The Future of Pricing: Context- Driven Pricing Model with Mark Stiving at Impact Pricing LLC

Hardware people do way too much cost plus pricing. Software people have this amazing advantage over hardware people in that you don't have costs. Granted there are costs, but you don't have these incremental costs to deliver to the next customer. They're very small. And so you have no choice but to find a different way than cost plus pricing to price your products. Well, guess what that way is. It's based on value. You're now listening to Monetize the Art of Pricing. Today we have Mark with us who apart from being a pricing expert, is also an author of very famous books such as Selling Value and Impact Pricing. He's been working in the pricing field for well over best part of two decades now. And we're excited to have you here, Mark, and speak a lot more about pricing today. Thanks, Abhishek. And I'm sad to say it's almost three decades at this point. Well, it's three. Okay. That's a really long time. So I hope we can capture and break down the significance of your learnings, cross this into what we want to speak about today. Right. So let's just dive. Right. So we keep speaking a lot about value based pricing and modern pricing. Like I've read like a lot of stuff that you've written about and you talk a lot about context based pricing as against simple value based pricing. So I just want to start off with that. Can you add more color to what do you mean by that? Like is there an added layer or is that just a different or a deeper way to look at value based pricing? So I wish that value based pricing is context driven pricing. I invented the term context driven pricing, but I only invented it because I got so much pushback from using the term value based pricing the way I wanted to use it. So to me, value based pricing is how much does somebody value a product? And so Tom Nagel wrote a ton of article, ton of books about here's what value based pricing means and, and he thinks of it in terms of incremental value. When I'm comparing two alternatives and how does someone choose one over the other? And it's almost always in a B2B scenario. So we're talking about incremental profit and it's a very specific definition. And I was trying to say, hey, when I buy a shirt, I value it. Well, how much do I value the shirt? I want to capture that in my pricing. So I thought of that as value based pricing. But it turns out most of my colleagues hate that. And so there isn't A definition of pricing that says, hey, we charge based on what people are willing to pay. And so to me, context driven pricing is just a way to say I charge what buyers are willing to pay. That's it. It's that simple. But it turns out the context driven pricing has three really important tenets to it that help us get our arms around what does this truly mean to us. And the first one is pricing, or willingness to pay is context dependent, meaning, hey, when it's raining, an umbrella is more valuable than when the sun's out. The second tenet is willingness to pay is malleable, meaning it makes sense for us to learn how to sell value. Because now I can change or increase how much you're willing to pay for my product when I do a better job at communicating what my product can do for you. And then the third tenet is, it's never perfect. There are always these constraints. And that to me says, hey, hey, go do something. You're not going to be perfect. So that's why I created this concept of context driven pricing. In truth, it's nothing new other than I've put a phrase around the concept that says we're going to charge, at least we're going to try to charge what buyers are willing to pay. Right. So how does somebody go about finding this? I mean, we hear about willingness to pay and we hear about like a value based or context based pricing, which is a more nuanced version of value. This pricing, how does somebody go about finding it? Like if it's a product person or a pricing person, a company, I want to find this answer, but I don't know how. So how would I do that? Yeah, so first off, remember, it's context dependent, meaning that it's going to change constantly. Every buyer has a different willingness to pay every day. Every buyer has a different willingness to pay. Maybe that's an exaggeration, but think that way for a second. And so what we want to do is say, what does value actually mean to that customer? Because even though I've taken away the phrase value based pricing or I'm not using it, still I thrive on the concept of value. People care a ton about value, and the more value you deliver, the more value someone perceives, the more they're willing to pay. So to me, when I think about context, it's really what's the value that I'm receiving given any specific context? And so when we start thinking about context or value, to me, I always use a value table. And you're probably going to hear me talk about this many times during our conversation. But a value table has four columns. The four columns are solution, problem, result, and value. But let me just talk about the two middle ones for a second. And if I were to define what value really is, Value is the result of solving a problem, Period. Value is the result of solving a problem. It's easier for us to think of value in the world of B2B. So let's spend a lot of time thinking about B2B instead of B2C for a second. And so companies manage to KPIs. KPIs are results. And so the question then becomes, what problem are you solving for somebody? And when you solve that, what KPIs are you moving for them? And if you move those KPIs, then you can use business acumen to say, how much profit did I just make that customer? That I just make that company? That's where value comes from. It's super simple