Pricing Narrative: The Difference Between Delighting and Confusing Your Customers

Okay. Hey, I'm Michael. Thank you for coming, Fred. This is I'm a pricing advisor. name is Tope. Today I wanted to talk about pricing narrative. So the way that your customers actually perceive the value price. This is one of the series of webinars. Every week, we invite you to come to our webinars at this place, Versailles FM. And every week we cover a subject that we think is interesting and we'd like to share thinking about it. Next week it will be Chris with cost covering and pricing framework logic. Chris has vast experience when it comes to implementing pricing. Before he became a partner, he was a client of willingness to pay. So he knows all the ins and downs of that. As mentioned, I'm a pricing advisor in the willingness to pay. I'm based in Copenhagen with the team. And before my pricing career took off, was twice a founder and also I had 10 years of experience in strategy and advertising. Hence today's presentation where I try to show the perspective of a buyer. So I'd to begin with a very broad question on what is actually the goal pricing. And I think that there are many answers, maximizing revenue, know, segmenting customers, scaling your business. But I think that at the basics, like the easy answer to it, like the one that is so obvious that it gets overlooked is actually convincing your prospects, your potential clients that they're buying the right product. That's the ultimate goal, right? And then if that happens, then everything else can also happen. So, as mentioned, I'd like to take a look from the POV point of view of the buyer. Since AI is hot topic, let's assume that the person probably marketing, you're trying to utilize AI to automate the marketing content delivery process. And what I would like to underscore here is that they're not

Trying to purchase software as in the software will probably be the solution or the way to reach the outcome, but it's not the goal itself. So, so how do people buy? the simplest way of looking at things is three steps. And when people are buying B2B purchases, they act the same as in B2C purchases. Of course, there's more rationale to it. There are more decision makers, but at the end. of the day, the process is very similar. So first, I want to see stuff, right? I'm not sure what I want. I know what's the outcome I'd like. So I'm going to look around until something catches my attention. And my attention span is not long. So I need to find something that actually resonates with me somehow. Then when I found something, then now I can think about it. I'd like to read upon it, depending on the person you are. You might spend from 10 minutes to 15 hours at this stage. since 10 minutes caught my attention, now I'm ready to learn more about it. So now I'm open to more knowledge. after my curiosity has been satisfied and maybe I have one or two options that I'm considering, now I'm ready to do, to pull the trigger, compare prices, engage all decision makers if needed. actually engaged in purchasing product. having this framework in mind, question is how we can use it with packaging pricing. So, beginning with C, let them find what they want, right? So, once again, they're not sure what you're looking for. There's an outcome that they want. So, they're exploring websites and exploring stuff. And since the... average time spent on the B2B website is around 80 seconds, then well, let's assume that you have a minute to show probably on the pricing pages. That's the one that they're most likely to whether you do offer or not something that they want, something that is going to solve the problem. So if our imaginary customer is looking for something that will help with their, something that is based on AI, that will help with their content delivery process, they might find a site

similar to this, a packaging similar to this, which is going to be, hey, we have some tiers, right? Core, Pro, Enterprise. And it's framed as in, this is a basic AI orchestration platform for small businesses. This is a medium one with some advanced features that is going to fit the needs of a larger customer. And this one is tailored to enterprise clients. And the main issue over here is that now it's the task of the customer to understand what you'll get out of it. However, if we flip it, if we think about the outcome that the person wants, that our RCP wants, then we can reorient our framing or packaging to outcome focus. So then tier one becomes format and translate, upload your content and publish, reformat it and translate it as it is in seconds. So it's a very clear outcome on what will happen. It aligns with what they want generally. Here's something very specific on what is going to happen. Brand voice. So taking the second tier example will be build your own brand model, LLM brand model and make your own unique assets. So it's no longer about repurposing, it's about creation. Then we have scale, manageable to for brands, teams and e-commerce sites and scale. So, so essentially this is the enterprise package, but named in a way that resonates with the customer brand. So it's very likely that they have many needs, many stores and need to duggle. those assets. So by putting yourself in the shoes of the customer and actually understanding what you try to achieve, what are the outcomes, you can reframe your packaging in a that's persuasive. And now you got the attention, right? If you understood the needs correctly, the packaging on the right is going to be 10 times more persuasive than the packaging on the left. So how do we get there? How do we move from core pro enterprise, like basic, better advanced to something that actually relates to the outcome our customers want? So there are three principles I'd like to explain quickly. So first of all, yeah, focus on the outcome. Understand what they're trying to achieve. Exploration conversations with new and existing customers are the way to go over here, absolutely.

