know, changing that makes no sense. Yeah. So let’s talk about tiering for a second. How do you decide what features go in what tiers?

Bill Diggons

Yeah, well, obviously customer segmentation, any type of research you can do with the end user is really important because some of the features are, you know, parity. And, you know, if you can pick out a differentiator that adds economic value, that’s the thing you want to focus on. We’re all about, you know, there’s 17 features, three of them might have points of differentiation. 

What’s the point of differentiation that is the high economic value? That’s the one I think we want to focus the buyer on because when the buyer says, you know, there’s a lower price one or there’s two prices that are the same, we can say, well, wait a minute, that is a good product. We’ll admit that. 

What’s different about our product is the fuzzball and capulator uses tungsten carbide O-rings. And that means, you know, blah, blah, blah. So I like to do, you know, what’s a point of differentiation that really creates economic value if there is one? And then, you know, try and build your tiers and your names around that if possible.

Mark Stiving

So, can you go a little deeper into this? Because let’s make the assumption that a competitor has good, better, best products as well. And so, now we’re trying to do differentiation, but I could differentiate at each one of those three levels.

Bill Diggons

Well, sometimes, you know, in industrial space, PSI, temperature, run life, whatever, could be rather similar. But then payment terms could be different in the column. Technical support, you might have one column where there’s no KPI tracking and another column that does. And so, if you could find those services and support payment terms. 

Another thing which I love about our tiering is on the bottom we never say price, we say investment. And right above the price we usually have incentives like no incentive in the basic column, but in the standard column, the 13th unit is free. And in the high-end column, they get half off maintenance and support after 11 months or whatever it is. 

So what you’re doing is, you’re forcing the buyer to make a trade-off. Just like recently when I went in to buy a car and I negotiated the price very successfully and the finance manager, even though I was paying cash, gave me a seven-column bid. And column one had about 13 things covered, wheels, windshield, a whole bag of beans. And this one over here just said, like, you know, free wash job when you come in. 

And so, even though I’m experienced as a negotiator and pricer, it really took me time to figure out, do I want this? Do I want that? Do I want that? So making the buyer look at trade-offs is very important, and making prices harder to compare is essential. The only time you want prices to be easy to compare with the same benchmark is when we’re the low-cost provider and we’re trying to gain a share. Otherwise, let’s make prices harder to compare to force a trade-off.

Mark Stiving

So I have to think about that because I’m not sure I buy that concept. I like the idea that says, let’s make sure my value is really clear and I’m worth the extra price. So I don’t care that you know I’m more expensive. I care that you know that it’s worth it.

Bill Diggons

Well, unfortunately, the price itself establishes the perception of value. So when you see a metric ton of polymer resin at 3,000 euros, the first thing that goes into their mind is, oh, three zeros, there must be fat. So whenever you do a three-column bid or a four-column bid, you just gotta get rid of all the zeros. 

And then there has to be a rational thing in the column that explains or implies why this column is a higher investment because if you can’t say this to the buyer, the incremental investment is going to have a positive return on incremental investment. So the economic value is higher or at least, at least 50% of the incremental investment. So the internal rate of return is 50% or a hundred percent or more, and then you’re golden. Now you’ve got everything you need to defend that price.

Mark Stiving

Yeah, I’d love that. I think that’s perfect. So what do you recommend for your clients? They get an RFP from a potential buyer, and obviously an RFP is asking for a price. Do you recommend they go back with tiered pricing?

Bill Diggons

You know, in some tenders, the seller believes that a noncompliant bid will be disqualified. And that may be true, like in the construction or civil industry, that might be true. but we always find a way in the executive letter or the appendix or through options. So even if the bid is compliant, I actually prefer things like non-compliant bids where we have a lot of customer knowledge about their needs. 

And then we try and say, here’s what you asked for and here’s your price, very upfront. And that price will be higher than the variable cost and we’ll do the job, but here are two alternatives. So I think having an executive letter or a summary, and it can’t have puffery. So a lot of these tenders, the seller answers with, we’re so honored to answer your request. But then the title of the tender says proposal or response. 

