Impact Pricing Podcast

Ep161: What is a Value Chain, Why is It Important, and How Does It Impact Value Pricing with Shantanu Basu

Shantanu Basu is currently the Senior Director of Go-To Marketing Strategy and Operations at Tanium. He was Director of Strategy and Operations at Intel for a long time, and he’s part of an organization called RevGenius. Shantanu got his MBA from the University of Michigan.

In this episode, Shantanu discusses value chain alignment alongside the importance of knowing what your value is and understanding what your customers think what your value is.

Why you have to check out today’s podcast:

  • Discover why knowing your company’s value and understanding how your customer sees value in you when doing pricing;
  • Understand the importance of doing things one at a time, especially when communicating about the company’s value chain; and
  • Find out why it’s necessary for you to be able to ask the right value chain alignment questions

“As a pricing professional, you should be able to ask questions and articulate – if you ask the right questions; articulate the value of your product across the entire value chain.” 

Shantanu Basu

           

Topics Covered:

01:47 – How Shantanu got into pricing alongside the discussion around capturing and communicating value

04:20 – Knowing your value vs. understanding what your customers think your value is

10:34 – How he communicates with people to help them understand how the value chain inside that company looks like

13:57 – The difference between being right and being effective in doing pricing

17:58 – How to align product positioning with packaging

22:34 – Discussion around the good, better, best framework

26:35 – Briefly talking platform pricing and how it intersects with good, better, best

30:49 – Shantanu’s piece of pricing advice for today’s listeners

Key Takeaways: 

“Do you understand how value is created for your product, your business, your industry? Do you know how to communicate and then, hence, capture that value? It starts and ends with value. As long as you can connect those different points along the value chain, you perhaps have something to go to market with.” – Shantanu Basu

“Change comes from understanding. If I don’t understand how my product positioning team and/or my sales team thinks our value is, I don’t know how to influence that change, assuming I am right in understanding what the customer said.” – Shantanu Basu

“Every time there is a shift to be made from our steady state, you start to ask these questions and go try to reach as far back into the value chain as you can without pissing off too many people and slowing down business. It becomes an art rather than a science.” – Shantanu Basu

“Change management is not about right and wrong or numbers or the customer. It’s about people and the emotions and maneuvering the informal dynamics of an organization, which I would like to think it only comes with experience.” – Shantanu Basu

“Pricing isn’t rocket science. Influencing change via pricing and influencing the right behavior – whether of your customer, your sales rep, your CEO, or your customer success person – is where the art comes in.” – Shantanu Basu

“You don’t have to be an expert in every piece of the value chain. That’s not your job. There are people who will always do better than you. But stretch all the way down the value chain and all the way up the value chain and feel free and empowered to ask questions at each point so that you understand the entire value chain. Because when it comes down to this ‘simple piece of pricing’, your understanding across the value chain is what’s going to probably provide the best results, not just coming up with a number and not just coming up with X.” – Shantanu Basu

People / Resources Mentioned:

Connect with Shantanu Basu:

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.)

Shantanu Basu

When you think of yourself as a pricing professional, when you’re doing your pricing jobs, so to speak, don’t limit yourself to what somebody else might consider the definition of your job. As a pricing professional, you should be able to ask questions and articulate – if you ask the right questions; articulate the value of your product across the entire value chain.

[Intro]

Mark Stiving

Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the perceived relationship between them. I’m Mark Stiving and we want to help your company win more business at higher prices, and helping us do that today is our guest, Shantanu Basu.

Here are three things you’d want to know about Shantanu before we start.

He is currently Senior Director of Go-To Marketing Strategy and Operations at Tanium. He was Director of Strategy and Operations at Intel for a long time, so he’s kind of a kindred spirit, and he’s part of an organization called RevGenius which we might ask a little bit more about, and sadly, he has an MBA from Michigan, so I’m not sure how smart he’s going to be. Let’s figure that out.

Welcome, Shantanu.

Shantanu Basu

Thank you, Mark. I appreciate you having me here. This should be a fun conversation. And I have to say, Go Blue!

Mark Stiving

Oh, man. So, just so everybody knows, I’m a Buckeye – an Ohio State Buckeye – and we don’t get along, at least from a school or rivalry point of view, but I’m sure Shantanu is a super smart guy.

