5 Pricing and Packaging Principles That Work As You Scale

Welcome to the latest episode of Go-To-Market Coffee Talks, where your hosts, Marc Jacobs and Rob Kreiner, are digging into the full GTM pipeline from sparking demand to closing the deal and everything in between. Marc and Rob serve up real talk, smart strategies, and the go-to-market pitfalls you'll want to dodge. Pricing is one of the last things founders want to touch and one of the first things that quietly breaks growth. Pricing and packaging shape who buys, how fast deals close, and whether expansion feels natural or painful. In today's episode, Mark and Rob cover 5 pricing and packaging principles that work as you scale. Hey everybody, welcome back to another episode of Go-To-Market Coffee Talks. I am Rob, and it's, it's been a while since we've done a, uh, since since we've done a live session like this. Marc Jacobs, how have you been? I've been great. You're a busy man, that's for certain. Busy, busy. Well, no, I appreciate that. Yeah, and we will, uh, we will get into more of what I've been doing lately, uh, in other episodes. But today we have, uh, a really, I think, good topic considering the time of year we are in. You know, it's December, it's a week before Christmas, got Christmas trees, lights, Hanukkah, right? Started, uh, I think yesterday or today. So it's a joyous season and it's a time when a lot of businesses take a look at their pricing strategies and they start to look at, you know, what, what worked this year? What are we going in? What do we have to do going into next year? Well, what are our costs, right? What have we done to the product? Where can we start to potentially increase sales? What do our discounting structures look like? And I think a lot of times, Mark, companies look at this as a math exercise, but it's really not, right? It's a strategic exercise, isn't it? Yeah, I mean, pricing is one of the last things that business leaders and founders want to touch, and it's one of the first things that quietly breaks down and breaks growth. And to your point, you know, today's episode, I thought we'd maybe take up 5 pricing and packaging principles. That work as you scale. And we can throw in a few real startup experiences that we've had, a few business experiences and mistakes that maybe we've seen, and walk it through there. But you kind of hit on the first point, which is pricing is not just math. It is a strategy. Pricing isn't just about picking a number that covers your costs. Your pricing tells the market who you are and what you want to become. And I think that's kind of important. I mean, I've worked with a B2B SaaS business that was pivoting from SMB roots to more of an enterprise approach. And now they priced the enterprise offer pretty cheaply because they wanted to remove friction, but instead it just scared off all the enterprise buyers because they thought they were too immature. Which kind of is a nice way to think that their service didn't have the great quality. So what the business did was raise prices and introduced tiered packaging and boom, increased closed rates and started to get more traction. So it was really about perception, you know, like they were pricing like they were small potatoes and they were treated like they were small potatoes and You know, every company must make a choice even if they don't realize it. Do you want to be the price leader in the market? Do you want to be priced alongside the market leaders to signal quality, credibility, and confidence? A lot of folks don't think about that. You know, they look at it just as a margin exercise and you really got to look at it strategically about, you know, what is your go-to-market and your value proposition? Yeah, it's a great point. And I think, you know, when I used to work in products, right, this was always a hot topic of conversation whenever you, you know, either launched a new product or you added things to an existing product. You know, are we going to increase the price? Are we going to charge for, you know, XYZ feature, right? And I think, you know, I'd be curious what you think about this, but, you know, I've worked in a lot of different industries where pricing for, you know, lack of a better example, right, usually followed with competition. So you were within an X amount range of your competition to not, you know, be so cheap that you seem undervalued, but so expensive that you weren't in a conversation. How do you manage that, Mark? I mean, how do you say to your sales team, look, we're going to price this 20% higher than our competitors, but it's because our product is that much better? How do you How do you do that? You know, I think there's a lot of parts to pricing and the packaging and, you know, it really does get back to the who do you want to be inside this marketplace? I mean, do you want to be the price leader? There's nothing wrong with being the price leader. There's nothing wrong with being the most expensive in the marketplace if you think you, you know, derive that type of value. There's nothing wrong with your approach, which is sort of like we're just going to stay within 5 to 10%. Of the competition and see where that takes us. But it's got to be, you know, thoughtful, right? You know, because it sends instant signals about the value of your product, the maturity of your company, you know, and whether you're built for companies like the one that you're going after and selling. So, you know, it's a good question. Let's get into that topic a little bit more as we go along some of these points because it does start to look at some of the other elements about, hey, I just want to do what the competition is doing and I want to be 5% cheaper. You