And if something, is there something they like about your product? Like really understanding why, why do you like it? How does it help you? How does it help your business? The next thing is bottom line up front. Essentially in journalism, there's a saying, don't bury the lead. So, so it's easy, almost too easy to hide the most important part of your product somewhere in the middle. So a very practical way of doing it is whether when you talked about your product to someone, explain the features to your customer, or simply write about it. Like look at what you have and then look like throw out the first 80 % and then look at the summary. Like what is the value you summarize with? What is this stuff that actually encapsules in a sentence or two, what you're offering? And the last thing is... Use your language, use your ideas. If the customer, the prospect sees that you are speaking the same language, you're using the same frameworks, you're using the same ideas, then they will intimately feel that, these guys know what they're doing because I use the same words. A simple example could be one of our clients was solving partially an HR issue on an industry where people quit very quickly, very often. And the industry name for that was Quick Quitters. So, hey, use the phrase Quick Quitters because A, you will build upon an existing concept so you don't have to explain that it's about the guys that are quitting fast in the first three or four whatever months. And B, you'll get credibility just by using the words that they are using on a day-to-day basis. Okay, so that's C. These are the principles to make people actually want your product. And only when they want your product, they're ready to learn about your product. So think, what we want to do is make it easy for them to tell about your service or product to the next person. So, you know, they're thinking there's their point of view is that, something catch my interest. I'm interested in learning more. want to understand what are the fits my needs. So I like the outcome, but now the question is, how do we get to the outcome? So, so.

You don't have a lot of time. People are impatient. You have around five seconds to explain how you deliver value, how the outcome is going to come to life. And once again, we have a part of packaging pricing that places its features, right? So typically the features are kind of abstract and dry. know, like, Hey, so here we have an AI orchestration platform, POR, that's what it's called. And we have workflows, we work with multiple LMS, have storage space, and we have integration like, here are the pieces, let's say, that you can use. But that's not very informing on what it actually do, how it would work. So taking the same capabilities and putting it into the frame of an outcome they want. If we have the tier of format and translate, that is going to enable quick delivery of new assets. And then you reframe the features to, we will integrate with your content creation tools. So integration. Yeah. Like that. That's the beginning, right? That's the start. So you write a story. That's first. You're going to integrate with what you use. We have pre-built formats for all social media platforms. So intuitively, you know, okay, so these guys are able to, this platform is going to be able to replicate everything that is needed at a speed. It's going to have everything pre-built. We have a content vault for your previous assets. to ensure consistency in translations and brand, assets, whatever it is, right? But essentially now you understand what the storage space is for and now it has utility. And then we are going to offer you multiple ways to verify translation, which is essential workflow. And suddenly what was abstract and kind of bland becomes a story. Now you're able to tell your boss or wherever else, whoever is the decision maker, hey, like... These guys have a tool that we might use. It helps with formatting and tracing stuff and it works like this. And the beauty of it is that even if there's a gap, if you provide them enough context, and this is once again for features, they're probably able to figure out what is the most likely way you address something. They might have a question about it, sure, but essentially like it's an idea they have. It's not just...

Try text became an idea. Okay, so once again, what are the features? How to make, sorry, how does it principles how to make features talk, how to make them speak for you? So, so first of all, they need an active voice, right? So that is why I'm saying I'm I dismissed integrations. I am giving an active role. We will integrate for content creation tools. So there's a purpose and now you can imagine why is it so mom should get it. Right? So, so Don't be technically over complicated. It's way easier to simplify at this stage and make sure that you get your point across. You can always give the technical elements further down the line, or maybe you can like below the fold, below, you know, your core features have a full list of what's inside. So, the curious person or the technical person can actually find answers that the answers are looking for. But at a higher level. You want to think that the audience might be an executive. He doesn't have time to get into technical stuff. So, so, Mar should get it. And then when it comes to last principle, need the whole skeleton. So it's fine to simplify, but you need to show the whole, like the whole service you provide. Like what are all the steps? So, so like, as mentioned from. integrating, reformatting for our pre-built format, right? Then we have something that enables consistency with previous content, and then we can verify, translate. Maybe a fifth feature, something about posting automation or publishing automation would be nice to close the loop. But essentially it's fine that it's a skeleton, as in you have only the raw basics of what you do, what you provide, what you need the whole skeleton. So for somebody to be able to imagine to get your whole value chain process. Okay. So that was. Okay. So, so now the last part is actually doing so, so, so, so the frame of mind point of view is that, I, I, I've read about it. I like your solutions, somebody else's solutions, maybe like there to it. I'm thinking about now let's, let's actually compare prices. Let's engage as makers. Let's let's pull the trigger. And.