Hey Shantanu, how did you get into pricing? Or do you even think you’re in pricing?

Shantanu Basu

That’s so many questions in one, right, Mark?

How did I get into pricing? Frankly, and you know, there’s this gentleman, Gordon Andrew, who used to be at Tanium. He is now somewhere else doing really good things. And he called me one day and he said, “Hey, I saw you applied for this gig in product marketing and I’m not going to hire you for this one.” And I’m going, “You could have just broken up with me over text. You don’t have to call me.” And he said, “No, no, no. I need a pricing expert.” And I’m like, “I don’t consider myself a pricing expert.” And he says, “I know. What I think I’m looking for is somebody who considers himself or herself a business or a Go-To Market Strategy expert that understands the value chain end-to-end and can bring all of that to bear via pricing and packaging to go communicate value and then capture the value.”

That’s essentially how I got into pricing. So, it hasn’t been more than two years that I’ve had pricing on my resume or my LinkedIn profile. Does that make sense? Does that give you a sense of how I entered it?

Mark Stiving

Yeah. So, not only does it make sense; I actually love what you just said. And I would add a tiny little – not tiny piece but a huge piece to it, where you said the whole value chain is communicating and capturing value. I would have put creating before communicating, right? So, how are we figuring out which products we want to go build? And does it actually have value? And so, the more we understand the value of our customers on our marketplace, the better we can create, communicate, and capture value.

So, thoughts on what I just said.

Shantanu Basu

Now, that makes sense to me. The word value shows up. You have these brilliant conversations on your podcast that I listened to, and the word value shows up at some point. You go, ‘God, stop talking about value. There’s one more time you say that word.’ But it’s all comes down to that, right? It’s do you understand how value is created for your product, your business, your industry? And then, do you know how to communicate and then, hence, capture that value? It starts and ends with value. And as long as you can connect those different points along the value chain, you perhaps have something to go to market with.

Mark Stiving

Yeah. I think my latest mean that I created for a presentation I did not too long ago may be overstating it, but I say companies exist to create value for customers. Pricing captures value. And that’s it.

Shantanu Basu

I’ve seen that. I’ve seen that post and I liked it, and I think I came back through and I went to like it again. I went, “Oh wait, I already liked this one.”

Mark Stiving

You’re the type of follower I love. Thank you, Shantanu.

Okay. So, help me understand. How is it that you go about understanding how your customers are perceiving value from your products?

Shantanu Basu

Fair question. It’s been a journey over the last two years here in this pricing-driven Go-To Market strategy role, and I think it’s come about in really two ways, understanding two things, right? How do we like to talk about-

I know the question you’ve asked. I’m going to get there.

How do we like to talk about our product? How do we like to talk about the value that we think we are creating? And I say think because we don’t know we think, right? All of us think this is the value. And then you sit in on a couple of few sales calls, you sit in on a few unfortunately named post mortems of lost deals, and you go, “Here’s what the customer said.” “Here’s why I lost this deal.” Or I’m listening on an actual sales call, and the customer is gracious enough to entertain some of my questions, and the customer goes, “Hey, I hear what you’re saying, but what I’m really looking for is X and you can do X.” And I’m going, “Ha! It’s interesting. Three customers now said we can do X for them, but we never actually say X in our conversations.” I don’t think I’m actually pricing for X, either. I’m actually pricing for Y. It just happens to be used for X more often than not.

And so, knowing what we think our value is, and then listening to what your customers say your value is, and then you’re trying to triangulate those two things or trying to connect those two things, it’s probably where the happy medium content, probably where you end up packaging and pricing appropriately.

Mark Stiving

Yeah. I love the story that you just told. And what turns out, I don’t know that what we think our value is even matters, right? This is one of those things where we have to let go and the only thing that matters is what our customers think our value is.

Shantanu Basu

You know, I didn’t know this was going to happen in our conversation, Mark, but every time you speak, I swear, there is a post of yours or podcast of yours or a meme of yours that pops back into my mind. I’m like, “I’ve heard this before. He has said this before. Oh, wait. Yeah. I read it on that.” But I’m glad you went there, Mark.

