Jose Morabito is a highly accomplished Pricing & Finance Executive with an outstanding ability to generate strategies for and deliver on innovative projects.
In this episode, Jose talks about how he carries out his function as a pricing executive. As a pricing person dedicated to seeing the whole company’s goal, he emphasizes the three important constituents who made up the company whose welfare needs to be taken care of. He also could not stress enough on how value plays a big part in pricing decisions.
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Why you have to check out today’s podcast:
- Learn about the mindset of looking beyond your current job, so you continually evolve, improve, and become competent as a leader who is ready to handle the challenges of what lies ahead
- Find-out the three organizational constituencies that are crucial in making pricing decisions
- Discover how to make sound pricing decisions amidst organization disagreements
“We at pricing are an enabler to the business. We’re not a barrier.”
– Jose Morabito
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Topics Covered:
01:18 – How Jose’s journey in Pricing began
02:09 – What is revenue management
03:20 – What made him choose Pricing after moving between Finance and Pricing
04:54 – What are Finance people most concerned about
05:29 – Jose’s thoughts on Finance people being risk-averse, hence the focus on Cost-plus Pricing
06:14 – Life lessons from Jose’s mentors
08:12 – What’s the key to making great pricing professional
09:53 – His thoughts about soft skills versus technical skills
13:36 – At what point should I question what you say
14:59 – How hard does he push against a constraint
15:43 – How does he encourage his people to push against a wall
16:35 – Not saying yes right off the bat
17:15 – Misconceptions people need to hear about Pricing
18:34 – How to communicate Value versus Pricing to product and salespeople
19:33 – Which pricing model did Amex, ADP adapt to
20:05 – Jose’s Pricing advice that can have a significant impact on your business
Key Takeaways:
“The ability to think like a general manager is key in making a good pricing person.” – Jose Morabito
“You typically have at least three constituencies in a company – a shareholder, a customer, and an employee. And depending on the role that you’re in, your job is to look after one of those three constituents.” – Jose Morabito
“A good pricing person needs to have the ability to think like a GM and see and understand and weigh the impacts to the three constituents when making a decision.” – Jose Morabito
“Whenever you can influence somebody by saying, ‘I had this experience in the past and we did something like this and here’s how it succeeded or failed’ – I think that adds a lot of credibility to what you’re saying.” – Jose Morabito
“The person who’s ready to be promoted is somebody who has already been performing at the next level.” – Jose Morabito
“If you are not agreeing to the decision early on, and then agree at the end to support it, that agreement is the only thing that people outside of that room need to hear.” – Jose Morabito
People / Resources Mentioned:
Connect with Jose Morabito:
Connect with Mark Stiving:
- Email: [email protected]
Full Interview Transcript
(Note: This transcript was created by an AI transcription service. Please forgive any transcription or grammatical errors. We probably sound better in real life.)
Jose Morabito
When we’re talking to product folks, whether they’re launching a new product or refreshing an old product, we never start with the price. Price things at the table from the beginning, but we always start with value.
[Intro]
Mark Stiving
Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the healthy relationship between them. I’m Mark Stiving. Today is the seventh episode of our season of Pricing Executives where we’re learning how pricing executives think. Today our guest is Jose Morabito. Here are three things you want to know about Jose before we start. He spent 15 years with American Express, climbing the ladder between two different roles: Finance and Revenue Management. He spent a couple of years as VP of Finance, he’s now VP Strategic Pricing with Quest Diagnostics. And I got to throw in the fourth one because I just learned it. He used to paraglide. Love that! Welcome, Jose.
Jose Morabito
Thank you, Mark. Nice to be here.
Mark Stiving
Hey, how? I don’t even know how you’re going to answer this question. But how did you get into pricing?
Jose Morabito
Dumb luck. As a matter of fact, I was a finance manager at the American Express Latin America headquarters in Miami Lakes. In early 2001, American Express was building their international pricing team. And at the same time, the finance organization was going through restructuring. So, I actually lost my job in Finance, was displaced. There were three finance managers, one in Latin America, one in Europe, and one in Asia. And they consolidated those three roles into two, and they moved them to London. So, I was effectively out of a job, but at the same time, they were stuffing up the brand new pricing team in the region, and I applied, and that’s how I got into it.
Mark Stiving
Nice. So, I’m always curious how people define revenue management because you’re using the word pricing almost synonymous with revenue management, is that true?
Jose Morabito
Yes, I would say that that’s true.
Mark Stiving
Okay. And so, what does revenue management mean?
Jose Morabito
I think it means different things in different cases. In American Express, Revenue Management and Pricing were interconnected. The team initially was named pricing and value tier, you know, point earlier in the introduction, you know, pricing value and the relationship between the two. Eventually, they changed the name to the revenue management function. In a company like Quest Diagnostics, where I am today, revenue management is more around the billing aspect, right? So how do you collect the cash, and how do you manage that function? So, it’s a little bit more back-office operational than pricing. That’s how they do it.