to think of. It's really hard to do because here's the hard part. We can't think about problems the way our customers think about problems. We as manufacturers, as software developers, whatever we are, we have this thing called the curse of knowledge, which says we know our products so well, we have forgotten what it's like to not know it. We have forgotten what it's like to truly need this product. And so we'll say a phrase, and one of the examples I like to use in my boot camps is experts versus non experts. So I just bought a new Mac, and so it's got some huge amount of gigabytes of some type of storage. And as an expert, you look at that and you're like, yeah, I think I probably need that. But imagine my grandfather walking into Best Buy and they say, hey, you need this four terabytes of sdram. And he's like, can I talk to my kids on the interwebs? So we don't know what it's like not to know our stuff. That makes sense, right? I sometimes find it really difficult to translate this between the hardware and the software world. So in the hardware world, like you said, it's fairly easy. You could kind of, you know, how do you price a book, for example? But in software, I think a challenge sometimes is there are different perceived values for different customers. That could be like five features. And like you just said, the same one feature could be useful to somebody else and something else for the other. So how do you think about this in a more comprehensive way to price? How do you go about doing that in the B2B software way. Well, what's funny is you just said, hey, we know how to price a book, but it turns out we don't. We tend to price books based on some industry standard or industry concepts. And so we think about selling a book because we've got this cost associated with it and we need our margin. And so we put our margin on top and now we're doing cost plus pricing. Hardware people do way too much cost plus pricing. Software people have this amazing advantage over hardware people in that you don't have costs. Granted, there are costs, but you don't have these incremental costs to deliver to the next customer. They're very small. And so you have no choice but to find a different way than cost plus pricing to price your products. Well, guess what that way is. It's based on value. How much value am I delivering to my customer? By the way, the other thing that SaaS did, which we could talk about all day, is SaaS made it so that I could choose hundreds, if not thousands of different pricing metrics. So we all know that Salesforce started out, hey, we're going to charge by the user and then we can move into way more different pricing metrics. So Dropbox charges by the terabyte and LinkedIn charges by the inmail, and Google charges by the ad click. And I mean, there's thousands of these that you can use. What we're looking for is what's correlated with the value we're delivering to our customers. And so let's talk about Google for just a second. I don't know how old you are. Abhishek, do you remember a long, long time ago when the Internet first came out, we sold headlines. You're not that old, but I have heard. Yes. So it was always banner ads, right? We were selling banner ads and it wasn't by the click. Nowadays we sell it by the click. Well, which one is more closely associated with you selling product on the Internet? It's the click. And so Google has moved closer and closer to how is it the customer actually getting value from my ads? Well, they get value when someone truly clicks on my ad. And so that's an amazing way for them to start saying, hey, how do I move my pricing metric? What am I going to do for pricing metrics? And so if we just put ourselves back in Google for a second, what's the problem Google's trying to solve? Well, they're trying to help their customers sell more product and is putting a banner app ad up helping them sell more product. Sure. But if I sell it by the click, I've got something that's more closely correlated to selling the product. I mean, what Google would love to do is just take a percentage of your revenue and say, hey, if you sold more, I get more. But I don't think they could pull that one off. Maybe they will, who knows? Is that always associated to being in essentially a position of power? So okay, like just same example of Google. And then I can talk about a few other examples as well where I see there is some inflection point at which this pricing change happens. I'm sure there was some inflection point where Google said, okay, now I think we can charge them with a kick and they would pay as against just this. It could be a technological breakthrough one or it could just be like something where they perceive power from the seller actually exceeds that of the buy in at some point of time. So I see the same thing happening in this whole talk about usage pricing in the last four or five years. I don't really think it's new or it's something that's not been done before. But why do you think that? Firstly to agree with that there's been the way we price has changed in the last five years in B2B maybe compared to the last 15 which is our subscription. And if you do agree with that, what do you think are these inflection points that typically when some large scale pricing changes happen, although I can't give you a great example, I don't think it's power as much as I think it's finding what fits the situation better. So as a customer, customers care about a few things and whenever I'm doing pricing work, I'm always putting myself in the shoes of the buyer and saying how are they making a decision? Right. That's the only way we can do pricing. And so we think about that pricing metric. What is it that the buyer gets to choose from? Well, so when