Episode Transcript
Asia Orangio (00:01.119)
Hello everyone, welcome to the In Demand podcast. My name is Asia Orangio. I am joined by my lovely cohost Kim Talarczyk and we both work at DemandMaven. DemandMaven is all about helping SaaS companies and PLG companies troubleshoot growth when they're stuck, when growth is slow.
Kim Talarczyk (00:02.498)
Hey.
Asia Orangio (00:23.603)
and they cannot figure out what to do next or even what the root cause is. So we come in, we help companies identify root cause analysis, help them figure out what's actually going on and then prioritize projects, define projects and structure projects for the team or the founder or co-founders to take and execute from there. And we've worked with over a hundred SaaS companies doing exactly this and it's been a blast. We get into all kinds of stuff like activation, acquisition, pricing, churn.
Mitigation, competitive intelligence, all kinds of fun stuff. So that's what Demand Maven does. Today on the In Demand podcast, we are talking about two things. I actually want to catch up with Kim on hobbies and chatting about hobbies because touching grass is important. And, uh, and we're actually going to talk about pricing today. So if you want to skip ahead and get to the pricing part, I totally get it. Uh, but if you want to stick around and just,
Kim Talarczyk (01:10.083)
Hmm.
Asia Orangio (01:16.437)
chat with us a quick minute on habits, because we've had this discussion before and I wanted to follow up with Kim on it actually. Okay, so for context, Kim and I have been talking about hobbies and like what do you do to disconnect, touch grass for fun? I have ADHD, which means I have a bajillion hobbies. So I think the ones that are the most prevalent for me are going to be, I'm a big tennis player. I'm cooling off a little bit on that now, but just because
Kim Talarczyk (01:23.074)
Yeah, all right.
Asia Orangio (01:46.003)
The time is gonna change and it's gonna get really dark early. And I do like playing tennis at night, but I find that tracking the ball is actually a lot harder. So I do a little bit less of it. I actually don't mind the cold. I love playing in the cold actually. It's one of my favorite times to play. But tennis is a big one. I write a lot of poetry. I make art. I entertain myself with YouTube, but I don't know if I consider that a hobby. I'm a little bit chronically online. So I play sports to get me literally out of the house, off of the computer or my phone.
and then it just depends on where the wind blows of where I'm going to get into next, but, right now, big ones are, and garden garden is another really big one. We just got the fall garden in and Kim and I were talking about hobbies and, and how, like, you're like, I need some.
Kim Talarczyk (02:30.85)
Right, how I don't have any. I'm so jealous of all your hobbies. Yeah, so and it's, you know, I also, have two kids, so that makes it a little bit harder, but I also have, I feel like Ben sometimes chronically stuck in like, what should I do for fun? I don't have ADHD. But yeah, so then you brought up the motivator. Is it the motivator code?
Asia Orangio (02:47.7)
Hmm. That we know of.
Asia Orangio (02:56.19)
The motivation code, yes, so what I recommended to Kim or what I said, my hobbies make sense since I've taken the motivation code, which I think, I think it's just the motivationcode.com, if I'm not mistaken. It might be motivationcode.com. Let me double check. Motivation.
Kim Talarczyk (03:09.037)
Yeah.
Asia Orangio (03:17.266)
Motivation code.com, So I took the motivation code, it's just motivation code.com, but I call it the MC, I guess. I did this a year or two ago and it suddenly explained what motivates me in work, but also what motivates me in my hobbies. And so was kind of like, you should take this and then let's see what your motivations are. And now we can kind of reverse engineer maybe like what.
hobbies would be interesting, that would fit that, that you'd be motivated to do. Because part of what makes a hobby, in my opinion, it's something that brings you joy, it helps you disconnect, but it's also naturally in tune with how you like to show up in the world anyway. it's something that you don't have to force. Or at least not maybe in the way that that sounds like. I do think you have to put in energy to be consistent, but it should feel natural. It shouldn't feel like you've got a...
like throw yourself into it all the time. I kind of go with the flow because that's just how my brain works. But anyway, so mine like makes total sense for what I do. And I feel like, I feel like yours, like we can figure out what are some things that come to mind. Okay, so I took the motivation code. Let me pull up my top five really quickly. But my top five motivators, and this is like so me too, it kind of hurts actually.