Mark Stiving
Yeah, and I think in a lot of companies, especially hotels, airlines, they think of revenue management a lot like yield management, because they have so much inventory, where manufacturing companies are manufacturing products, and we can make more. I love the Doritos commercial, Jay Leno, we can make more! I think it’s more pricing and value than revenue management in that perspective.
Jose Morabito
I would agree.
Mark Stiving
Yep. And so, you hop back and forth between Pricing and Finance, what made you keep jumping back and forth? What made you come back to Pricing, and what made you leave Pricing?
Jose Morabito
You know, once I became a VP at American Express, I would say that my career was largely out of my hands, they have a very strong talent management function, or at least they did, I’ve been out of there for seven years, where you know, VP’s that were doing well were picked up and moved. There was an FLT Finest Leadership Team Leader over there. They’re two of them that I got along really well with Alan Gallo and Paul Huff. And you know, they both kept taking me into their teams taking turns. I would do two years under Paul, two years under Alan, two years under Paul. And you know, that’s how I ended up moving between Finance and Pricing. Paul typically led the pricing area and Alan more of the finance area, at the time, and then, you know, I ended up here. I don’t know if you’re going to ask me about how I ended up in a pricing role, but I can talk about that, too, later. Like, I mean, I always enjoyed the Pricing work much more than Finance. I enjoyed both, but Pricing was always more fun. And, you know, when Quest was recruiting for the head of Pricing role, you know, I felt that I needed to give it a shot because I had never led a company-wide pricing team. I’ve led, you know, regional pricing teams and I’ve led divisional pricing teams, but never, you know, company-wide pricing team and I felt like I was ready and I needed to give it a shot and I would choose a pricing role over a finance role any day.
Mark Stiving
It’s probably a biased opinion, but I have an opinion about how I think Finance people think about Pricing. Can you tell us, don’t put your pricing hat on put your finance hat on, what do finance people think about pricing?
Jose Morabito
I would say that finance folks are most concerned with adding value to the shareholders, profitability, and making pricing decisions mostly based on shareholder returns.
Mark Stiving
Okay, so I don’t think that’s horrible. In my mind, I get the feeling that Finance people want, because of risk aversion and they want to protect the company, they focus a lot more on Cost-plus Pricing than trying to figure out what customers are willing to pay. Would that be accurate, inaccurate?
Jose Morabito
I would say that would be accurate in some companies. My experience has been in companies where Finance leads the pricing group; yes, they are doing a more cost-plus approach. But over time, as the maturity of the pricing function within the company improves and increases, they will tend to gravitate towards a more value-based approach even if they are under the Finance umbrella.
Mark Stiving
Yeah, I’d love to learn the magic words you could say to CFOs that are doing Cost-plus Pricing that that’s the wrong thing to do. If you know, though, share with me, would you please? So, let’s talk about first off, let’s talk about your mentors. You talked about two people that kept pulling you back and forth. Were they your mentors, and what did they mentor you on?
Jose Morabito
One of them, Paul, was one of my mentors; he always mentored me to think long-term. One thing Paul always told me was, you know, don’t think about the next job. Think about how the next job is going to get you ready for the job after that. So that was always interesting to me. And I think, you know, he said that to me the first time when they were trying to put me in a job that I didn’t want. But then, I saw how valuable that was, and he reinforced that time and time again. I had another mentor who was not my boss. She was my business partner in one of my, actually, in that first pricing role, Doria Camaraza, she led the merchant division for Latin America for American Express, and then she and I got to work together again when I was a Finance VP for Lauderdale service center, she was a center head of the call center there. She always, you know, her mentoring me was always around encouraging me and praising me whenever I told her something that she needed to hear, but she didn’t want to hear. So, she always has the courage to tell people, regardless of the level and your level, things that they need to hear to make a better business decision. Don’t just tell them what they want to hear, because some of these senior leaders will always want to hear what they want to hear. And they will value hearing things that they need to hear, even if they don’t necessarily agree with it.
Mark Stiving
Yeah, that sounds like a fantastic life lesson. And so, did you seek out mentors? Or did they kind of fall in your lap,
Jose Morabito
They fell in my lap. I would say I never really sought them. You know, these were folks that I had worked either for or with, and I had done a good job and I had made them look good. And they saw something in me that they wanted to help develop and help me flourish.
Mark Stiving
Nice. So, let’s talk about, doesn’t have to be your current team, but any pricing team that you’ve worked with or thought about or coached? First off, what are the skills that you think make up a really good pricing person, pricing professional?