know, sometimes you got to look at the options, you got to look at price matching, you look at discounting, things of that nature. But let's keep that— I'm going to table that and we'll talk more about as we go through some of these things. Okay. Yeah, no, that's— that sounds great. So I think moving on from, you know, let's say point number 1, right? We go into point number 2. And point number 2, I really, I really love personally when I was in sales and even in marketing to some extent, you know, packaging. Packaging is a creative way to show the market, you know, something that may be new, right? But it may be existing, but to show it in a different way and to price it in a different way that, you know, maybe the market hasn't seen before. So when you think about Packaging, right? What, what, what are some of the key elements to think about when you're packaging up your pricing? I think packaging first should be built around the buyer. You know, what does the buyer want? What do they want to achieve? It's not a list of features that you just throw all together and say, yeah, here's the package. It's like, you know, what are you actually bundling together that helps the client get to their goals? In, you know, as an ex-product person, well, don't take any offense to this, but a lot of times, you know, you'll see the product folks working with engineering or the technology team, it's all about, you know, it's dictated by what can be done. You know, it's in this next module, is going to be, took us this many sprints to build and cost us this much to to release, and therefore, you know, we're going to bundle that in and we're going to raise the package price by X amount. You know, those are factors to be considered, but, you know, they aren't really the determinant of what you do there. So, you know, most buyers are going to not go line item by line item. When they're comparing. They're gonna look at the package that's presented to them. If there's a stripped-down version and a deluxe version and one that's in the middle, the standard version, they'll usually go for the standard version, which is something you should keep in mind, you know, when you're designing things. And, you know, good packaging quietly guides buyers to the right choice. Now, bad packaging, which is when you just start throwing features and benefits and adding your technical costs in there, you know, it just forces your sales team and your customer-facing team to explain and justify and missell, discount, all those things. Yeah, and that's, you know, it's a great point. I think I think it's gotten much better over the last several years, but there still can be disconnects between sales and product. And I think depending on where your product people sit, if they sit in engineering, that becomes very much a math equation about, you know, how much resource have we put into this and, you know, what do we have to make to kind of get back our cost to build.. But if your product people are sitting in more of a commercial seat, that should not be, that should not really be the issue. And most product teams, you know, should really bleed between the two, but they don't and we all know they don't. But, you know, it's a great point. It's not just, you know, I could think of situations, Mark, in companies where we work, where we have worked, where, you know, we would package certain things together that made sense from a client perspective. But then you almost get to this point where there's too many options and there's too many things where, you know, salespeople are having to explain, well, if you get A and B, you get C, but then if you add D, I can give you E for 50% off, right? You start to roll down this hill and options start to slow you down, right? So that's another, key thing that you have to keep in mind, right? 100%. I think that's point 3. Too many options slow everything down. Yeah. Because, you know, when, when you're packaging it together, you do wanna think of the outcome. You know, what's the use case? What is it that the client gets out of this? It's not to your point, that list of features and benefits, and it's not just a justification of development costs and, and delivery costs. So Those are all part of the equation, but there really has to be a strategic view, you know, that you have to have an outcome that's gonna be, you know, desired by your client. One of the things that happens, I see my experiences is that people get desperate. So they start adding more and more things into the package. Yeah. And, You know, the more complicated your pricing, the more complicated your package, the harder it is for people to buy from you. You know, too many options confuses buyers, slows down decisions, makes conversions really hard, you know, and then your forecasts and your planning all break down. I mean, I think we've both worked with companies that have, gone off the rails a bit sometimes in terms of what they— in variations and customizations. You know, we both have worked with companies that have 70-page-plus price guides. Yes. The complexity leads to unnecessary human involvement because somebody's got to explain these things. So, you know, the whole dream of like, oh, somebody's gonna buy it, you know, it's gonna be self-serve. It just doesn't happen because it's just too complex. And then business slows down, deals take forever, added cost, and in many extreme cases, it just turns off prospective buyers because, you know, they just feel that you're difficult to deal with. So, you know, that level of options, which comes from a good heart— I want to customize, you know, I want to give this specific flavor of ice cream to this specific prospect just can spiral. So