a buyer goes to buy a car today, you can actually subscribe to a Porsche in Atlanta. We all know that if we play in the subscription world, we can buy a Porsche, we can lease a Porsche. So here are three different pricing metrics that we can use for a Porsche. And as a customer, we get to choose which pricing metric we want to use. In the world of Google, you don't get to choose what pricing metric you want to use. You get to choose to buy from them using their pricing metric or not. And so what I think really happens in our industry is that companies come up with a new pricing metric that fits the way some buyers want to buy and they start to move that way. And once it becomes obvious, then everybody ends up moving that way. Because if you think about it, if I could charge based specifically on the value that I deliver to you, then if I'm not delivering value, you're not paying me money. And you're fine being a customer because you don't owe me anything. And the more value I deliver, the more you pay me. And you're fine being a customer because you're making a lot of money. And so that's the perfect way to think about a pricing metric is, is I want it to be as closely aligned to how much value I'm delivering to you as I could possibly be. This value keeps changing. So let's say, for example, you are building an AI agent or chatbot, for example. So let's just kind of paralyze that with the growth of a company. A new company comes in, they have queries, the chatbot helps you answer, the chatbot becomes better, it solves your queries better. So you actually need less people to essentially solve for their queries. And then suddenly now what was a per user model, now is actually getting paid less because they are doing their work better. So this value changes happen through the company. Right. So how do you as a selling company, B2B, keep changing your pricing to fit the right value metrics as you scale and as you grow? Yeah. So I have two comments about what you just said in your AI chat box. First off, per user pricing is horrendous, right? I mean, that's just like the worst pricing you could use because as you just pointed out, hey, more we use it, the fewer users I need. And so therefore I'm actually inversely pricing based on the value I'm delivering to you. So it's horrible. But the other thing I want to point out, and this is a really interesting pricing problem that a lot of companies face and have to think about. And that's the difference between a platform and a solution. So when you are putting a chat box together, what you are is a platform because you can do million different things. I mean, I dearly love playing with perplexity and chatgpt and just doing all the things I could possibly imagine to do. But I don't pay him very much money because it's a platform and I have to figure out what it is I can do with that. In a way, you can think of it as a tool and it's a hammer. And what can you do with a hammer? Well, you can build a house and you can hammer a nail, but then you have these things called solutions. Now a solution is, hey, I'm going to go solve a specific problem for a customer. So Salesforce is building AI capability into Salesforce. Microsoft is building AI capability into all of their products, in fact. And in each one of those, you could say, here's a specific capability that I'm providing for you and when I can actually quantify that value that I'm delivering now, I can charge more for it. So there's a huge difference. And as companies, we want to be thinking about that. Can I give you my favorite example? My favorite example is LinkedIn. So LinkedIn, if you think about it, all it is is resume storage and search. But they've identified four key market segments. One of the market segments they identified is recruiters. And they charge probably 10 times higher prices to recruiters than they do to anybody else. And the reason is there's so much value to recruiters, to being able to manage their whole recruiting process and find new potential hires. It's just amazing. Amazing. But it's all about a specific solution to a problem. It's not about selling the platform because if LinkedIn all they sold was access to resumes, then there's no way they can get as much from recruiters because they're trying to capture everybody else at the same time. It's a great distinction, Right? So what you're essentially saying is between a platform and, let's say, solution or an application as they call it, it's different ways in which you think of pricing when these two. And it's important to make a distinction when before you think of pricing. I think that is a great takeaway point. So let's just get back to this, right? So do you agree in a certain way that there are companies that are significantly large revenue? Right. Let's just talk about companies, 100 million plus, for example, other companies that don't do pricing well at that scale. And how, from the way you laughing, I think that's a lot. So what is the difference that you typically see between a company that does pricing well and a company that does not do pricing? What a hard question. I would say companies that do pricing well probably have pricing departments that act like internal consultants to the company because pricing is hard. I mean, I've done it for forever. And you never walk into a company and say, oh, this is the answer. Go tweak this. And it solves the problem. There's 100 different variables that we could be playing with and different ways to put all the pieces together. And so when you get a consulting firm that's looking at individual product lines or individual departments and saying, look, how are we looking at how did we package our products? And how are we looking at how we're raising prices and which