There is the reason I first started with knowing what we think our value is, and then I said that I need to understand what the customer thinks, you know, says our value is to them. You know, all customers, not just one. At the end of the day, it is then my job to influence internally, to shift either how we talk about things or how we package things, how we position things, and then how you price what it is that you package and position. And change comes from understanding. Without trying to sound too philosophical about it, if I don’t understand how my product positioning team and/or my sales team thinks our value is, I don’t know how to influence that change, assuming I am right in understanding what the customer said.

Mark Stiving

Yep. No, I think that’s absolutely right. I guess my point was, as a company, I don’t really care what we think; I care what my customers think. But on the other hand, as a change agent, if someone is trying to influence the inside of the company, now I care what my company thinks, right? I care where we are today, because I have to get them to move somehow to where the customers are. And I think that’s really valid.

Shantanu Basu

Absolutely. I hear you. It does start with, you know, I’ll flip my answer. It starts with what my customer thinks. You also have to, then, you know, I wonder how you’ve talked about this with others or any guidance you have to your listeners, even to me.

When you talk, when you’re in a product-lead, many companies like to say, you know, it’s a product-forward company, it’s a product-lead growth, may or may not be there, there’s just so many definitions of that term, but then you go- Most places, Tanium, for example, has a very unique value proposition. I won’t talk about this, you know, chat is not about Tanium, but we have a very unique value proposition for an existing industry, right? And so, you could go, I am one of 10 others that already exist, right? And so, my customers are used to talking about my industry or what services I provide like this, and so I need to align with that. But then you have passionate product managers, passionate CEOs and ELD who goes, “I am trying to disrupt this industry by doing XYZ.”

And so I have learned, finally, after a few missteps to go, I have to hear very clearly what my CEO – let’s say it’s the CEO – says he thinks his value is, and then I have to read very clearly what the customer says what she thinks our value is, and then I got to go have that conversation with the CEO and say, “Hey, would you ever invest more in marketing to go change that conversation or you focus on what the customer says thinks your value is and then serve that value? You can’t have it both ways. You have to do one or the other. Decide which one you want to do.” And that then provides clarity in conversation internally.

Mark Stiving

Usually, the CEO gets to make those decisions.

Shantanu Basu

Right? Yes.

Mark Stiving

So, if I were in that situation, I think I would try the following – and I don’t know if it would work; I don’t know if it’s possible – but I think what I would try is understanding the CEOs vision as clearly as I possibly can and then going to my customers and seeing if I can understand the problem that they have that my CEO’s vision solves for them. Because if there isn’t a problem that they have that we’re going to go solve, then we lose, right? There’s nothing we can go do that’s going to help this company be more successful or that’s going to going to help us penetrate that market. But if the CEO has identified a problem, found a unique way to solve it – and we can solve that problem better than anybody else, then we could start having that conversation with our customers to say, “Hey, do you have this problem? Does this problem resonate with you? How important or how hard or how problematic is it?”

Shantanu Basu

Absolutely. I’m going to say that’s better. That makes complete sense.

Mark Stiving

Okay. And so now, your job, at least you mentioned to me earlier, was you want to be able to communicate or convince the rest of the company to come along with us in understanding what the value chain looks like inside our company. How do you do that?

Shantanu Basu

One step at a time, but I think, you know, I’ve had experiences in the past. At Intel, I think my value add, you know, other than my specific day job or tactical operational job, my value add was the same which was I tended to align the value chain internally so that externally, we are, you know, by the time we go external, we’ve lined up the value chain for the value we want to deliver, as opposed to having the value being X but the value chain geared towards Y. And the way- You know, I made mistakes in the past where I’ve tried to pontificate on it, and I kid you not, pontification is the right term there. I preached, pontificated, talked about it, and fell on deaf ears, not because people don’t want to listen or they’re not smart; they’re way smarter than I am. There’s work to be done. There’s money to be made. Every day, you have to move the ball forward.

And so, what I’ve tended to do and I’ve found success in is find those tactical, let’s say, points in time, right?

“Hey, I want to launch this new product. I want to launch a variation of the SKU of that product.” And you go, “That’s easy. I can literally make a SKU in two days. Systems are tested. UAV testing in three days. Price is not that difficult. It’s a variation. You can do a quick analysis and put a price on it and put it out to the sales team. It’s not rocket science, what we do operationally.” Though, that’s when you start asking questions.