remember, too many options slow everything down. Especially if you're a company that is offering a technology product with a service offering. I think I've seen, like we've both seen, those are usually the companies where packaging and options start to get a little ridiculous because you have technology and then you may have human beings on the back end, even though, you know, those are going away. With AI these days, but they still exist. And I think that's where you can really start to overthink how you're putting together the humans with the technology to the client and how you're presenting that and how you're packaging that. That can really start to lead to a lot of confusion. It can lead to a lot of inconsistency with, you know, how you're structuring your deal. Some deals get this, some deals get that. And then as a, you know, from a sales management perspective, looking at all these deals, it's hard for you to really gauge what your real pipeline is because there's some mishmash of things going into all of these deals. So particularly you companies out there who are combining human services with technology products, these last two points I think are crucial to keep in mind when you're pricing things out and thinking about, you know, what kind of packages you're going to offer. So I think that takes us to point number 4, Marc. Marc, pricing has to match how you sell. Yeah, it is. I guess I shouldn't be surprised, but I am surprised still that when I see folks who want to, you know, their whole value proposition of how they go to market and how they want to sell is, you know, customers can buy on their own. We're transparent, we're easy. To understand. And then they create this incredibly complex pricing grid and package grid that needs to be, you know, explained. So if you really have a disconnect, you know, between how your product is priced, how the components are priced, how they are packaged together, if that is disconnected from like what you think your process is in terms of selling, and the timeframes and the length of engagement, which ties into your forecasting, all that, it has to be synced up. So I guess this point is, it's just a little bit of a surprising pet peeve that when I see the contact is for pricing and companies consider themselves Oh, you know, we're do-it-yourself, we're simple, we're easy, our pricing is transparent, we expect to close things in 30 days, and then they contact us for pricing. It makes no sense. You know, once you put contact us for pricing, I start thinking you're, you know, you're 90 days plus in terms of what your, your sales cycle is because I can just see this box being opened up with all these different things going on in, in the package. You know, I'm sure you've seen the same thing, Rob. 100%, right? There's two things that I think this in particularly touches on. One is friction. And, you know, where you're talking about this contact us for pricing sort of scenario just creates friction. It creates friction for the buyer. You're probably losing a good percentage of your leads at that point because they just don't want to contact you for pricing, right? But if they're thinking to themselves, why can't I just see the pricing? So you're increasing friction for your buyer, right? And then the other part that this, you know, you kind of got to think about is something called cognitive load. So to touch on consumer psychology for a second, but, you know, cognitive load is this: we all are processing so much information on a daily basis that putting too much information on your pricing pages or giving too much information for your sales team to have to go through and decipher and explain to a prospect It creates too much cognitive load to the point where people, you know, from your sales team perspective, what they're gonna end up doing is just selling the same thing over and over again because they get comfortable with it. So they're gonna potentially leave money on the table because they're not adding things when they should be, just for the simple point that they've gotten very comfortable with these 1, 2, 3 things that they can sell really well, and that's all they do. Um, and you see that a lot when you start to get too many options and, you know, the way you're pricing things isn't matching the way that they're talking to their prospects. Uh, and then from a prospect perspective, from a lead perspective, when they hit your website and there's just too much information, um, or there's too many steps in the way for them to get information, we're too busy, right? The cognitive load becomes too much and they jump ship. Uh, and that's when your bounce rates start to get ridiculously high. So I think those two things, you know, reducing friction and cognitive load are super important. When you match your pricing to how you're selling, because all of that should flow really seamlessly for your team and, you know, for your prospects when you're communicating to them. Yeah. Bad pricing is truly one of the major sources of friction in doing business. And I think that's probably a discussion on a podcast all on its own. To talk about friction. But let's move along. I think we have one last point that we wanted to touch upon, which is, okay, so we put this pricing out and we put this packaging out and we made some mistakes. We had some wins and we had some learnings. We want to change our pricing. Let's do it tomorrow. Let's get it done right now. What are your thoughts on that? That is never— it's never those overnight changes. And this can include discounting, right? So I'll throw not just changing your, let's say, your book rate on what you're charging for a product, but changing your discount structure