Kim Talarczyk (04:23.341)
Yes.
Asia Orangio (04:41.939)
Let me... where... I was... Okay, here we go.
Okay, so my top five are my number one motivator is to demonstrate learning, meaning I learn how to do something new and then I show that I can do it. That is my number one. Now this is a million percent true in my hobbies and also at work. So for example, in demand maven, when I learn something new about how to do pricing, which we're gonna talk about today.
I immediately want to try it. Like I'm like, okay, well I've learned all these things. I want to go do it now. And to demonstrate the learning, like that's like a huge piece of what gets me into all the things that I get into. It's also part of why Demand Maven has as many offerings as it does. Excuse me. It's part of why Demand Maven has as many offerings as it does, but that is like a huge part of what gets me into that. Just like all the things that we do now. So.
It's not just, I guess, like high level strategy. Like we look at acquisition strategy, we look at activation strategy, we look at retention and how to mitigate churn. We look at like all different kinds of things. And it's a hundred percent driven by me learning more and more and me kind of connecting the dots between all those things. so that's my number one. Yours is. no, we lost Kim. Whoop.
Kim Talarczyk (05:55.191)
Right. then going deep into stuff.
Asia Orangio (11:17.215)
Yes, and my number two, I won't go through all five, but I think part of what makes me go deep is my number four, actually. So I like to advance, I like to make progress as I accomplish a series of goals. And also my fifth is excel. I wanna give my absolute best as I exceed performance and expectation. So that's part of why when I do get into something, I'm like, I don't have to be the best.
I just, I want to make sure I'm constantly making progress though, towards being the best. And when I think about my hobbies, it's like almost one, it's like, it's the same. Except for my hobbies, I don't, I talk about this with my sports psychologist a lot, which I do have a sports psychologist, because I was struggling in tennis with my serve. I have a great serve, but I was struggling mentally with trusting my serve and trusting myself to deliver a good serve, if that makes any sense.
Kim Talarczyk (11:48.07)
Mmm.
Asia Orangio (12:13.543)
Anyway, but when we talk about like playing tennis, for example, I don't need to always win. I just need to always give my best. And when I'm not giving my best, I get so frustrated. so, so for me, it's not about being the best. It's about making progress towards being the best version that I can give. And it's it's a slightly different mindset than like winner takes all versus playing the infinite game of
Kim Talarczyk (12:13.65)
Mm-hmm.
Kim Talarczyk (12:33.925)
Mm-hmm.
Asia Orangio (12:41.269)
of becoming, so to speak. When I think about gardening, so gardening is, I mean, demonstrate learning, because gardening is science. It's also fun and intuition as well, but it's also a lot of science. It's art and it's science. It is a lot of science. And so I love the, let's demonstrate learning. My number two and my number three are realize the vision and make an impact. So for me, gardening is like,
Kim Talarczyk (12:44.699)
Mm-hmm.
Asia Orangio (13:08.617)
I wanna demonstrate the learning, but I also have this vision of, it just would be so cool to just go to the garden and just pull some food and be like, this is what I'm eating today. And that I was so in love. It's a very romantic vision, but I was in love with this vision and all of my motivation, like all of my motivators kind of collapsed or condensed into like, not like the perfect hobby. Like there are seasons where I don't always garden. I went two years not gardening.
Kim Talarczyk (13:23.032)
Mm-hmm.
Asia Orangio (13:38.1)
before we moved into the house that we're in now. But all that to say, it did kind of condense into this, this is why I do this. It's part of these. Now that brings me to yours, which I think are so interesting, because they're the opposite of mine. Which is why I think this test is so fascinating. So if you're like, ooh, the motivation code, definitely take it, motivationcode.com. I think it is very cool. It explains a lot of, at least for me, why I do what I do.
Kim Talarczyk (14:02.342)
Yeah.
Asia Orangio (14:07.751)
I feel like yours, I was like, this is Kim. Your number one is collaboration. You like to collaborate with others. Like all of yours are very like people. Like you need to be around people. you like to identify and fulfill needs. So you like to seal and find gaps. Your number three was taking charge. So being in charge of, this was very like autonomous. Like it sounds like you're motivated by.