So you go, “Why?” And he says, “Oh, because this customer asked for it.” “Oh. So, this one customer has asked for it.” Then said, “No, no, no. It’s actually five different customers in the past have asked for it.” And I’m like, “Interesting. So, six customers have asked for it?” And like, “Yeah.” “So, you want us to create a whole new product and enabling go-to market motion for six customers? It might be right. If this is Bank of America and JPMorgan Chase and the US Marines, then shoot, we should do it.”

And so, without going into more detail, I think the way I’ve tended to do it is every time there is a shift to be made from our steady state, you start to ask these questions and go try to reach as far back into the value chain as you can without pissing off too many people and slowing down business. It becomes an art rather than a science, and I learned this from a mentor of mine, Stephanie Hallford, who’s still at Intel. She had this way of doing it where she used every tactical decision to affect strategic change bit by bit. And so, by the fifth time you do this, people are used to the 10 questions you ask. And then every time, you’re going to ask five more questions, such that by the, let’s say – I’m going to make up – by the 15th time you’ve done this, people realize that, “Oh. I’m going to have to think through the answers of these 20-30 questions before I hire Shantanu or his team or his organization to help me communicate a specific kind of value.” And then, you do it once and then do twice, and then over time, it changes.

I will end by saying I have tried to shove this down people’s throats in a short period of time, and fail miserably at it. So, that’s why I started with one step at a time.

Mark Stiving

Yeah, I’m completely with you.

I remember back when I had real jobs, I used to think I was super smart and I would tell people what to do, and I don’t know why, nobody ever listened to me. They should have. I get it. And until you start communicating with them in their language and helping them do better at their job and not trying to say, “Hey, you’re not doing it right, do it my way”, then you start to make progress. So, it’s not easy.

Shantanu Basu

I hear you. Somebody once told me. I remember this conversation. We’re sitting in a conference room at Intel in Jones Farm in Portland, Oregon, and the VP of my group went, “Shantanu, you’re right, and you’re the smartest person on this topic.” And in my mind, I went, “Okay. So, why? What’s the conversation about that?”

Mark Stiving

Right.

Shantanu Basu

And he said, “But I’m not going to do that. How stupid do you have to be?” I was a stupid one, right? It took me time to understand. Like, to your point, change management is not about right and wrong or numbers or the customer. It’s about people and the emotions and maneuvering the informal dynamics of an organization, which I would like to think it only comes with experience, because if there is a way to learn it and I didn’t 20 years ago, then I’m the idiot.

Mark Stiving

Yes. So, one of my favorite lines, and I don’t know if I’ve ever shared this on the podcast, but I do this with people that I mentor. I often ask the question; do you want to be right or do you want to be effective? And it’s very different.

Shantanu Basu

Please tell me you came to that brilliant, simple question later in your career.

Mark Stiving

Oh my gosh. Yes. After many, many failures. Many failures.

Shantanu Basu

It feels like one of those questions, Mark, that, you know, on one hand, I want to say I wish somebody had asked me that when I was 25, but I’m also going to go and be transparent and say, I don’t know that I would have heard it when I was 25. I don’t think I would have understand. Like, intellectually, I get what you’re saying, but do I have enough awareness to understand what you actually said?

Now, I hope I do. I feel like I do. And it is just so I feel like I think I should make that part of my interviews, right? When I’m interviewing for a new candidate for my job, I should ask that question and see how they respond to it.

Mark Stiving

“Which is more important?”

Shantanu Basu

Right. Which is more important? Then, let’s go. Intellectually, I guess most people would answer, “Oh, to be effective” and I’d be like, “say more”, right? And then you start to understand. Are you self-aware enough to understand how to influence change, because pricing, you know, this might not work on pricing podcasts, but I go, pricing isn’t rocket science. Influencing change via pricing and influencing the right behavior – whether of your customer, your sales rep, your CEO, or your customer success person – is where the art comes in. And that’s the fascinating part about pricing for me.

Mark Stiving

Yeah, I agree.

