Impact Pricing Podcast

Ep105: Pricing in IT: Is Cost Plus the Only Way? with Love Sanoria



Love Sanoria is the Director of Operations at ChargePoint. He is also a Professionally Qualified Senior Finance business partner adept at increasing profitability, having significant all-round corporate experience of 16+ years in Finance & Accounts domain. He is a subject matter expert in creating processes for driving financial forecast & annual budget for the organization in collaboration with multiple teams.

In this episode, Love talks about what IT pricing is all about, though it may be based on what the costs are but it is never about not putting concern over quality first for as to him quality never comes cheap. He points the fact on how a company’s IT landscape determines its subscription need. He also shares how COVID will increase pricing due to expenses and losses incurred by companies at this time of the pandemic.


Why you have to check out today’s podcast:

  • Learn how to charge your product based on the level of differentiation, how better your product is from your competition
  • Learn what is COVID pricing and how it affects future pricing
  • Understand how IT pricing is arrived at


“If you understand the business, then pricing is a derivative of that. So, if you understand what are the cost elements to it, you will be able to do the pricing.”

– Love Sanoria


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Topics Covered:

01:00 – What made Love consider Pricing

01:54 – How does Revenue Assurance differ from Pricing

03:38 – Looking at cash and revenue from the accounting standpoint

04:44 – Does it happen that transaction in million dollars not paid

05:08 – What is IT pricing

08:55 – His thoughts on pricing based on customers’ willingness to pay and not about the cost

11:39 – Quality never come cheap

13:54 – How a company’s IT landscape determines subscription needs of companies

15:30 – How people wouldn’t mind spending something just to keep things as it is

17:00 – How has COVID hurt the IT industry and how it affects future pricing

18:20 – How prices are going higher not because of consumer’s willingness to pay but because companies expenses have gone up


Key Takeaways:

“I would say pricing comes… might be at a second, third level, but quality comes at first but given the transparency of the process in the big companies, it adds a weightage to your overall budget from the customer perspective.” – Love Sanoria

“Think from a vendor perspective, no one wants to lose a deal from high price perspective, given the very competitive scenario.”  – Love Sanoria

“There are different vendors. And if you talk about vendor, they have different cost strategies as well. They have different quality. But if a customer wants to choose the high quality, they have to pay the high price, quality never comes cheap.”  – Love Sanoria

“COVID has hurt, I would say, the IT industry, generally a lot. Obviously, they have their margin pressure, they have cost pressure, it will bounce back, once it bounced back, they will obviously charge back from their customer.” – Love Sanoria


Connect with Love Sanoria:


Connect with Mark Stiving:   


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.) 

Love Sanoria 

If you understand the business, then pricing is a derivative of that. So, if you understand what are the cost elements to it, you will be able to do the pricing.


Mark Stiving

Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the financial relationship between them. I’m Mark Stiving. Today, our guest is Love Sanoria. Here are three things you want to know about love before we start, he is the Director of Operations at Charge Point. He’s held a title of Global Revenue Assurance and Pricing Head. And he brings to us a mix of both Finance and Pricing. I look forward to the perspectives. Welcome, Love.

Love Sanoria 

Thanks, Mark.

Mark Stiving 

Hey, how did you get into pricing?

Love Sanoria 

So, it’s all just started, I tried and I qualified. And I was lucky enough to be into Pricing. I don’t want to go into the traditional Finance area so I choose pricing, which excites me. It’s into a lot of business interaction. You know, it’s a business partnership role. It’s different, very different from traditional accounting roles. So that was exciting to me, Pricing.

Mark Stiving 

Yeah. And it seems that you moved out of Pricing? Or do you still consider yourself part of Pricing?

Love Sanoria

Not now in my current role, but yes, if I look at my overall career span, it’s like 10 years of plus experience in pricing.

Mark Stiving

Right, nice. And then I mentioned in the intro that you held a title of Global Revenue Assurance. What does that mean? What is revenue assurance and how is that different from Pricing.