Kim Talarczyk (14:14.267)
Yeah.
Asia Orangio (14:35.301)
autonomy of something but also being in charge and taking that responsibility. I do not have this at all. So I kind of wish you lived in Georgia so you could be our tennis team captain because I feel like you'd do great. Like you would do so good. I'm captain again and I'm like I don't want to do it.
Kim Talarczyk (14:43.374)
Yeah.
Kim Talarczyk (14:52.036)
Right.
Kim Talarczyk (14:57.327)
That does make sense. I've heard you complain about that. Yes.
Asia Orangio (14:59.345)
I have complained about this before. There are just some scenarios where I don't want to take charge. I don't want to, no thanks. But when it comes to hobbies, at least, I don't always want to be like the point person. When it comes to work, you for me, it's like I got to pick and choose. the fact that this is number three for you is like, ooh, OK. And then number four, improve consistently seeking to make things better and handsome. I identify a lot with this. I can see this a lot in you.
Kim Talarczyk (15:15.707)
Right.
Asia Orangio (15:26.153)
And then number five, I cracked up so bad. Be key, be a key person who holds things together. Kim, if that is not you, I don't know. I'm like, Kim is literally what holds demand maven together.
Kim Talarczyk (15:34.865)
Yeah.
Right. That is funny. It is true.
Asia Orangio (15:39.958)
So hobbies, I had so many ideas. Hobbies could be, I mean, like, yeah, like being surrounded by people or like being involved with people where you can collaborate. I think that is important. But then also we're going to say more like leadership type experiences where you can, you know, be the key person or be in charge. And then like the meeting needs and improving that was making me think
All of these, I was getting ideas of like, I feel like you do great volunteer work. Like that, I don't know if you're interested in volunteer work, but I feel like you'd be so good.
Kim Talarczyk (16:17.618)
Yeah, and I do a little bit of it actually, which aligns. And it's funny, I never think about it as a hobby. My husband and I actually started our own little community giving group, which tracks, and I actually kind of run it. So like, there we go. It's funny because sometimes the admin gets a little heavy, so it doesn't feel like a hobby, but I really enjoy, we meet quarterly with the group, and there's all sorts of people and age ranges.
Asia Orangio (16:28.282)
Hmm.
Asia Orangio (16:32.629)
Of course.
Asia Orangio (16:40.533)
Mmm.
Kim Talarczyk (16:46.467)
and I leave that feeling very fulfilled. But that's once a quarter is when we meet. So it's like, I probably need something that's more often than that. But yeah, so I think finding, and what's funny is, you know how like, do people have like reading as a hobby? Because what's funny is that's so accessible and I actually enjoy reading, but, and I think, well, maybe I should, like reading should be my hobby and I can get like more, but it's not with people.
Asia Orangio (16:49.277)
Hmm... Mm-hmm.
Asia Orangio (16:54.483)
Mm-hmm. Yeah, totally.
Asia Orangio (17:03.357)
Yeah, definitely.
Asia Orangio (17:08.5)
Hmm.
Asia Orangio (17:16.5)
Yeah.
Kim Talarczyk (17:16.945)
So it really makes sense why that like, it can be a hobby of mine. It could be something I do to like unwind, which is how I use it. But like based on this motivator code, like can it be like a true hobby that fulfills me in certain ways? Like probably not. And that's probably why, cause I'm not being key. I'm not connecting unless I'm in a book club, maybe. Yeah. So in those, I find some book clubs should be annoying. And I, you're like, you know, maybe I need to start my own.
Asia Orangio (17:23.157)
Mm-hmm. Mm-hmm.
Asia Orangio (17:35.733)
I was gonna say book club, yeah. Book club.
Asia Orangio (17:42.838)
Summer, a little cringe. Start your own, be the key. Yeah. Take charge. Those are, that was three and five. Yeah. Be key and taking charge. Totally. So maybe it's like, yeah, like it could be book club. Um, you can also stack. this is, this is what I've learned too, is I think a of people think of hobbies as like, you have the one thing that you do all the time. Um, I think about it, like, maybe there are three to five things that you do that you kind of oscillate between and it stacks within the month. So.