or what your sales team can offer from a discounting perspective. Any of these changes overnight are never a good thing. I would even venture to say that changing your pricing at the end of the year Sending out a price letter, let's say now, December 16th, um, letting your, your clients know that come January 1st there's going to be an X amount of price increase is too late. Their budgets have already been set, right, for the most part. So now you're going to increase price on them with 2 weeks left in the year where there's not going to have a lot of, um, ability to maneuver, right? So when you're changing pricing, it needs to be not a long drawn-out conversation, but needs to be a conversation. You need to give your sales teams at least 60 days notice, 90 days preferably, so that they know what's coming. In my opinion, especially, you know, working in product and marketing, knowing what those changes are and how they're, you know, knowing in advance what those changes are and what's going to be coming, you know, helps from a product perspective and it helps from a marketing perspective, but it helps to set the sales team expectations. You know, they get to, you know, think about their major accounts if they're doing account management. How they want to communicate it. It just gives them time to react. Sending out price changes towards the end of the year is never a good thing. Changing discount structures is also something I think that companies just kind of do, right? Like, you know, we're going to get rid of our 25% discount. We're just going to do, you know, say 10, 15, 20% discounts, just as an example. Um, that's a big change. It's a big change for sales, right? Going back to what we were talking about pricing, how you sell. That could have been something that, you know, sales teams were using in a very strategic way. And now you take that away with them, away from them. So I think it's all about conversation and communicating and just making sure that these, like you said, don't happen overnight. They need to be internal conversations first. Then that has to go out to the market in a very, you know, sort of strategic way. In your experience, What do you think are some of the signs that it's probably a good idea maybe to revisit pricing? Well, if you start to look, competition is one, right? So you should be looking at what your competition is doing. Not that you want to somewhat replicate what they're doing, right? But, you know, if your two major competitors are upping their prices by 10-15%, gives you a starting point, right? Now you can start to, you know, look at that and say, we're going to match it and we're going to get, um, be in line with what they're doing. We can go lower and have a competitive edge, or we can go higher and try to be the market leader as far as price goes, right? So understanding what your competition is doing, understanding economic signals, right? I think that's a huge thing, especially if you're working in a, uh, you know, across vertical situation. You have multiple different industries that you're dealing with. You know, right now the economy is funny, right? I'll just say, I don't think anyone really truly understands what's happening with the economy. There's layoffs happening left and right, but the market keeps going up, right? So you have to understand how this economy is affecting your client base, you know. Are— is it having a positive effect, negative effect? Are there companies in your industries going through layoffs, right? All of these things need to be, you know, from a macroeconomic perspective, have to go into your microeconomic world. Otherwise, you're going to look out of touch, and your clients are going to come back and say, what are you doing? You're raising my prices 20%. Don't you Don't you see we're having, you know, cuts here and there? So it's a big job. I mean, it's well beyond just the sales team, right? It includes the whole organization. And that's why there needs to be a lot of communication about it. Yeah, absolutely. Two of the performance indicators I keep an eye on when it comes to revisit pricing is one, deal discounting. You know, if you see a trend line where deals new business deals specifically are taking more and more discounting on, or if you really just had over 50% of your deals that are incurring discount, there may be something worth revisiting with your pricing. Uh, another performance indicator is just the length of time to close deals. Now that can be a lot of things, but a part of the diagnostic process if you see deals getting longer, you know, the packaging, the pricing, the way there's, you know, features and expansions and upsells that are involved in it, that all that can be very confusing as well. So I'd keep an eye on that in terms of an indicator. Yeah, that all makes perfect sense. You know, I mean, how your pipeline velocity is working And this is why, you know, going back to, I think, what was it, our first episode about CRMs, right? I mean, this, this tracking your deals and tracking your velocity and tracking, you know, all of this information, all this data should be taken into account. You know, again, looking at, you know, sort of the microcosm, right? Because at the end of the day, both of those things need to come together and they have to mix, right, properly. You have to take all of the things that are happening economically with your clients and in the industry, all the things that are happening in your organization with your pipeline, your velocity, your, your win rates, right, how much revenue you are making, and that all has to come together to formulate pricing strategy, right? And, you know, it's— you're teaching your customers