The behaviours separating the best pricing organisations (price makers) from the rest (price takers).
Andreas has recently joined Notion Capital as its Director of Pricing & Monetisation, where he supports SaaS and Cloud founders to drive enterprise value through pricing excellence.
Treat pricing as an organisational capability, not a point-in time activity
Price makers understand the impact of pricing on the bottom line and as a lever of growth. They see pricing as an organisational capability and a source of competitive advantage. Pricing is a C-level topic and is discussed in Board meetings. Appropriate metrics are tracked across the organisation and colleagues are held accountable for the quality of pricing outcomes.
Price takers see pricing as a point in time activity, not a capability. At best, it’s a topic they outsource and, at worst, it’s ignored. They don’t believe they have control of their destiny, and let the ‘market’ dictate terms.
Give pricing the attention it deserves and don’t leave pricing conversations too late
Price makers discuss pricing before a line of code has been written. They spend more time discussing how they will package their product and how they plan to charge than what they will charge. They see pricing as a feature of their proposition, integral to the customer experience.
Price takers discuss pricing a week before they are supposed to launch. They obsess about ‘what’ to charge, ignoring ‘how’. Pricing is mostly based on gut-feel and lacks serious scrutiny.
Lead with value not price
Price makers talk value first, price second. They equip sales functions with the tools and the training to sell the value of the product and therefore defend its price. They are obsessed with understanding the value they deliver to their customers, use concessions conditionally to drive growth, and walk away from bad deals. Discounts are a customer privilege; rare and intentional.
Price takers talk price first, value second. They are obsessed with their competitors and complain about aggressive competitor pricing regularly. They claim to practise value-based pricing but no one can explain what that means. Discounts are seen as a customer right and they aren’t prepared to walk away from bad deals, accepting revenue at any cost.
Build a disciplined cadence around price increases, don’t let fear and doubt dictate your pricing
Price makers increase prices like clockwork and do so confidently; they know their customers and the value they provide. They understand that their highest paying customers are amongst their most loyal. They know that price increases take guts and a value-based culture will have a bigger impact on the prices they charge than their analysis.
Price takers don’t know when they last increased prices or haven’t done so in years. They require months of analysis and debate to feel comfortable to push through even small increases. They believe their business will collapse if they ask their customers for higher prices and would rather remain a customer’s best friend than have a difficult pricing discussion.
In short…price makers take responsibility and ownership for pricing: they treat it as a strategic lever to drive profitable growth. They understand that, if they build excellence in price management, they will drive enormous value for their enterprise. Be a price maker.