Jose Morabito
That’s a good question. I would say that the ability to think like a general manager is key in making a good pricing person, right? When you think about the constituencies or the constituents in any company, right? You typically have at least three, most companies have three. They’ll have a shareholder; they’ll have a customer and they’ll have an employee. And depending on the role that you’re in, your job is to look after one of those three constituents. So if you’re in a marketing or sales, you’re looking after the customer, the client, if you’re in Finance, you look after the shareholder, if you’re in human resources, you’re looking after the employee, and whenever a tough decision needs to be made, it’s typically the GM that’s the one that’s overlooking all three of those and they’re the ones that are going to be making that decision. You know, I think a good pricing person needs to have the ability to think like a GM and see and understand and weigh the impacts to the three constituents when making a decision.
Mark Stiving
Yeah, I think that’s pretty interesting. I often recommend that people go out and talk and learn from everybody else in the company, what are their roles, what are their goals, and how can we help them achieve their goals with the decisions that we make and the things that we do. And I hadn’t thought of it the way you just said it, where it’s across those three constituencies. I often think of it more of, I’ve got sales people pulling me this way. I’ve got product managers and product people pulling me this way. And how do I keep everybody balanced? But adding in the shareholder and the employee side probably makes a lot of sense, probably, especially for the shareholder side for pricing people. So, what do you think about soft skills versus technical ability, knowledge of data?
Jose Morabito
I think, you know, your expertise and technical skills will be more important when you are in the lower levels of the organization when you’re the ones rolling up your sleeves and getting into the data. However, I think the more senior folks need to understand how that data is structured and how it works, so, you can ask the right questions and provide thought leadership to the team. Right on the soft skills side, it’s more critical to have them the more you grow, and the higher you go up the ladder, where you’re more focused on influencing and you have to frame things up correctly, influence people to move into different directions. So, I see it as a pendulum right below where you are, the more important technical skills are, and then as you climb, those technical skills become less important, soft skills become more important.
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Mark Stiving
Yeah, I think I would buy that. Let me throw in pricing expertise. Or maybe its reputation for pricing expertise, because when you say something you want people to believe you. And I would say that that probably fits, that has to grow as your soft skills grow as you grow up in the career.
Jose Morabito
Agree, whenever you can influence somebody by saying I had this experience in the past and we did something like this and here’s how it succeeded or failed, I think that adds a lot of credibility to what you’re saying.
Mark Stiving
Sure. Okay, describe to me the person that you’re going to promote next.
Jose Morabito
Oh, boy. You know, that’s a really tough question, because I think it depends on opportunity. But the person who’s ready to be promoted is somebody who has already been performing at that next level. It’s somebody who has lower risk of failing, if you will. Somebody who’s performing, if you’re a manager, somebody who is performing at the director level, if you’re a director, somebody already performing at the VP level where you’re giving them very little guidance and oversight and direction and they’re essentially putting things in front of you, and you’re agreeing to everything they’re saying. That’s the person that’s going to get promoted. If somebody’s putting stuff in front of me. And I’m always questioning what they’re doing or asking them to do things differently or look at it a different way. They may not be ready to be promoted yet.
Mark Stiving
Yeah, that’s a really interesting question. How do you decide if I should question what you say? Or just say yes, and go do what you say? Because if I think it’s not the right thing, you want me to question it, I assume?
Jose Morabito
Well, I think it goes back to, you know, the advice that Dora gave me, right. Don’t tell people what they need to hear, right. If I’m asking you to do something, and you’re questioning it, it’s either because you don’t understand it or you don’t agree. And I would certainly hope that you feel comfortable enough to have that discussion with me and either get me to clear it up or help convince me that my way is not the right way. So, I would welcome that in and actually encourage it at every single level in my organization to question what your leaders are doing.
Mark Stiving
One of my favorite sayings that I heard, and I think it’s Intel that adopted this or where I first heard it, and that was disagree then commit. In other words, let’s have a big discussion. Let’s debate and then once we’ve made the decision 100% behind it doesn’t matter which decision was made.
Jose Morabito
That’s right. And if you are not agreeing to the decision early on, and then agree at the end to support it, that agreement is the only thing that people outside of that room need to hear, right?
Mark Stiving
Yes, yeah. We don’t need to go bad mouth people. So how do you decide when to go push against a constraint? I often call us pushing walls, right? Push against the constraint. Think of it as changing a process versus just saying, yep, I’m going to adopt that. I accept it. That’s the way it’s going to be. I’m not going to change that. So that’s a really hard decision.
Jose Morabito
It is. And I want to say that how hard I push depends on what’s the prize at the end. Right? So, if it’s something inconsequential, or has very little impact to the business or to the bottom line, I may not push as hard. Right? But if it’s something that I truly think is transformational in nature, and it’s going to significantly improve something, even if it’s a harder push, and a harder thing to accomplish, I will push harder on those things.