customers are getting price increases? When you get a pricing department that acts like internal consultants, that's when you find companies that do pricing well. So if, let's say we are a company who is just now starting to take up pricing, we've reached like $50 million of revenue and 100 or whatever the inflection point is, with respect, okay, we need to price better. So we don't have a pricing team. So we come to you or we come to anybody. And with a goal here being that how do we get to a place where we can be pricing the best? How would we go about doing that? What would that typically look like? And what would be the steps involved? Right. And one last step. And how long is this like a continuous thing that you kind of like it's a habit that you change? Or is it like, hey, we should do something for six months and then we can take the best of that and keep build something internally. How should we look at that? Man, that's only like 20 questions at once, Abhishek. Well, the easy answer is I think that you should be doing something in pricing every quarter. You should be testing something, tweaking something, changing something, because you don't know, right? Nobody knows. I can't read people's minds. There's no way any of us know if we're priced correctly or not. So we should be doing something new every quarter to see what we could possibly do. So let me describe what I do, and let me describe what most consultants do. If most consultants will walk in and they'll do a bunch of questions and surveys, they'll actually go out and survey your customer base. They're going to start to understand what does value mean? How do you guys make decisions? And they'll come back in and make a recommendation and say, hey, I think you guys should go do this. And almost always you make more money when you do this. So hiring a pricing consultant is a really smart thing to do. Turns out I don't do that. So I'm not a pricing consultant. What I do is I teach and I advise companies. So typically I run a boot camp. It takes us about a month to get through the entire process. And what I do is I teach them about the basic frameworks. Usually it's executives. If you're Talking about a 10 to $25 million company, it's usually executives and VPs and people that are leading the product lines. And I teach them how to think about value and how do their customers think about value. And then we look at a bunch of different frameworks on decisions we have to make. So we talked a little bit about the market segmentation decision. We have to talk about product portfolios and which features go into which products and how do we position that and how do we market that. We talk about price segmentation and how do we charge different customers different prices based on whatever the context is that we happen to be in at the moment. And then most importantly, we talk about how do we raise prices, who's going to take a price increase, who's not going to take a price increase, how do we communicate the price increase? So typically, that's what I do. That's different than what most consultants do. And I'm a huge fan of consultants too. So I'm not saying I'm the only way to go. Got that. So could we talk about maybe like, I mean, you obviously do this and you've met a bunch of companies or various companies that. Could we talk about an example where maybe something that you found it to be like such a story or something that you thought was a failure story that comes to your mind when you think about, hey, I spoke to this company, we did this abc, and then we were able to see some results. That bad. Good bag. Okay, I'm going to share with you my all time favorite story from one of my customers. So 11 software makes the software that manages WI fi at hotels. They landed a huge customer. They've had a huge customer for a very long time, actually for quite a while. And this customer came to them and said, hey, we'd like you to write this piece of code for us. What would you charge us to write this piece of code? And they charged $50,000 to write a piece of code. And the code was running for a couple years. And then 11 gets a call from, by the way, in this process, Hannah, the CEO, had come to my boot camp and was thinking in terms of value now instead of cost plus. So 11 gets a call from the lawyers at this huge chain. And the lawyer said, hey, the software went down. What's going on? You got to get this up right away. She. She's going through all of the documents to say, hey, we didn't really owe there's no sla. There's nothing that says we have to have it up. We're not going to get sued, Life is good. And then she did what she learned in my class. Where's the value? Why am I getting lawyers from this chain calling me to say, hey, there's a big problem here. And it turns out what the code did was it just signed up members to the loyalty program and she was signing up more loyalty members than any other method they had. And this chain valued a loyalty member at hundreds of dollars a person. She was putting millions of dollars in the hotel chain's pocket and she wasn't getting paid for it. So because of that, a couple things happened. First off, she went out to other hotel chains and she now had a very different value story to tell. Sure, I can manage your WI Fi, but guess what else I can do. And then it's really hard to get this chain that paid her for the software to pay her more money. But we're working on how do we identify more of the value that we're delivering and how do we keep it up. And so we're going to end up getting more revenue from that customer as well. But I want to point out it's all because we didn't write a piece of code. It's because we focused on how much value we delivered to the customer. Huge difference. I could