Kim Talarczyk (17:47.139)
Right. Right.
Kim Talarczyk (17:51.77)
Right.
Kim Talarczyk (18:10.683)
Mmm.
Asia Orangio (18:11.657)
like gardening and tennis and my poetry writing and the story, like I do storytelling too sometimes, where I'll like go to like a storytelling open mic. I never talk about that. I don't know why I don't. just, doesn't, it generally slips my mind. Then there's like, when I'm making art, it's all very much depending on the season and the time of the month and all those things. So you might find that like some seasons are heavy,
Kim Talarczyk (18:37.713)
Mmm.
Asia Orangio (18:40.521)
book club seasons, some are heavy volunteer seasons. But if you have enough of those things, then you never feel like you're like, okay, well, what do I do with my time? So yeah, I love this though. I'm so curious what you end up getting into. But my mind was like, food bank, community gardening. Like think a community garden would be cool. Because then again, like it's anything you can bring like people together.
Kim Talarczyk (18:50.201)
Yeah, that's interesting.
Kim Talarczyk (19:04.561)
Mmm.
Asia Orangio (19:09.523)
And then I was thinking there was a random one that I thought of, but I was like, I don't know if I could see you doing it, but I did think of it. I have to think of what it was. It was something kind of random though. I was like, Kim probably wouldn't do this. so there's Rand and Geraldine, know, Rand Fishkin and Geraldine DeRotter, of Moz and Spark Toro. they, I don't know if they think of this as a hobby, but they do like, like kind of like cooking nights, like
They invite friends over, they cook. And they entertain, I guess is the better word. They do like regular entertaining. I've always been like, is envious the right word? Envious is the right word, yeah, better than jealous. I've always been a little envious because I'm like, I wanna do this so, like I would love to do this. Zach would love it, my husband. And I'm...
Kim Talarczyk (19:41.233)
Mm.
Kim Talarczyk (19:47.654)
Yes.
Asia Orangio (20:06.421)
The motivation three is not like the take charge, me when it comes to that kind of stuff. So I'd really be depending on Zach to do it or to like to organize I should say. But when it comes to like curating an event or like curating like a self-expression related to food, that's what I like about how they think about it. Like it's part of their self-expression and like what dishes do you pick? I don't know, just like what cocktails do you serve? It's part of their like
Kim Talarczyk (20:24.709)
Hmm. Hmm.
Asia Orangio (20:36.373)
both of their expressions, because Geraldine is a food writer and Rand is a foodie and it makes sense. So anyway, they're like, I have to think of the random one that I thought of though. I'll have to remember it, but I just remember being like, Kim would never do that, but it would be kind of funny if she did. Yeah, I'll have think about it. So speaking of getting into all kinds of things, that brings us to pricing.
Kim Talarczyk (20:42.904)
Mm-hmm.
Kim Talarczyk (20:51.345)
All right, well, if you think about it.
Kim Talarczyk (21:01.979)
Yeah.
Asia Orangio (21:02.579)
The busy founders guide to pricing. So we're finally here and I could speak forever I think about pricing. And I think a lot of it is because it does kind of feel like one of those sciences that is like mystic almost I think for a lot of founders. There's lots of content about pricing. It doesn't get the same love that customer acquisition does or marketing does.
because so much of what founders struggle with in the early days is just getting customers. Pricing and monetization really becomes something I think that people think about later. Like it's almost, I don't wanna say like an afterthought, but it is kind of like an afterthought. But you do get to a certain spot in the business where you need to pull the pricing lever. So this is my verbal guide to pulling the pricing lever. Like how do you do that in a way that is standardized, operationalized.
And you don't completely outsource it to where you don't learn anything about it. You do need to learn how to do this internally. We are going to certainly talk about your options related to consultants versus DIY and what the trade-offs are. But I just kind of want to give people like, here's the stages or phases of pricing. Here's how we think about doing pricing, but in finger quotes, like how do we execute against monetization? And then, and then again, like, what are your options? So.
Kim Talarczyk (22:07.685)
Mm-hmm.