Advertisement

Some companies pay $1,000 per hour to talk with me privately about their pricing issues. And yes, they get their money’s worth. Implementing just one suggestion can yield incremental profit much, much larger than that small investment. However, some companies have found a way to hack my business. They join insiders for just $100 per month. Sure, that gives them access to all of our courses, but many use it just to come to office hours. During that time, I answer all sorts of pricing questions. I’ve reviewed upcoming price increases. I’ve helped price new products. I even helped one insider prep for a job interview for Director of pricing, and yes, she got the job. Sometimes, only one person comes to office hours and it’s like they get the value of $1,000 one-on-one private session. So, if you want to take advantage of me, and in this case, I don’t mind, become an insider. Go to insider.impactpricing.com.

Mark Stiving

So, another thing that you mentioned to me, and I don’t really know what we’re going to talk about so I’m just going to open it up and you just say “here’s what I’m thinking”, how do we align our product positioning with our packaging? Or maybe it’s our packaging with our product positioning?

Shantanu Basu

Here’s how I approach that. It’s a good question. It’s something that we went through, failed I think a few times before. I think we’re getting it right now. You know, we started the conversation with understanding what is the value we think we are providing and then what is the value the customer thinks they are buying or we are providing or wants to get from us or from a competitor. And you go, our positioning drives, you know, you could go to Tanium’s website. It’s a cross functional, powerful platform that we have positioned as doing five fundamentally different things and those are our five solutions, right? So that is our positioning. That’s our positioning the platform and its capabilities, breaking it out into bite sizes.

And you go, how do I package so I can very easily go great? Here are the five solutions. Here are the features or the modules or the capabilities of the product provides. Let’s make a package and let’s call it asset, discovery, and inventory with these three capabilities at this price, because hey, let’s do some market research and it’s great, you know. This is the price.

But on the flip side, I go, that wasn’t difficult. But then I pivot to the customer and I go, can a customer consume $40 or $50 worth of list price product that does these five things? And if my sales team goes, nine out of 10 people afford a 4 1/2 out of 5. And I’d go, yeah, no. I’m never going to be able to land a new logo with that. Because they don’t need the product to where they go. They absolutely need the product. But buying cycles, our annual or whatever it is in any industry, and customers, usually like this class of customers probably has $100,000 to spend and they’re willing to spend $100,000, make a quick decision, and move on.

So, give me the ability to give them something to consume, and easily consume, so that then, we can come back and have a conversation, have the standard plan and expand your way of selling.

The reason I went into that level of detail, Mark, and trying to ask your question, I’ll come back to the straight answer now, I feel like packaging is, again, an art of packaging. The way I position is not difficult. Packaging the way the customer is willing to consume is also not difficult. But when those two are two different things, especially in a company or industry where we’re trying to disrupt something, how do I make it easy for the seller to sell but provide a path such that you get eventually – it might not be in the first stage, it could be in the third expansion – you are now actually selling what it is that I’ve positioned. And so, kind of balancing those two push and pulls is where the difficulty comes. And again, this comes down to change management, one step at a time, putting the right people in the room, and asking the right value chain alignment questions.

Did I answer your question? I said a lot, but I don’t know if I actually gave provided value.

Mark Stiving

I think it did. What I found interesting is as you were giving the answer, I always come back to, well, how would I have answered this question? Or how would I have thought of this? And I think of the customer’s mindset and how would I do positioning for that. And one of the things I found really hard to do, I was trying to figure out how to teach people how to create good, better, best packaging for customers and this is not a trivial thing to do, right? I’m not going to do it in 10 seconds. But the thing that I ended on, which I thought was really good, was can you tell a story about why good matters, why better matters, and why best matters, right? It isn’t just did I put features in each of these? It’s do I have a story to tell that says here’s the type of people who buy the better? Here’s the type of people who buy the best? And I think that fits along with what you’re describing and it also fits really tightly with the way I think about the world, and that’s based on problems. What problems are we solving for different customers?

Shantanu Basu

No, that’s you. You went to the good, better, best framework or anything. I heard what you were trying to say.

Do I get to ask you questions on this podcast? Was it a one-way round?

Mark Stiving

Of course, you can.

Shantanu Basu

Let me ask you something. And I mean it not to put you in a spot. I mean it because I want to learn.