totally resonate with that in the sense because we had maybe not at that scale, but a small experience in a similar way while building my company as well earlier. So the question that I wanted to ask is a little personal as well. This change of mental framework, like the founder you're talking about being able to see this. I somehow feel this takes place beyond a certain level. When you're like, okay, initially you just worried about getting the contract across or just signing customers and all of that. So people theoretically say price as early as possible. Start thinking about it in realistically speaking, it comes when beyond a certain limit. So what is your take on when should a company start thinking about pricing more seriously or when is the best time? Like back of the hand rule. I think there's not going to be a rule of thumb here, but I'll give you some ways to think about it. If I have tens or hundreds of millions of dollars of investment, then I am probably not focused too much on pricing until I hit 10, 20, $30 million in revenue. Do now when I say I'm not focused on pricing, what I'm really thinking is I need to price high enough that I'M demonstrating that people will pay for my product, but I'm really focused on how do I penetrate the market, how do I get more people, more customers in. So that to me is the most important thing. And so I'm not going to making additional profit because I have investors giving me money. Making additional profit or optimal profit isn't really the goal at that point in time. On the other hand, if I'm trying to bootstrap my company when I first launch a product, same story, I don't care what your price is. You've got to be able to prove that someone's willing to pay for the value that you get. But once you start delivering product, you should be learning what's the value I'm truly delivering, and then how do I communicate that to the next buyer and the next buyer and the next buyer. And so you could start to work your prices up pretty easily. I work with companies that range from, I would say, 3 million to 50 million very frequently. And the ones in the 3 million are almost always bootstrap companies that were just recently acquired by a smaller PE firm. And they're like, look at all the value we're leaving on the table. Let's go pick this up. Because now I've got money that I can go spend on the next company I want to go buy. And so it really depends on that goal or the type of company we're looking at. Sadhgas. So internally speaking, at what are typically internal inflection points apart from revenue otherwise. So like, let's say, okay, an external event, like an acquiring a PE is a great one. But if building a company, are there some key metrics that I should keep track of when. Okay, this is sometime. Okay, we need to be thinking about pricing. One is a revenue metric. Sure. Okay, you hit a 5 million, hit a 10 million. Are there anything else that we need to keep think of saying? Okay, now I think is a good time to think about pricing. So let's define pricing for a second. So I'm going to answer your question in two ways if I may. First answer is if you think it's time to focus on profit, then you better be focused on pricing. And so I think that's an easy answer. I think the other answer though is when I think of pricing, I think of it as so much more than putting a number on a product because as you've already heard me say, I think of have we identified the different market segments? So you're LinkedIn, you've got this huge database of resumes now, when are you going to think about pricing? Well, I'm going to think about pricing when I say, well, recruiters are going to pay me a heck of a lot more than anybody else. How do I go craft a product portfolio for recruiters? So that, in my mind, was a pricing decision that we just made. And so we should be thinking about that really early. When we first get our product out, it's, hey, let's go learn, let's get products out, let's find out what people are using it for, where the value is, what's happening. And once we start getting that value, now it's a matter of how do I structure my entire company around delivering and capturing more of the value that we can deliver to the company, to the marketplace. Got it. So you also spoke about one of your tenets. Initially, I remember you saying, pricing is not perfect. So it seemed like a fairly obvious statement to me. But in a sense, I was curious, though, why is there a tenet? Is it, like, not that obvious, or is it something more deeper that people think it's obvious, but they miss out on the true impact of that statement. So I want to understand why you thought that was such a core statement. It's such a core statement because people get paralyzed by thinking they don't know the answer. In fact, smaller companies have it much easier. They have way less data, but they have fewer constraints. As soon as you go to a bigger company, and this will actually resonate with you better as soon as you go to a bigger company, you've got pricing systems, you've got quoting systems, you've got accounting systems. And if you try to do something that doesn't fit in one of those systems, you don't get to do it. And so now I've got these constraints. What I think everybody should be doing is as soon as they run up against one of these constraints, write it down, just say, look, I've got this constraint, but if we could break it, here's what we could do. And so now you have to decide, is it worth pushing up against one of these constraints or not? You guys are in the software business. Here's the question. When does someone say, I want to change all of the processes I have in house right now and go buy a new billing system, go buy a new quoting system, go buy a