how you want them to buy, and that's a huge It, it's not to be taken lightly. It's a huge thing. And changing it, you and I have both been in situations where we have seen massive, massive disruption from clients, complaints because of pricing changes that were— it, it creates, it creates chaos. I mean, I've worked with a legal tech firm that had probably over, probably 50 price points. For one product, one product, 50 different price points. And we're not talking a million-dollar product either here, talking the smaller size SaaS product, you know, ton of price points. How did that happen? Because it happened because they were constantly discounting new deals, they were giving away add-ons for free, but at the same time they were increasing price points and upselling add-ons to existing clients and they were introducing new features and some of the features they were charging for, some of the features they weren't charging for. It was so random. You know, I remember like a client, when a decision maker would leave client A to go work at client B, you know, they'd be thoroughly confused. They'd be like, was I even working with you guys before? You know, and it just led to a you know, frustration of what they used to have and what they have now and what they can afford. So to your point, it's easy to get out of control. And when you start making like a lot of pricing and packaging decisions on the fly, less is more, right? And I think that's— it's so simple, but it's like words to live by, especially in business. I mean, less, less is more. And sometimes you run into You know, especially if you're new to an organization, you know, not so much talking about a startup, but you know, you come into a mid-sized company and you know, you've got some experience and you see how things have been done in the past and you start to look at the pricing and the packaging and you just speak up and you're like, this is too complicated. We have to make this simpler. You're gonna run into friction. You're gonna run into people who have been with the company for 20 years who don't wanna change, right? They, they expect things to be a certain way and they don't think their clients are going to, you know, sort of adapt to what's happening. But in that situation, when you're again lowering the cognitive load and you're lowering the friction by making things simpler, your pricing stands out and it becomes actually clearer for how somebody should actually be buying something from you. So All things to think about. That is it. That's the key, people. You know, pricing isn't just what you charge. You are teaching your customers how to buy. You're introducing them into a journey along the way there. And that is something that, you know, it's a good thing to keep in mind when you start to put together your pricing for your products and how you package your products. And this was a fun topic. I have a feeling that we could probably talk about this again, break it up a little bit more. Pricing's interesting because pricing is one of those things that's dynamic. It changes. Very rarely will it go down, but it's the one thing I think that everyone can relate to, not just from selling and buying from a professional standpoint,. But as a consumer, right, you're— I mean, I saw a meme the other day that showed how much streaming services have gone up over the last 5 years. It's crazy, right? And they do it in small little increments. They give you like 2 weeks notice, right? And it's like, we're going to raise it $1.25, then we're going to raise it $2.50, right? It's these small little jumps that you don't realize until, you know, I don't know if this is— this is just an example— Netflix goes from $7.99 a month to $19.99 a month, right? And you, you're kind of looking back like, when did that happen? When did I start paying $20 a month for Netflix? Right? It's the one thing that you can relate to both professionally and personally, because pricing is everywhere. So everybody, take that, take that as your end of 2026. It's not even 2026, it's 2025. I'm jumping ahead. Take that as your year-end sort of call to action. When you go into 2026 and you're looking at pricing, these 5 points will be crucial and help you as you start to look at, you know, either forming your pricing strategy for the first time or changing what you have, right? Just be smart about what you're doing and communicate it. That's— I think that's pretty much it. MJ, Christmas pies. Tell me, tell me what you're eating for Christmas. It's great to have you back, Rob. It is great to be with you. It's great to be podcasting again with you. I look forward to doing a few more over the next couple of weeks. Christmas pies. Well, I think on the next one, because I don't know, we haven't quite— we haven't quite got there yet. So we'll see. But there will be some pies in the, in the hopper, that's for sure. That's, that's great. I have a hoard of Christmas cookies coming my way from my mom. She, she is retired and has a lot of free time on her hands, which means I get a lot of cookies to eat. So I will be lambasting myself in cookies over the next 2 weeks. But yeah, as Mark mentioned, I am around again for the next couple weeks, so we are going to pump out a few more episodes about different various topics. We hope you guys are enjoying the espresso shots. That was a great idea Mark had for these quick little 2-minute segments on, on individual topics. So hopefully you guys have taken a listen to those and are enjoying those, but, uh, we will be back again after this episode with another one. Uh, in the meantime, hope everybody enjoys the holidays, uh, has fun, stays safe, and we will talk to you all soon. Thanks, take care.