Of course, this is a very complicated step. It might take a few meetings, it might take quite a lot of materials. And to take into consideration the decision making, both from a pricing, packaging pricing point of view, you want to provide the customer with logic that they will use on their own that frames the price as fair. So the customer thinks, that the price reflects the value that you give. So yeah, typically the metrics that are used in AI actually relate to users and credits. Users as in the way, the easiest way to reflect how the product scales with usage and credits because that's the cost that they have. However, aligning on metrics that actually scale with their business and reflect whether they are successful, whether they provide a lot of value or not. are more likely to be accepted and liked by the customer. So in this example, pages or new products per month could be a way to better measure how much value is being provided by the customer. And the importance of it comes in building a common understanding of created value. So if our customer agrees, if our prospect agrees that, The first tier provides some value and I see it. And the second tier provides more. That's fantastic. And the third one provides you more. Then they agree with the fact that, I should probably pay more with each instance. caveat being here is that you want to add a whole outcome on top. so design tiers in a way where you provide one outcome in the basic tier, another one, not like not tended by 10 to 15 % that builds like a whole new thing on top. then once again, another outcome and a third year. So, so there is no discussion, no vagueness about the increase in value. has to be obvious that there's an increase in value. So, so this way you have one way of like one axis to build value. And then if they agree with your metric, with how you scale the value,

the metric, then it becomes a two dimensional way of delivering value, right? Because depending on which tier you have and how much of a metric you have, you're going to get more or less value, right? So suddenly it's not one dimension, it's two dimension. But for this change to capn, they have to agree with you when it comes to the metric as in yes, we see how our value grows with the metric you use. Hence, as Ulrich mentioned recently, finding a good metric is 80 % of success. To be able to have this common understanding that, yeah, we agree, we're nodding with you that the value provide is an outcome of both of these things, things of the tier. And so that's one person, that's one object that you want to get. The second one is to show how your price scales. It is reasonable for a customer to want volume discount. It's obvious, I would even say. And if you show how the price per metric per unit changes with volume and demonstrate it, give them a CPQ, custom pricing quote to a calculator. demonstrated in some other way that, hey, if you're small, if your volume is low, then you pay 100 % of the price. And with the volume increasing, you're paying less and less and less. So show your logic, show your transparency around that. And if you are consistent about it, if you do it in 100 % of your cases, then you could use it as leverage. Because when your customer wants to, when the prospect will try to negotiate, then you can say, hey, We have been using this logic for all our customers. so our existing customers are social proof that this has been commonly accepted as fair, essentially. so despite like, I appreciate you asking questions or suggesting that the prices is different. So they will be testing you. They'll test you whether you are going to say, oh, okay, no, like sure. can talk, no, no, but if you standard round, use existing customers are social proof, then

you have a way higher chance to actually maintain the price point and build a better relationship with the client. this way, me, finding it this way, as in, hey, the market thinks it's fair because we have our clients who demonstrate the fact, even if they're smaller clients, like they use the same logic, right? Even if you're talking to a very large enterprise account, only has medium accounts. You're using the same assumptions in it. So you can still use them as a benchmark. And after you've established that, you can ask, okay, so why does the pricing fit? And this way you won't get into haggling as much as in, you know, let's find a middle ground, plus 15 minus 20, whatever it is, but you are going to understand like, what is the reason that you think the price isn't fair? Maybe it's about them not being certain that you can provide the value of promise. So you can solve that in a different way. It can be, you know, guarantee. It can be a pilot. It can be a concession of different sorts. Maybe that's about the fact that they don't have the budget this year. So maybe you can do a one year time limited discount only just to get them one more quicker. Maybe something else, but it's no longer about the price itself. It's about an underlying issue and, and, yeah, and having the confidence of Knowing that other customers have paid prices according to the same logic allows you to be bold in that kind of decision. Okay, so once again, we have three steps in the purchasing journey. See thing do, see they don't know anything. So at the packaging level, have to, you want to make them want your product, right? You want the prospect to say this is exactly what I was looking for. So to do that, focus on outcomes, don't bury the lead, bottom line up front and use your language wherever applicable.

when they like your product or ready to think about it. So then you go into the feature level and use your features as a way to explain how you deliver value. So every feature has to have an active voice, an active role in the value delivery process. Don't make it complicated. Mom should get it, right? That's the rule of thumb and give them the full skeleton. So it can be simplified, but it has to have all the steps of what you're actually trying to do. So, so they can imagine how it works on some very basic level. Um, then one comes to do, when it comes to the moment where you're actually ready to compare, ready to, to, to, to buy something, you want to frame the logic on, on that level. So, so you have to have tiers that and, and metrics that align the build and the line on the value. So, so it's obvious. for your prospect, for your customer, how each tier provides more value. And it's obvious that each tier provides way more value because it solves or gives a different outcome, as well as it's obvious to them that the metric you're using also relates to them. Then you want to create transparency on how you scale your pricing so that they can see that all of your customers have been using the same framework. to be priced. So you have the social proof, like, hey, discount like this, we have these costs, we have these SKUs that you need to purchase at this size. And this is the logic has been accepted among all our clients. So if there's something preventing you from purchase, let's talk about it. But our price point is where it is. I hope this is useful for you as a way to find a sub goal at each step of the packaging pricing process. If you have any questions, that was a time.

Okay. Well, then, once again, I would like to invite you next week for cost covering and pricing framework logic, which will be done by Chris. Otherwise, we also have a monetization mastery process in the program, which we will lead in the coming month. So more information can be found here. And if you're interested in more opinions and packaging pricing, feel free to follow me on LinkedIn. and hope to see you soon. Thank you.