new pricing system. And let me tell you what the answer to that question is. It's when have you identified enough problems that you can solve that are costing you so much money that it easily justifies the price of the system and the implementation to change all those processes. And so to me, that's what it's never perfect is about, is I don't want you to stop, I want you to keep going and it's okay if we're close. By the way, I can't read your mind either. And the fact that I can't read your mind means even if I'm pricing just for you, I don't know what price to charge. Do something. A lot of pricing in that way is a little proactive in the sense that you decide on what, then the market kind of like starts thinking that way. So I always think that I see very few examples of, let's say it's a competed category, whether three or four companies or like two companies, a third one comes in. More often than not, I see them pricing the same way. The first two companies are priced maybe a little lesser, little higher, based on where they want to enter. But very rarely do I think of somebody and say they want to change the model itself and say, like, I'm going to price not like based on this, but on something else. Because the reasoning I hear is it could be much of risk. The market might not be ready for it, but that could also be disruptive in a certain way. So how would you go about it? If I was a third company in a category, am I better off just pricing the way the other two are? Or is there a way to disrupt by saying I'm not going to price this way, but completely on a different variable, of course, within if that's also anime, yes. So I would answer the question. First off, do you have real differentiation from the other two companies? If there's true differentiation, then you can probably use the same pricing model that they're using and find your place in the marketplace. What you're looking for are how is it that customers are making decisions? That's what I always look at. How do buyers make decisions? And if I automatically am thinking, oh, if I'm selling CRM software, I sell per user and that's what everybody does. And so I'm going to come up with a brand new CRM software, should I sell per user or not? Well, all my customers are thinking about buying per user. Do I want to change everybody's mind or not? And it's so much easier to say, look, I'll go with per user because everybody else is doing per user. I'd better have differentiation. If I don't have differentiation, then I might consider changing a pricing model completely. And. And what? That's going to end up doing is finding the people who get the least amount of value at let's stick with the example of per user pricing. We're going to find the people who have the least amount of value per user, but they come to us and pay us less because they're actually getting less value. But as they grow and get more value, they grow with us. So what we've done is we've just captured a marketplace. But I can tell you the answer. I would really like. I would really like to see you do both. I think it would be really cool for competitors to come out on CRM and say, hey, we charge per user, but we also have a different package. If you just want to pay per salesperson or if you just want to pay per sales call or you just want to pay per marketing lead or however you know some other metric and say, look, I'm going to give you a choice, Mr. Customer. You want to pay per user. Now, I'm just like everybody else, but if you want to pay based on value, I'm right here with you. And I think many companies would choose the value side and that is differentiation as well. Is there a specific example or do you generally think that actually optionality pricing is a good way to go about things in the sense giving the customers the option to buy in a way that suits them? Us again, just having a specific pricing model that works across. I'm not talking about the cost, about the model, whether it's subscription or whether it's vm. Now, I'm not sure that I would say that that's a common thing. I gave you the car example earlier, right? Subscription, leasing and buying or taking a loan out. So there's different ways that we could buy cars. You don't see that very often in the SaaS space. But I think that's because people aren't trying to move the pricing metric. And so I think that's a safe way to move a pricing metric. And what you want to make sure of. I would not do this if I wasn't positive that the new pricing metric was highly correlated with value my customers were getting and the old pricing metric isn't. That's fair. So you've been, like you said, three decades in pricing, Right. What are the changes that you've seen if you had to kind of look back at a journey, like in terms of maybe we'll keep it to B2B software just because that's specific. Like in terms of how pricing has evolved for the better or for the worse. I wish I had good experience 30 years ago to be able to say, here's what's changed. I can certainly tell you that SaaS, the world of SaaS, changed a lot in the world, of course, pricing, because we never thought of this thing called a pricing metric before SAS came along. If you sold a bicycle, you sold the bicycle. Hamburgers would charge for the hamburgers. Microsoft Word, you would buy shrink wrapped software off the shelf at Best Buy. Right. Or at fries. So we sold physical goods and so we know what we were selling, we knew what we were buying. And then once we got to SaaS, it's like, oh my gosh, we could charge for so many different things. It just changes the way we think about that world and pricing. So I thought that was the single biggest change, the most fun. Oh, I'll give you one more that I really like that has to do with SaaS. Cloud