B2B pricing is a black box - and marketers are paying for it (feat. Liam Moroney))

Speaker A: They're charging 30 grand. We should also charge 30 grand. That seems like a good price.

Speaker B: I did a lot of work in looking into price because I thought price was just one of those things that for marketers is just, it's almost taboo to talk about. Right. Which is, which is so interesting because marketers are asked to be so data driven. And yet when you start to press a little bit about how products are priced or like where pricing comes from or whether or not we do any testing on pricing, it's very much a non data driven exercise in a lot of ways. And I got to give a lot of credit to people, um, at Winter because they did such a great series of surveys on how pricing, on how B2B tech companies price. And it was just stunning to me how few companies actually run real pricing studies or, or do real pricing research. I think from one of the. I want to make sure I get this, uh, get this number right, 8% run actual pricing research of all the people that he surveyed there. And I find that to be unbelievable. And it just goes back to as marketers, how do you get yourself involved in more of the four P's and sometimes it's just asking like when's the last time we've asked our customers whether we're priced fairly or underpriced or overpriced. And these tools are there, they're very available and they're actually not even. Some of them are not even that difficult to implement to find out how well priced you are in the market. So why do you think, why do you feel like price is such a taboo for marketers to even bring up as part of the go to market strategy and get themselves involved in. Because it's such a finance driven exercise. Right. Um, and it's, and even sales drives a lot of it as well. We've seen there's a very well known founder who was talking about how his sales team is going to dictate all pricing with agents. Uh, you and I both know this company a little bit. So can you tell me why it's so, it's so taboo for marketers to even broach this, uh, as part of their role?

Speaker A: I mean I think you, you nailed it in the sense that it's a financial exercise in most cases. Like there are inputs and outputs, there's marginal cost and like there's a lot of things that make up the price of a product that are, this is how much we need to make to cover our costs as a business. And I think some of that just Asking the questions that break that down for me and help me understand the unit economics of our business gets you in rooms and gets you aligned with finance in ways that change the game. I remember I learned it long ago and it turned out to be the best thing ever, where I just asked inquisitive questions and then I asked them, like, how are you determining marketing payback? And, like, explain your perspective on it. Because, you know, the truth is, sometimes it's not very intelligently put together. And I think, you know, SaaS is a weird model because, uh, up until at Least now, before AI tokens come into the equation, SaaS has very relatively low marginal costs. It doesn't cost much to spin up a new instance. Most of the cost comes in the form of how much it costs to win a customer and how much it costs to service that customer. But the product itself has very limited costs. Like the infrastructure isn't that expensive. But I remember being part of early pricing exercises and, you know, this was back in, like, everyone had, you know, bottomless pits of money from VC's days where, uh, pricing was done the same way that it seems that like real estate agents do, where they look around the neighborhood and they go, they're charging 30 grand. We should also charge 30 grand. That seems like a good price. And that's the entire basis of it. And I think that, you know, I'm a cynic when it comes to this. I, I will give you my, like, very cynical answer. I, I get very annoyed when I read things on LinkedIn where it's founders and CROs and certain CRO communities putting this pressure on marketing, saying, you need to be speaking in the language of finance, you need to be understanding the economics of the business. You should. But I don't think that that many founders are all that fluent in marketing and even finance. A lot of the times they're very good at fundraising, they're very good at networking. That does not necessarily mean they are extremely good at the unit economics of price development. So, like, I think a lot of it is maybe the people doing it aren't, you know, maybe we shouldn't be as afraid to ask questions about, how did you get to that number? Truthfully?

Speaker B: Right, yeah, I totally agree with that. And like, you know, I'm just, I'm just looking at some of the ways you can even do pricing studies just to give yourself more knowledge. Because pricing, ultimately as a marketer, you're trying to improve margin, you're trying to improve profitability, you're trying to improve revenue and Ultimately, for marketers, like, we've gotten reduced to just doing promotion as a way to prove our ROI to the business. But if you are injecting yourself more in product or in pricing and just understanding, like, well, what could we do with these things? These are all levers for the business that can help improve our juice, help improve our Runway, help improve our margin. You can do things to prove and make yourself more irreplaceable as a marketer, aside from just having to point to the number of qualified leads or qualified pipeline that you produce in a given month. And so just by injecting yourself more into these other aspects, not only will it make you more irreplaceable, but it will also make that downstream thing that ultimately everyone looks at you to do, right? Promotion. It'll make that more effective, right? Because ultimately, and m. I know this because we run so much paid media for so many companies. Almost every company that we work with that we are more successful with than others, really, their marketing department does a really, really good job understanding their customer. They go out and actively court their opinion. They do customer research. They understand evaluation criteria, and it helps them design their promotion strategy. By and large, like, ultimately, what you want to do when you're doing promotion is build from an informed place. The other P's give you that informed place to build from. Right? Because promotion is the most downstream thing you end up doing. Um, and all these other things come way before that.

Speaker A: And I think, you know, I'll keep reiterating that point. It's about the understanding of the customer reflected in things that you can then use in promotion. And to be price aware does not mean that, you know, the goal does not necessarily be. Have to. You find a way of going back to the board and convincing them to change the product pricing. It's not necessarily that. It's, you know, price is a very emotional thing. And the way people interpret value and interpret cost relative to value is very, very different, depending on the product and depending on the problem. Um, like, I see my good friend Ryan there and I'm always trying to channel myself through him about, like, how do we actually get to the root of how people are thinking and why they make decisions and price? You know, like, you can you look at this? We were chatting with this the other day, uh, Matt, where we were saying, like, there's a lot of the time where we will lean into price in terms of, well, here's the ROI. It will cost you 50 grand, but you'll make 250 grand. Yes, but the really important question is when will I get that 250 grand back and how quickly do I need to get it back? Like I'll uh, uh, give you a really simple non SaaS example. If you were looking to save money on your electricity bill, there's a few ways you could do it. One way is you could just use your air conditioner less in the summer. That's an immediate solved problem, but it's not a really fun one. Another way you could do it is install solar panels on your roof. But you won't save any money on today's bill. You will save it way down the line because it's a payback period. They're both solving the same problem, which is I don't like how high my electricity bill is, but one of them is I, I'm running out of money and I need to like cut things right now to save money versus I have the luxury of long term thinking and I'm willing to invest in something that will pay off over time. B2B is not that different. When you're asking someone to front load a tool that costs 80 grand, potentially hire two people or at least train people on your team to be dominant users of this tool and it becomes a core part of their job. It's a lot more than the sticker price, like the value. And uh, the reason I say all of this is because as we're thinking about ways to promote the product, you also have to put it in context. Just saying you'll get a 4x ROI isn't compelling unless you can put it into the context of, well, where else were you going to invest money and what was the ROI of the other options that you were doing? What was the time horizon for that roi? What's the, what's the unseen costs that go around this product? Like can you install it and it'll do on its own, or do you need to spend three months completely changing your business and selling this in and training the company to use it? Like all of these are incurred costs and that's all price. We have to understand that to know why would you buy it and why would you buy it now?