I have found – and maybe this is my 14 years at Intel speaking and it was drilled into me and Intel has a very unique position in this industry – good, better, best essentially became a, you know, the car industry does it too, right? It says, I really want to sell you the best at $100. I know I have to have a $20 option out there, because my competitor probably sells their products at $20. So, I’m going to, you know, either bait and switch you, which sounds like a negative thing but I’m not trying to make it a negative thing, or I sell you the $20 and then I push you towards the $50 option or the $100 option, which is a very cynical way of looking at good, better, best. But unless you’re very good at hiding the cynicism, you didn’t quite say it that way.

You talked about good, better, best as serving different needs, and I have found in my experience that people tend to move away from the genuinely serving different needs to have the $20 option because I must, but what I’m really trying to do all day long is sell you $100 option, which I understand from a sales perspective, but then the audience or the buyer just feels like they’re being taken advantage of. That’s my experience.

How have you approached that? How have you dealt with that?

Mark Stiving

Okay. Shantanu, I’m just going to say, you need to read more of my writings. I love, love good, better, best. This is the best way any company could do pricing and I’d be thrilled to talk to you about it. I’m going to break it up into two different sides to good, better, best, if I may.

First, let’s talk about buying a traditional product. So, you have an iPhone or an Android or some type of phone and you bought either the good, the better, the best, the one with the least amount of memory, the middle, or the most, and I can tell you exactly how you made the decision. If you’re an expert in the product, you bought exactly what you needed. So good, better, best didn’t matter; it was just alternatives for you. If you’re not an expert and you’re scraping to get into the product category, you bought the good. If this is a tiny piece of your budget and you just don’t want to make a mistake, you buy the best.

Almost everybody else buys the one in the middle, and we buy the one in the middle because we’re afraid of making a mistake. We think if we buy the least expensive one, it’s not going to be good enough. If we buy the most expensive one, we’re wasting money. So, buying the one in the middle is the easy answer. And so, by far, most people buy the one in the middle.

Having good, better, best helps our customers make decisions and then influence what decision they’re going to buy.

In a subscription type world, good, better, best behaves very differently. In a subscription world, I want you to buy into my product category at the good level. Oh, by the way, here’s the huge difference between subscriptions and more traditional products. In traditional products, you rarely know the quality of the product before you buy it. And then after you bought it, then you get to learn more about what it is. In a subscription, same thing. You don’t know the product before you buy it, but once you start using it, you learn the quality really, really well, and now the question is, did you get ripped off? Are you going to continue? Are you going to turn out or you’re going to keep paying them money? Are you going to upgrade into the next category?

So, when I offer good, better, best in a subscription, my intent is to get you into the product category of goods, you could try it and love it, and actually get tons of value and say, oh, I really need more capability. I’m going to upgrade into the better category or into the best category.

So, this is part of the expand part of landing and expanding that you already mentioned. I am a huge proponent of good, better, best in almost every company.

Shantanu Basu

I haven’t read everything you’ve put out there. I have seen your propensity and your belief in and how you explain good, better, best. I do appreciate it. It’s taken away for sure. It has eaten into my cynicism about it, and my cynicism does not come from my- it really comes from my experience of having experience in a very different industry in a very different way.

You know, one day, we should talk again, and I’d love to have a conversation with you about platform pricing, right? And what does platform mean? That’s a whole conversation on its own, which doesn’t negate anything that you said. It’s just, it takes it to the next level of complexity and nuance, and I’d love to talk to you about it.

Mark Stiving

Yeah. So, tell me what you mean by platform pricing and let’s see if we can do it relatively quickly, just for fun.

Shantanu Basu

Think about, you know, in our industry, people like to use the term point solutions a lot. People like to use it which essentially means one specific problem, one specified solution, three degrees to the right or left, I really don’t know what to do, but this very thing, I do it the best, I do it really well, right?