Love Sanoria 

So, it just depends once you establish a contract with the customer, right? So, I would say it’s like order-to-cash cycle. So, here comes the Pricing is like once you agree to… and contract with a customer, it’s all the pre-sale stage and the sale stage. So, in the Pricing, what happens, you offer some product to the customer, you do customized pricing, then what happened customer agrees on your price, then there is a whole lot of contracts like MSA sort of agreed with the customer. And once the contract is established with the customer, it’s signed by both parties, then comes the part of order-to-cash cycle, which is like you have to recognize your revenue, which is the top line for the companies. And that is very important part because if your company is listed, it’s like what, you know, the share market, it’s solving this. So, look at your top line. And you have to recognize the revenue based on the applicable accounting standard. If this company was GAP, compliance, your proceeds ASC 606 compliance or not. And then you have to recognize the revenue, you have to build the revenue to the customer and to realize the cash, right? So, it’s the order-to-cash cycle, you have to get the order, you have to convert into cash. That’s how it goes.

Mark Stiving

Yeah, I love how public companies focus a lot on revenue recognition and when we can recognize it and, and so that’s an important thing for running our business. But if we just talk about order-to-cash for a second, did you see or do you often see places where we leak profit, where we got an order for X number of dollars, but the cash wasn’t X number of dollars at the end?

Love Sanoria

So, see, there is always a difference between what you recognize revenue as per the common accounting standards and what you realize, right? So, in accounting, there is a concept of accrued, right? So, if you employ, so you’ve seen it in IT industry, if you deploy so many number of resources, if you submit the timesheet to the customer, right, so your revenues accrued, you have delivered that services, but if as per the payment contract if you’re able to recognize the cash even after one year or six months, right, so that’s the difference between cash and revenue.

Mark Stiving

As you say, I’m actually less interested in revenue and the revenue recognition part. I know a lot of companies are absolutely. But what I’m really interested in is, if we get an order for a million dollars, how often do we not get paid a million dollars cash when it’s all done? Right? Was there leakage in the process that we just didn’t see because of errors and invoicing or errors in the way we collected money? Things like that? Do we see often see errors like that?

Love Sanoria 

Very rarely. So, if a customer has accepted the delivery, and it’s very rarely that the customer doesn’t pay the amount. So, it’s very rarely, unless there are some delivery issues.

Mark Stiving

Okay. Cool. So, let’s talk about IT pricing. First off, you said you were passionate about IT pricing. So, tell me what you mean when you say the words IT pricing.

Love Sanoria

So, I would say in terms of any pricing, let’s say specifically IT pricing, if you understand the business, then pricing is a derivative of that. So, if you understand what are the cost elements to it, you will be able to do the pricing. Pricing is just secondary and the understanding of business is the first part. So, let’s talk about the IT pricing, for example, if a customer wants to develop a software, right, and he approaches three, four different vendors, that he looked at the RFP, share his requirement that this software contains… should contain this, this, this, and you’ll give me the price. Now, there can be a different model, right? It could be fixed price, it could be TNM basis, it could be a percentage based on customer revenue, it could be based on, you know, the outcome, or it can be based on a predefined output, like for example, in a hardware industry, like number of CPU, number of monitors. So, as a vendor, how a vendor approaches because first of all, they understand what’s the requirement, what’s the scope of work. Within an IT industry, I would say 60 to 70 percentage of cost is the manpower cost, right? And depending upon the location of the geography mix of the resource, right for example, if a resource is based in US, Europe, obviously, it will be a high-cost medium. And within Europe, you have low-cost center. Within US you have near shores, which is low-cost location, and the IT industry work with a mix of resources, right? So, say 80%, 90% is based in India, Philippines, some part of, say, Mexico, they deliver the work. And then say five to 10% of resources are on-site near to the customer location, understand what’s the worst case. So, based on the location makes geography makes the experience makes the skill makes the niche skill versus the non-niche skills, all those parameters come into picture when I arrive at a costing proposal. So, while I would say, when they say they evaluate that, what’s the resource mix? Then how much would be the travel cost, then all other factors X and if there isn’t a quality requirement, is there any warranty requirement, so all those top-ups keep on adding. So, it’s like an ala carte. If you select A, B, C, and D, then it’s come to the price. So, and depending upon the geography, it has a risk of foreign exchange as well. It has an SLA risk. What is your SLA, and all? So, all these factors, and then obviously, there’ll be nominal margin, those companies make any, if it’s a publicly listed company, they have some requirement of meeting the shareholder expectation of net profit. So, all those added up, it gives you the price, right? And depending upon different industries, you know, some companies have their inbuilt software to do the pricing, some even the high company do with Excel. So, it depends how they…