And every title, every tender that we coach has an economic benefit in it. So it’s going to say X solution to reduce risk and lower the total cost of operation. And that whole tender is going to be built around why us? Why not them? What do you get and why is it true? And if you have those points in there with alternatives, chances are you’re going to have a disruptive bid, which will, you know, the buyer will take the time to kind of evaluate. So I’m a big fan of presenting alternatives.

Mark Stiving

Yeah, I think that’s a great idea. I haven’t heard of anybody who got rejected because they proposed more than one alternative. The other thing I usually recommend, and I think it’s consistent with what you just said, is that when you’re applying to an RFP, especially if you’re gonna quote outside what they requested, talk about why, right? What is the value of this incremental feature, of this incremental capability? What’s the ROI that you’re gonna get from that, essentially?

Bill Diggons

Yeah, and even if you can’t give a hard number, you give a range like tens of thousands of dollars or several million or whatever it is. And to me, you probably shouldn’t answer the bid unless you really understand as much as you can what the needs are, because how do you know you’re not being thrown in to lower someone else’s price? So I think the more upfront you can do to understand it, the more dialogue. 

And by the way, the sales process itself, if the sellers are using concepts like, let’s set up a networking meeting to talk about best practices. That name is way different than lunch and learn or presentation. As soon as you say presentation to a buyer, it’s a death march PowerPoint. But if you say networking best practices meeting, then when you deliver your tiered bid and offer, you could have a column in there saying, networking meetings, value chain labs, KPI scorecarding. 

And they say, what is all this stuff? And you say, well, that’s the way we’re gonna demonstrate this value. and you’re going to be able to use the product and service more effectively because we’re having this exchange of ideas with you. Now we’re your partner.

Mark Stiving

Yeah. Okay, so we’ve been talking about bids or RFPs. Let me toss out my thoughts, and I actually say this to people all the time. For my own personal business, they say, hey, we’re going to send out an RFP. I say, don’t bother sending it to me. Let me tell you what I do. If you’re interested, great. If you’re not, that’s totally okay.

Bill Diggons

Yeah, well, I’m the same way. And it even goes so far as, you know, filling in all these bloody forms to be a vendor and, you know, all this stuff. And we’ll say, well, you know, we’re kind of senior guys are a little bit busy. We’ll sign an NDA, but we’re not going to like fill in this procurement stuff for you. And people, you know, start to pay attention. 

A big conglomerate hired us because one of the board members said, you need to hire these guys to help with pricing. And I know they’re a little bit upset with that, but the contract was 183 pages. And we just said, well, we’re not signing it. And we still got the work. So I think politely pushing back is probably appropriate. I’ve had cases where they said, well, look, you didn’t get chosen. I said, well, what do you mean? 

They said, well, we offered this job to, you know, A.T. Carney and McKinsey and Deloitte. And unfortunately, your price was too low. I said, yeah, right, because we don’t have a lot of NBA kids running around and we don’t do any underpowered page PowerPoints, well, it didn’t look very impressive. 

So what I learned is I probably should have had a factor of 10 on that, but I feel bad about that because it doesn’t cost that much. So I think it really is a judgment call, but I don’t like participating as a coach or an advisor when they’re saying, you know, what’s your price and blah, blah, blah. I’d rather say, choose us based on what we’re good at.

Mark Stiving

Yep. I’m totally with you. The other thing I did the other day, just because I didn’t want to fill out a contract, right? It’s like, no, I don’t want to read your contract. I don’t want to use your contract. And they said, really, would you please? I said, okay, extra $5,000 on the bid and I’ll read your contract.

Bill Diggons

Cool. I like it.

Mark Stiving

So it’s like, okay, we can manage. Excellent. So where else, where am I missing that we need tiering?

Bill Diggons

Well, You know, I like to think about customer segments as they’re loyal, they’re repeatedly buying the product and service. I don’t necessarily need a three column bid or a complicated quote. They call up, do you have it in stock? We shoot them a number. We try and get a little uplift if possible. But at the end of the day, it’s like, I don’t want to waste time on a high transaction business that’s locked in. 

