Transcript
Welcome back, everyone. I’m today joined by Jenny Miller once again. We recently had an interesting discussion around innovation meets pricing, some lessons learned. But before we get into that, Jenny, for those of our listeners who didn’t hear your introduction the first time around, could you maybe introduce yourself and just talk a little bit about what you’ve done, your journey so far, and also maybe even a little bit about what you’re writing? Oh, that’s great. Thank you, Annaie. Yes, uh, I am founder of Untapped pricing. Uh, we help companies use price to drive growth and profitability and deepen customer connections, so we look at all facets of pricing.
So not only uh uh the the pricing model and the numbers themselves, but also price framing. So how your price, how and when your prices are presented in your customer’s journey with you. Uh, how, uh, value is communicated, uh, by your staff, by your sales materials, um, and how the structure of your pricing changes over time and evolves with you as your business evolves. And, um, as I’m listening to that, I’m, I also think back of our exploratory, very brief preparatory conversation around, actually pricing, price is such a loaded word.
And I loved hearing you there talk about unlocking value. Um, but, and, and we said to each other, yeah, that everybody is an expert on pricing and price, etc. etc. But how would you define this? What, what is price? I know we, we touched a little bit on it in our previous um podcast, you know, the the, it evokes emotion, etc. but What actually is price? It’s a multifaceted something, isn’t it? So how would you define it? Yeah, it is. Uh, so I think it’s about a value exchange, uh, at the heart of it.
So, uh, a customer or client is paying you or sort of financial compensation for, uh, the value that they are, uh, receiving from your product or Service. So there are various elements to, uh, price, as I mentioned. Um, so if you think about a retail business, that might be, uh, kind of one-off fees or subscription fees. There might be shipping fees, uh, there might be upsell fees and so on and so on and so forth, depending on the business model itself. And, yeah, can you also explain to us the connection between price and business model?
And, and really is at the heart of any business business’s success, pricing. Oh, great. OK. So, uh, yes, I think, uh, uh, to answer your last question first, yes, I think pricing is, uh, uh, existential for, uh, many businesses, um, and. Absolutely critical to the trajectory of a business. Um, there, there is not much that pricing doesn’t touch. So it is inextricably linked with your brand and positioning in the market, with your products and proposition. Uh, with your sales and, and marketing processes, and also with your kind of customer, uh, journey over time.
So, so how you develop that relationship. Um, and yeah, feeds directly into your, into your business model. So, and, and financial performance of the company. So what would you say is, um, you know, are the, the most important points as we navigate a pricing journey from, well, actually maybe not only from in product inception, but actually, in any context, right? So, is there a journey is the journey different when you have an existing product and you’re reflecting on pricing, or, you know, so what are, what are those core steps?
In your pricing journey that you need to reflect on. Yes. So I think there are 4 key phases in, in a pricing journey. Uh, so the first is, uh, launch, uh, or, or even pre-launch. So that very early, uh, MVP stage, and we actually spoke in our, in our last podcast around the importance of understanding. this to pay is a key key part of establishing product market fit. Uh, so the price testing, uh, pricing is fundamental, uh, to establishing product market fit, yet is often a bit of an afterthought.
But I think the price pricing, uh, plays a different role, depending on which stage, uh, in the journey that you are at. So, at launch at the outset, it’s really all about learning. So, uh, and, uh, collecting those first customers, um, uh, rather than squeezing out every penny. So almost focusing on that user behaviour and value perception. Um, uh, and, uh, yeah, experimentation. And then I think products move into a growth stage and there the, the objective of pricing is to monetize but without killing that momentum.
Almost think about Spotify introducing their premium tiers only after proving free users, uh, uh, would convert and establishing a large enough pool of, of free users. So once you have that traction, I think you can start introducing pricing models that then scale usage and deepen commit customer commitments, for example. I’d love to hear a little bit more about how, and I think it links to your comments around value before, but how, what’s the connection and how do you drive deeper customer commitment through pricing? Is that through a pricing strategy that changes?
Is it highly targeted? Is it, yeah. So how do you do that? Uh, I think it’s about using pricing models that either lay out an upsell path. So over time. Like they, they, they have, there’s a starting package or starting point with you, and then you, uh, the commitment and value to them changes over time. Or it could be, uh, deepening customer commitment by using price as an incentive to sign up for longer, for example. OK. Um, yeah, then just like going back to sort of stages 3 and 40 yes, of course.