Mark Stiving
Yeah, and certainly that makes sense. It’s your decision or your thought process that says this is really impactful. It’s worth my time, energy, effort. What do you think about your people who do that? Should they be doing it? Should they be pushing as well?
Jose Morabito
Oh, yeah, definitely. You know, I keep telling some of the newer folks on the team at the lower levels that you know, we’re not order takers, right? We’re not here to take an order from a commercial person that says, ‘Hey, you know, my client wants this. Give it to me. Right? You know that. That’s not what we do. Right? We try to do what’s right for again, the three constituents, the customer, the shareholder, and the employee, and, you know, if you don’t agree with what the commercial person is asking, absolutely push and come to a consensus, come to an agreement that is good for everybody.
Mark Stiving
Yeah, I love that. I found that really hard in my career to figure out when to push and when not to push. It’s just, it is hard. And I guess my advice and correct me if you disagree, but my advice is to first say, ‘Yes, I agree with you.’ And then think really hard if I’m going to push against a constraint, make a conscious decision that says, ‘I’m going to push back on this one.’
Jose Morabito
Yeah, I mean, I would agree in the sense that I would never say no, right off the bat. So, I don’t necessarily always say yes right off the bat and then push. I may ask for time to think about it. Yeah, they’re coming to me, you know, but I would agree with your point there that, yes, is a good place to start. And then push later. Certainly, don’t ever start with a no.
Mark Stiving
Yeah, well, one of my big lessons that I learned way too late in life was to look for areas of agreement instead of areas of disagreements.
Jose Morabito
That’s how you build relationships. Yeah, absolutely.
Mark Stiving
So, what are some pricing lessons that you wish more people know? More people inside your company, outside your company?
Jose Morabito
That’s a tough question. You know, I want people to know that we, pricing, are an enabler to the business. We’re not a barrier. You know, some people, they hear the word pricing, they have a revulsion, right? They’re like they’re there. The cops are trying to make me, they’re trying to make my job harder. No, we’re trying to make your job easier. We’re trying to make more money for the company, you know, better solutions for the customers and, you know, better life for the employees. So, let’s do that. That’s number one. You know, number two is we’re not always out to raise price, right? Sometimes we recognize when the price-value equation is not imbalanced that we need to lower the price. So, there’s just some misconceptions out there on pricing that I think people need to hear.
Mark Stiving
I’m a little more than curious. I’m actually very curious about value versus pricing in the following sense, I get the feeling a lot of pricing people think it’s, I’m watching the numbers, I’m figuring out what the right price is. Maybe I’m crunching some new reports. But it also feels like most people in the business don’t understand what value means. So how much time do we as pricing spend educating product people, salespeople about what value actually means and how we achieve higher prices?
Jose Morabito
So, the way we do currently, when we’re talking to product folks, whether they’re launching a new product or refreshing an old product, we never start with price, you know, pricing’s at the table from the beginning but we always start with value, right? What’s the value to the customer from ordering this particular product versus the competitive product or the product it’s replacing? You know, why are they better off you know, what’s the benefit? And we don’t move to the price discussion until everybody’s clear on what that value component is, what the benefit is, the value product. A lot of times the product people will say, ‘Hey, we’re launching this new product, we need to know what the price is so that we can model the outcomes and get it approved’, then, that’s not the right place to start. So, we always start with value.
Mark Stiving
That is absolutely a brilliant answer. Out of curiosity, and are you able to tell me, did Amex or ADP do the exact same thing? Or was it a different perspective?
Jose Morabito
Amex certainly did. ADP was more of a cost-plus approach. But Amex certainly was, I would say, a pioneer in the value-based pricing arena, you know, going back to 1999, 2000, you know, going back 20 years, and they were doing you know, value-based pricing already. Yeah, that’s where I cut my teeth in value-based pricing.
Mark Stiving
Nice. Yep. Okay, we’re going to have to wrap up. But the final question that I always ask is what piece of pricing advice you would give our listeners that you think can have a big impact on their business.
Jose Morabito
Understand what the value is of your product, how that’s differentiated versus your competitor and make the hard decision on whether you’re going to be the premium price provider in the market, the low-price provider in the market or somewhere in the middle. Once you come to grips with where you want to be, you’re going to have a better time at it.
Mark Stiving
Yeah, and then you can, it helps you make your decisions. Jose, thank you so much for your time today. If anybody wants to contact you, how can they do that?
Jose Morabito
I am on LinkedIn, Jose Morabito, M-O-R-A-B-I-T-O, I think I’m the only one there, so it should be pretty easy to find. Thanks for having me, Mark. It was great!
Mark Stiving
Episode 87 is all done. This is the time where I asked you to please leave us a review. These are very, very valuable to us. And I promise I’ll read them as well. The most recent review titled, Great Interviews and Great Guests:
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