Mark Stiving 

Okay, so, Love, I hate doing this to you. But I completely disagree with what you just said. And so, let’s have a conversation about this, because I’d love to understand your thinking, and I’d love to share with you my thinking. So, I take what you just said, as a really good explanation of what costs are. And I would also say this would be our floor price, meaning we would never want to sell below this price. But I’ve always thought of pricing as charging based on what my customers willingness to pay is and not about what our costs are. What did it cost us to create this or do this? So, do you disagree with me or, or what do you think on that?

Love Sanoria

So, I would say it depends upon the competitive scenario, like for example, if it is a very independent… for example, if you are the only vendor to the customer, then you have an edge, but if it’s a complete transparent RFP then right now, what happens you have a tender process in most of the big companies and you can see where you are in terms of the pricing. So, I would say pricing comes… might be at a second, third level, but quality comes at first but given the transparency of the process in the big companies, it adds a weightage to your overall budget from the customer perspective. If you are the only vendor to the customer, yes. And if you are a goodwill vendor, right, in terms you have premium to your product, then you can ask, if you have a unique product which you can sell. So, think from a vendor perspective, no one wants to lose a deal from high price perspective, given the very competitive scenario. You might disagree to that, but, look at from a scenario where all IT players are hungry for their revenue growth.


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Mark Stiving 

Yeah, so if I were going to say what I just heard you say I’m going to put it in words that that make me comfortable, if that’s okay. And that would be we figured out what our costs are. We know we’re in a really competitive situation. So, we want to bid the lowest price that we’re willing to accept. And so that would be the price we would set it at.

Love Sanoria 

Sorry, not at the first go, obviously, you have to see which level you are in terms…what is your… for example, you will get an Apple phone, right? And similarly, we’ll get another company for the premium Apple phone comes, right? The customer wants to buy it. Obviously, it has its own fruit price based on its, say, Apple profit benchmark based on Apple costs based on Apple, you know, other areas, right? So, Apple product has its own quality with price. Similarly, you will get a Samsung phone, and you will get even say any other company phone, right Philips phone, like a Motorola phone, but it’s the customer to choose, right? So, there are different vendors. And if you talk about vendor, they have different cost strategies as well. They have different quality. But if a customer wants to choose the high quality, they have to pay the high price, quality never come cheap. That’s a fact. Right?

Mark Stiving 

That was a perfect answer. Because now what I just heard you say was, I’m going to differentiate my product. And I’m going to charge based on the level of differentiation, right? How my product is different or better than my competition? And can I get away with that? And, and so I think those are absolutely spot on. It’s just a matter of translating this, because what I find is most of the time when I disagree with people, we actually agree, we just use different words. So, as a Finance person, can you help me understand something that I’m struggling with? Right? I don’t know the answer to yet. How do big companies think about subscriptions? As a consumer, I’m getting tired of subscriptions, right? I’ve subscribed to so many different things, that I’ve got subscription fatigue, and I’m trying to figure out how to get rid of subscriptions. How do big companies manage that process?

Love Sanoria

Subscription in terms of what, like if they’re using any vendor for their services? Or like what?

Mark Stiving 

Yeah, so companies are going to have salesforce as a subscription, they’re going to have maybe another CRM or a finance package as a subscription. And right, so nowadays, everything they’re buying is a subscription. So, how do they manage the fact that they’ve committed to or they’re locked into all these subscriptions?

Love Sanoria 

So, it depends upon the IT landscape, I would say or the overall IT team the company is going, right? For example, there might be 10,000 of applications which the company is using, but if we’re all IT landscape that they want to, you know, reduce the IT budget or few of the application are going redundant. For example, if you’re moving from say Oracle to SAP, right, all those applications, which are Oracle, they will go, you know, down, say over the period of two years, three years. So that’s how they will plan their IT landscape. And right now everything is moving on cloud, right? So, most of the companies, for example, there are companies which are using physical server, there are companies which are using virtual server, right? So, it’s about how the IT team of the company or the IT architect, how the IT landscape is focusing on and each company has their own vision that …

Mark Stiving 

Yeah, I can see how a bunch of IT, in fact, a bunch of companies I’ve been involved with will try to move everything to the cloud if they can, which is nice, but imagine that you’re going to sell to, we’re not talking million-dollar products. Now, we’re talking $1,000 a month products to some departments. It isn’t really an IT problem anymore. Now, it’s a departmental problem, and are they managing the $1,000 a month or whatever it happens to cost them to run this SaaS product? It seems to me that this is an area that at least us consumers are feeling pain, I would guess companies are feeling that pain as well.