And the way people also then tend to use the term platform is it’s an overused term. Platform is like synergy at this point. Nobody actually knows what it means. You know, without getting into that, you go, Okay. Our people want to sell you a suite of products that do 10 different things. So, you know, reasonably well enough. And perhaps, if you buy all 10 from me, the interconnection between those products and your ability to go across this product makes it easier for you. So, the value of it is better than the sum of its 10 parts. You don’t have to go to 10 vendors. You go to one vendor and it’s better like that. People can be using our platform for a suite of products in our industry, which I don’t think is the right definition, however, then you get into the point of good, better, best, right? If my goal is to sell you all 10 but neither one of my individual components is the best step, what it does is just when you buy all 10 from me, you get more than 10x the value. How good, better, best intersect with that kind of market approach is something I haven’t cracked the code on yet. Maybe you have. I would love to learn and discuss it.

Mark Stiving

Yeah. I don’t think that there’s a single answer, but I’m going to give you the best answer I could come up with, and that is forget thinking about 10 different items. Forget think about that as a platform and thinking about that as 10 different features or products that work well together. And so, we could choose to bundle those together, we could choose to sell those separately. If we sold them individually, we probably aren’t as good as our competitors, so it’s not the best of breed.

However, if we can identify market segments that typically want three or four or five of these together because they’re solving a consistent set of problems, now, inside a market segment, what we usually say is who’s willing to pay us the most inside this market segment? Who’s willing to pay us the least inside this market segment? Are their product features that really matter to people who are willing to pay us a lot but don’t matter much to the people who aren’t willing to pay us very much? And can we tweak those product features inside those modules, inside the things that we’re offering, so that people end up choosing the products that make the most sense for their situation.

My favorite example. My favorite company to do pricing is see if you can study LinkedIn pricing. It used to be easy to see the way LinkedIn does pricing. Now they kind of hide it in a lot of places, but the thing I love about LinkedIn pricing is if you want to subscribe, if you want to pay the money for more capability, you first tell them who you are. So, are you a recruiter? If you’re a recruiter router, they’ve got these packages that they sell to you. You’re a salesperson? Oh, they got these packages they sell to you. So, they’ve identified market segments, and then inside the market segment, they say, okay, people who just pay us a little bit, what are the features they want? People are willing to pay us a lot, what are the features they really want? And they create different products inside their market segments. Brilliant.

Shantanu Basu

Brilliant. And I think the way you explained it is a lot simple, right? It’s not complicated, which doesn’t mean it’s easy; it’s just simple to understand, simple to implement, simple to communicate, and then simple to capture the value too.

So, I appreciate that primer. I think I’ll think on it more.

Mark Stiving

Okay, Shantanu. That’s not fair. You got me talking, which means we’re now over time.

I do want to wrap up with the final question though. What’s one piece of pricing advice you could give our listeners that you think would have a big impact on their business?

Shantanu Basu

I think I will leave you with this. I’ll leave our listeners with this. Something that’s worked for me and the people around me who have been successful, I think.

Don’t limit yourself when you think of yourself as a pricing professional. While you’re doing your pricing jobs, so to speak, don’t limit yourself to what somebody else might consider the definition of your job. As a pricing professional, you should be able to ask questions and articulate. If you ask the right questions, articulate the value of your product across the entire value chain. I keep coming back to value chain. You don’t have to be an expert in every piece of the value chain. That’s not your job. There are people who will always do better than you. But stretch all the way down the value chain and all the way up the value chain and feel free and empowered to ask questions at each point so that you understand the entire value chain. Because when it comes down to this “simple piece of pricing”, you’re understanding across the value chain is what’s going to probably provide the best results, not just coming up with a number and not just coming up with X. I’ll leave you with that.

Mark Stiving

I love that answer. And I’ll add on to it, that if you spent the time to truly understand the entire value chain, you become much more valuable to your company and you’re much more likely to get promoted.

Shantanu Basu

Amen.

Mark Stiving

So, Shantanu, thank you so much for your time today. If anybody wants to contact you, how can they do that?

Shantanu Basu

shantanu.basu@gmail.com or my LinkedIn is open. I accept requests, and I’m happy to have conversations anytime.

Mark Stiving

Awesome. Episode 161 is all done. Thank you for listening. If you enjoyed this, would you please leave us a rating and a review? These are very valuable. And also feel free to send me emails to just tell me what you think. If you have suggestions on the podcast, I’d love to hear them. If you have any questions or comments about the podcast or pricing in general, feel free to email me: mark@impactpricing.com.

Now, go make an impact.

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

Related Podcasts