Asia Orangio (22:30.995)
I'll start with the first, which is the phases of pricing. So most founders start, and most early stage companies start in a very consistent way, and that's looking at competitors. When I think about most people's early pricing, nine times out of 10, it's we did a research, and when I say research, we looked at other competitors, what are they charging? Based on what we do, what do we think our value metrics are? So a value metric is,
It's usually a product-related metric where the more that someone consumes of something, the more that you charge, in theory. So value metrics could be things like seat, like how many seats or user seats are you giving away. It could be very highly specific to your product. So for example, if you have like a calendar or like a scheduling app, maybe it's the number of calendars and the more calendars that you need, the more that someone pays. You can also think about
other aspects of your product that this could be, again, like it really depends on your product. But generally speaking, like your value metric is the thing that if someone consumes more of, you would then therefore charge more for it. Any pricing scenario can have several value metrics, but there usually is like a primary one where this is really where the bread and butter is. And this is the most consistent thing that changes across our plans or our packages or whatever it is that we're doing.
The next thing to think about too is our plans and packages. So do we offer more than one way to buy? Meaning maybe there are, I mentioned plans or packages, but you can split up the product in a number of ways. You can also just offer one that maybe scales in a particular way according to your value metric. There are a number of ways to think about this.
But that's typically what people start with and how they think about it. Usually it's looking at competitors and then they kind of make some assumptions and make some guesses based on just what they're seeing out in the market. And this works. Like when it comes to getting started and you're less than a million, yep, makes sense. I have no qualms with that part of the process.
Kim Talarczyk (24:44.899)
Yeah. So it sounds like you don't need to overthink it too much necessarily. Put something that makes sense out there based on the industry, the competitors.
Asia Orangio (24:53.225)
Yep. The key to pricing and the key to charging is you really don't know if you have product market fit until you charge. So that's part of why I say whatever it takes for you to get it up there and just to go and like to do it and to see like, you know, like what, like what kind of business do I have? Great. So if it, if it's comparing it to competitors, makes sense. Start there.
Kim Talarczyk (25:18.221)
And of course, basic profitability metrics. Right.
Asia Orangio (25:22.365)
Right. Like we do want to make sure we're creating something sustainable. So I wouldn't say, you know, blindly copy competitors or even like, let's say you're kind of making it up as you go. Maybe there aren't any direct competitors and you're kind of like, I think pricing should be this. I would say something is better than nothing. However, we do still need to make sure we're not creating pricing that is not sustainable. Like it costs you more to deliver than it does what you're making it like making off of the revenue of that.
So that's usually phase one and phase one makes sense. I said, I have no qualms with phase one. You have to get through phase one to get to phase two. Phase two is what I would consider to be, we are now optimizing pricing or we are at least testing pricing to understand what levers can we pull when it comes to pricing in our market and monetization in general.
So this I would say is, again, like you're pulling different levers in pricing specifically to really understand what are your ceilings and what are your floors. Most products have a floor and a ceiling for what they can charge with the way that it is structured and designed. The moment that you change the design of pricing, then your floor and your ceiling may also change. So for example, you may have a product that's one size fits all and
There's no, there aren't any other tiers. You can't maybe even change like, you know, how many seats are you paying for? Like, it's just, you pay the one price and that's it. The second that you adjust that and make it, let's say it scales based on how many seats you can add, and maybe you introduce a second plan that is like more, like it's like the luxury version of what you've got and you have like the basic version or like the, you know, basic versus premium essentially.
you have now changed those models, that context, and now your floor and your ceiling of what people may be willing to pay has also changed. So this phase two is really all about understanding what levers can you pull within pricing to achieve the absolute best possible balance between the revenue that you're getting and the value that people are expecting to receive from the product. And that should feel seamless pretty much every time. What I mean by that is,
Asia Orangio (27:45.642)
Customers should never feel like it is a... I should rephrase. Customers should always feel like it is a no-brainer to pick the plan or the pricing or whatever it is to pay for what they're paying for. It should always feel like a no-brainer. It should never feel like they have to emotionally, mentally, and physically overcome barriers every time they...
want to give you money in exchange for the software.
Kim Talarczyk (28:18.113)
And that's qualified customers, of course, right?