Love Sanoria 

I would say nobody… it depends upon the application. So, it is very, I would say, the decision of life and death to an application, for example, it’s very required by the business. So, obviously, they will need it in terms and nobody wants to, you know, lose their old data, if they are not migrating to any future product. If there is no other option B, and there is only option A. Right? And anybody can, I would say people don’t mind paying, say $10, $20 a month or even $100 just to keep the thing as it is, unless it is… doesn’t require.

Mark Stiving 

Right, right. So, the key is getting your foot in the door, and then they’ll just keep paying you.

Love Sanoria 

Yeah, if it isn’t a very business critical. For example, if I don’t require Netflix subscription, right, so if I watch movies, once in a month, or if I keep on watching once in a couple of months, I don’t mind paying a small dollar for maybe a month. I’ll keep on watching it. I’ll just relate to that.

Mark Stiving 

Nice, nice. Okay, the other thing you mentioned to me that you’d be interested in talking about is COVID pricing. And here we are, hopefully near the end of COVID. Hopefully, since we have vaccines that are supposedly available, what do you think is going to be coming in the future? And how do you think that affects pricing?

Love Sanoria

So COVID has hit, I would say IT industry, generally a lot. It’s not only IT industry, I would say because IT industry is depending upon their customer. So, if the customer of IT industries like hotel, hospitality, airlines, so they are battling it, even if a customer is like within even a shopping mall, a small shop, right or even if it’s a garment industry. So, these are the area which are hosted by the IT industry. So, if a customer base of IT industry are linked to that, they’re highly paid, and they have reduced their staff most of the company has reduced their staff. It’s all across the globe, right, not specific to any particular industry. So, obviously, they have their margin pressure, they have cost pressure, it will bounce back, once it bounced back, they will obviously charge back from their customer if the company has taken a debt or a loan from a bank to pay for its salaries. They have to repay the debt, they have to repay the interest costs, so they will recover. And it will come to the customer.

Mark Stiving 

Yeah, so you think prices are going to go up because of all of the expenses the companies had to incur in the near term in the COVID times. So, prices end up going up to recover those?

Love Sanoria

My views? Yes.

Mark Stiving 

Yeah. And so, from my perspective, that has nothing to do with willingness to pay. Except if every company does that, then there’s no competitive alternative that says, ‘Oh, I’m going to continue to charge the old prices.’ And so, it’s almost implicit collusion, where we’ve all said, ‘Hey, look, our costs went up, we have to raise prices. And now people are going to pay higher prices, because the whole industry does that.’ I could see how that would work.

Love Sanoria


Mark Stiving 

Yeah. Nice. Love. Thank you so much for your time. This has just been fascinating. If anybody wants to contact you, how can they do that?

Love Sanoria

Oh, well, you can connect with me over my mail ID or over the LinkedIn. That will be [email protected].

Mark Stiving

Yep. And we’ll have a link to your LinkedIn page in our show notes. So, it’ll be easy for us to find. Thank you. I appreciate it that. So, Episode 105 is all done.

I’d like to make a quick, very somber note, if I may. Last week, my father died. And as my siblings and I reminisced, and we looked at photos, it struck me that both he and my mom came from really humble beginnings. He was the first person in his family to go to college, and yet they raised three successful kids. And when I look at the success that I’ve been able to achieve and see where he started, first, I’m grateful for everything he did to launch me into my life. And second, I’m inspired, and I’m inspired for you. Because if he could do it, so could you. My advice that comes directly from him, never give up, work hard, take the long view and especially laugh a lot, just like my dad.

Finally, if you have any questions or comments about the podcast or about pricing, feel free to email me, [email protected]. Now, go make an impact!

Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy

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