I get so sidetracked because I have so many questions. But yeah, sorry about that. Can you just remind us of 1 and 2, just the name. So one is sort of MVP stage, getting things off the ground. 2 is uh growth stage. I think 3 is like market penetration. So here you’re starting to optimise pricing for profitability. So, uh, pricing needs to evolve to really establish that longer term profitability rather than just incentivize customer acquisition. Um, uh, and finally the four stages maturity. Um, so at scale, price can then be optimising for, uh, profitability, but also appealing to different customer segments.
So maybe you’ve got different upsells or bundles or new value drivers to engage different pockets of, of your audience in, in that more mature phase. Um, but I think the, I guess, the overarching point is pricing is not a set it and forget it exercise. It continuous optim optimisation. So it’s a living and breathing growth lever, uh, in the business, uh, you, revisit really regularly to, to stay ahead of market shifts and, uh, where your product is in its journey. OK. And Isn’t it fascinating though, to observe that it’s almost as if there’s a dance between customer and business, um, because surely at some level, we all kind of know what’s going on in terms of the price value exchange, right?
And so I keep wondering how much opportunity there really is to be innovating in the context of pricing. Maybe I’m not being clear, but what I think is, we all know it’s about value exchange. There’s an an element of Um, not negotiation, but, but you either buy it or not. You either transact or not. You either value either gets exchanged or not. But isn’t it all just quite predictable? How much opportunity is there to navigate in innovative ways? I, for business leaders. Yeah, so that’s where I think offering, uh, different choices at different price points is so persuasive, uh, because you’re switching, um, someone from a binary decision, as you say, to buy or not to buy into a, oh, how should we buy or what shall we choose?
And it’s a very different mindset and it’s quite empowering to your buyer. Um, for service businesses, um, if you’re able to, you know, put together a, a bronze, silver, golds in your proposal, then you, you know, you put yourself on the front foot for any negotiation because you’ve already laid out how scope and price need to move together, for example. Um, or maybe with an online subscription business, then you’ve laid out that upsell path as, as a business grows or as a consumer wants more from you. Mhm.
And as we conclude our 2nd podcast, What is your one piece of advice for successfully navigating the pricing journey? Mm, great. So I think my one piece of advice is to seek out the evidence that removes the guesswork. And builds and directly informs your pricing decisions. So that might be conducting research with customers or prospects, uh, asking questions that directly align with what the decisions you need to make. It might involve digging into your data to look at kind of customer behaviours and how they’re currently interacting with your pricing and your choices.
Um, and it might involve experimentation. So running tests, pricing tests, or, uh, and that might be changing the internal pricing process. It might be running AB tests if you’re able to isolate different user experiences, but experimentation and evidence building is absolutely key. One last question. Who owns pricing? In an organisation or in a business. I think because at some, at some level, everybody feels that they own it, or a part of it, at least, right? But who should own pricing? Yes. Ay, I have seen it sitting everywhere.
Uh, and, uh, the CEO founder, the CEO, strategy team, marketing team, uh, finance. Um, uh, and even worse than that, I’ve often seen it floating around with an unassigned owner, so it’s the hot potato that no one wants to catch. I think, uh, I think actually it can be, as long as there is clear accountability, there is no right or wrong place, but say that accountability needs to be at senior leadership level, so that that person has the sway to, uh, kind of influence the activities that, that will, um, drive, uh, the performance of price as a growth lever.
And I, I also think pricing has to be a team sport. So because of that interlink with everything else that you’re doing and because uh it always invites lots of opinions uh across the business, usually because, um, yeah, it it evokes quite an emotional response. And different stakeholders have different needles they need to move, then, you know, it has to be a team sport to take all of those key stakeholders with you and to ensure that alignment and um, uh, cohesiveness across price and other other key activities.
Well, on that note, thank you very much, Jenny, and I’m sure we all look forward to hearing more about what is going to come in your book, what’s going to be happening next. But I really found that super interesting. And, uh, just remind me, how can, how can anyone get in contact with you? Ah, that’s great. Uh, so just head to untapped pricing.co.uk. Wonderful. Well, I wish you a lovely rest of your day, and yeah, I look forward to speaking to you or seeing you soon.
You too, Annaie. Thank you so much.