based SaaS. If you are not measuring usage of the features of your product, you are missing out big time. And the reason for that is usage from different customers. Let's go back to the value tables I talked about. Value is the result of solving a problem. People use products to solve problems. If we have customers who aren't using something, they don't have the problem. If we have customers who are using it a lot, they have the problem. If we want to do market segmentation based on problems, we start looking at who's using which features a lot and we can start crafting these segments that make a lot of sense to us on, oh, these people are getting a ton of value. We should put be charging them more money or inside a market segment we could say, oh, these people get a ton of value, they're using this set of features. We should make that our best in our world of good, better, best and start thinking about how do we package it. So usage information in the world of cloud based SaaS is just invaluable and everybody should be logging in. Do you think that's kind of impact how people think about. So let's say you talked about somebody not using your feature, right? Like does that mean I would also probably go and reduce my pricing or I'm better off not serving those customers? Do you think it's just a one way road when it comes to pricing? I'll give you a great example, right. I love the fact that Netflix sends me messages saying, hey, if you're not using Netflix, we will unsubscribe you and you will come back to it later. I think it generates a huge amount of goodwill as a customer because I feel like these guys are. I don't know if it works in the B2B world, but when we talk about pricing, we always talk about increasing pricing. Do you think that's also another vertical where you go down when needed just to win in the long run? I think if you have the right pricing metrics, then you can do that. So you're taking good care of your customers and saying, hey, I've built this really great relationship with my customers in general in B2B. What we do is we offer lower functional products to win new customers into our portfolio. And we try really hard not to let our existing customers know we've even built that product so that they're not going to think about downgrading or moving down in that product category. But are there ways? Sure. Slack does they build based on number of active users, which is pretty cool, right? I mean, it's a way of saying, look, I'm only going to charge it for people who are using the product. And I think it builds a good rapport, a good relationship with the client. The question becomes how much money do they leave on the table because they do that and what's the long term value? I'm not sure I could answer that question. Yeah, I mean, it does sound a lot more complex, but I feel like the companies that typically do things like that are doing pretty well and are very confident in terms of like what they're offering and the value. So I somehow feel if somebody does that, I kind of get a subconscious bias that they are a good company doing well. Right? Yeah. But one last question to kind of like leave you with is like, I just want to get your thoughts with all of AI and a lot of our talk about AI and the new pricing. Do you think there's going to be significant changes? Do you see this as a tectonic shift again, in terms of how companies are going to price or simply because of the structures of this infra or the platform being different from what it was before. So I'm going to give you a yes and a no answer to that question, if I may. If you remember earlier we talked about platforms versus solutions, and so AI fits that world perfectly. If you're going to subscribe to ChatGPT or you're going to subscribe to Perplexity, you are subscribing to a platform and these guys are driving prices as low as they possibly can in order to get as many users as they can on their platforms. So it tends to drive down towards A cost plus type pricing at that point in time. And then as people take that and create solutions, now they're going to price just the way we would price any other software. And that is we're going to use where's the value, what's the pricing metric going to come from? And as far as I'm concerned, it doesn't even have to be AI. I don't care that it's AI. If you can build a house using AI, great. Build my house. I want to buy the house. That's the way I think about it because I'm buying the solution, I'm not buying the technology or what we're using it for. So by the way, everything I just described, nothing's changed. The one difference is there are plenty of people in my pricing community that believe that we're going to start having pricing created on demand for different users based on how much value we're delivering to customers. Now we're going to see if that works or not. I'm not sure that I'm a believer yet. I believe that AI can do that, but what I'm not sure of yet is that buyers will accept that. And so we'll have to see how we get buyers. The reason buyers love SaaS is because there's huge advantages to buyers to have SaaS. And so the question is, is there going to be huge advantages to buyers with generative AI pricing or not? And so we'll see because we will be able to create a price for each customer pretty easily. Awesome. Mark, thank you so much. Very, very interesting conversation. I'm sure we could go on for a lot longer. And my biggest takeaway again is this. I hadn't thought of this from the platform versus application perspective. I think for me out of this call, I think that was my big takeaway. I hope that whoever listen gets their own. But thank you again for doing this Mark. Really enjoyed your conversation. Thank you Abhishek. It was a lot of.