I want to spend time on when it’s going to be chosen based on value or on the scale. You know, value says performance matters and scale says, are you big enough to service in ways that are going to be profitable to us? So I want to put my energy into high value deals and the repeat transaction stuff. Hey, let’s throw them a quote, whatever it takes to give them a number and go on about life.

Mark Stiving

Yeah, and if it’s a standard product, I have nothing against good, better, best standard products. I think that actually helps our buyers make decisions.

Bill Diggons

Yeah, I’m with you on that. I think, you know, too much repricing as we all know since we study this field is, oh, you know, we mark it up 50%, you know, wow, or the guys charge this and it’s just so sad because getting to the economic value actually isn’t that difficult. And then when you make a change and they see the fall through, it’s like, you know, we’re printing money.

Mark Stiving

Okay, I have to share my last thing that I typically think of when I do good, better, best, and I’d love to hear your thoughts. I think I said this already, the good I think of as a minimum viable product, the better I think of is probably what they actually ask for, and then the best, I think of that as an advertisement of what it is we could possibly do for you. And so, it might be a really expensive thing, and sometimes people buy it and you smile and say, hey, isn’t that awesome? But even if they don’t, we just said, look, we’re way better than what you’re buying. Yeah.

Bill Diggons

No, I love that. One thing that comes to mind, Mark, is an experience where the client was very reluctant to use a three-column bid and we spent a lot of time on it. But the feedback was so, you know, rewarding because they said, we presented it. And two guys from the client side got up and started rearranging the chart. 

And then at the end of the day, we were 16% higher because through coaching, we knew to say, well, no, we’re not getting that for free. You’re not doing this. And then we had a lot of the data on our side, but while they were rearranging the tier, we just sat back and looked at our phones like we were doing some calculation. 

We were actually checking our texts. And then we just shot some numbers out there. And we just, you know, got higher margins because now the buyer thinks I’m customizing this. And unless you have that high super duper column, they don’t even know that you can do that stuff. Why don’t we tell them?

Mark Stiving

Yeah, that’s great. I think that’s great. Bill, this is fascinating, but I’m going to start to wrap this up. Here’s the 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?

Bill Diggons

Yeah, not profound, but no zeros on the quote. It’s so often that we can get half a margin point just out of stuff like that. And then beyond that, try some naming and tiering because it’s going to work for you.

Mark Stiving

What do you mean by no zeros on the quote?

Bill Diggons

Well, when you see a price, let’s say $3,000 or $30,000 or $3, it just implies to the procurement guy that there’s fat. And if you have an odd number like $3.11 or $3,079, psychologically, you know, it’s just like iPhones always end in 99. That’s one end of the spectrum. But I don’t like zeros. And we downloaded 24,000 transactions. 60% of the transactions ended in two zeros or three. And we eliminated all of that. 

And in three months, the fall through was $8 million. And I guarantee you that our consulting was like peanuts compared to that. So you have a lot of transactions, a lot of zeros, or you got a few transactions, get rid of the bloody zeros because it’s telling the buyer you got fat.

Mark Stiving

Yeah. By the way, my dissertation was in price endings, right? So, 99 cents or zero zero. And one of the things that I learned was that when you use, let’s call them random price endings, it looks like the price was carefully calculated. So it looks less negotiable. So I agree completely with what you said. And I’ve actually bought and sold a few houses using that strategy.

Bill Diggons

Yeah. I’m digging it. I love it.

Mark Stiving

Mm-hmm. So, excellent. Bill, thank you so much for your time today. If anybody wants to contact you, how can they do that?

Bill Diggons

Easy. Bill at Kitatut.com. Now, that’s the complicated part because Kitatut is Quebec, India, tango, tango, India, tango, uniform, tango.com. Kitatut, Q-I-T-T-I-T-U-T.com. Thank you, Mark. I appreciate it. It’s been fun.

Mark Stiving

Bill, it has been, and we’ll put your email address in our show notes so people can find it. And even if you start out with Q-I-T, my guess is that LinkedIn will find you. To our listeners, thank you for your time. If you enjoyed this, would you please leave us a rating and a review? And finally, if you have any questions or comments about this podcast, or if your company wants to get paid more for the value you deliver, email me, mark at impactpricing.com. Now, go make an impact. 

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