Asia Orangio (28:20.159)
Qualified customers, correct, correct. That's a great clarification. This is not everybody and their grandma. This is for the absolute best paying customer. It should feel like a no-brainer. And the reason why is because of behavioral science. But behavioral science says that if we want a particular action to be taken, we have to make sure that the barriers to that, both psychologically, emotionally, mentally, and also physically, all of those barriers have to be
minimized enough for that to feel like a no-brainer, like, yep, like this is an easy resolution for me. There are scenarios where you do want friction in pricing, but I do think that those are very specific scenarios. The vast majority of people listening to this episode are going to be in the, needs to feel seamless bucket, if that makes any sense. So we're in phase two. I'll come back to phase two in a second. I just want to briefly talk about phase three. Most of what we're going to talk about is actually phase two.
But phase three is like, I consider this to be you are flying. Like your pricing, like you have really dialed it in. It has supported NRR very positively. Excuse me, what that means is pricing really supports NRR and that it effortlessly creates expansion revenue, which is the ideal for most SaaS companies.
If we don't have expansion revenue, we're missing out on a huge part of what makes a SaaS company go, you that beautiful curve that everybody wants. Expansion revenue is a huge part of what makes it happen. But we have the expansion revenue and also you can tell that pricing is pretty optimized when you have plans that do have pretty great retention, net revenue retention, and also you have
a pretty good distribution of customer across the different plans. What I find is usually if you, now there are some people who might disagree with this, which is totally okay. I'm actually open to learning more about this. But what I find is there seems to be a pattern where if you have like 80 % of people are on one plan, but you offer three plans, it's either because you're not attracting the right people for the other plans or they're not the right plans. So.
Kim Talarczyk (30:38.127)
Mm.
Asia Orangio (30:38.227)
What we find is not that everything needs to be perfectly even, but I will say it is a good signal when you have your three plans. They have great retention across the board long-term. So again, people who buy those plans more than 12 months, you know, they retain and also you do see good expansion between the plans. And it is relatively evenly distributed between all of them. The exception here would be enterprise plans, but that is more just because of volume.
Kim Talarczyk (31:01.989)
Mm-hmm.
Asia Orangio (31:07.817)
than anything. like, you know, just.
Kim Talarczyk (31:10.063)
Right, it might be a lower volume, is what you're saying. Yeah. then when you, right. And then when you say expansion, are you talking about add-ons within a plan or people jumping from like a low plan to a mid or both? Yeah.
Asia Orangio (31:11.987)
Yeah, exactly. But the revenue might be high.
Asia Orangio (31:25.983)
Both, both, both, yeah, both. What we would like to see is a a healthy balance of no matter what plan people start on, there's a really nice natural progression into either the next plan over some period of time or adding add-ons over time. And yeah, like that's typically what we're looking at. But phase three is really all about, okay, you're flying, you've got it really dialed in.
What's gonna make phase three interesting for you is when the market shifts, so AI for example is coming in and changing everything. These things you can't necessarily predict, but what you can say is, when the market shifts, you may have to adjust pricing accordingly. And then also similarly, as your product continues to evolve and grow, you are going to continue to evolve and grow your pricing. But if you already have a pretty dialed in foundation, this is very easy.
In my opinion, like I would say it's easier. I don't want say it's easy. It's still hard work. It's easier because if you have a solid pricing foundation, in theory, new additions to product, new additions to the market. So as you expand and grow, the way that you think about pricing hopefully doesn't feel in conflict with where the business is going. Although certainly it is the case where as you grow and scale and expand into new areas or expand the product or what have you.
as new competitors pop up, as the market changes, pricing is always going to also change, but hopefully you don't have to completely overhaul everything, although I will say that might happen. You might have to completely overhaul pricing. Intercom is actually a really good example of this. Intercom is a SaaS darling, unicorn, think, technically. I think in the last year or two, one of the founders, if I'm not mistaken, came back to the company and was like, hey guys, I hear the complaints about pricing.
we're gonna overhaul it. And I think that they went back, if I'm not mistaken, they might've gone back to like an OG version of their pricing back when people were like, this makes more sense. But basically Intercom had kind of gone down the path of we are going to continue to tweak and push and tweak and push pricing until it became less palatable for customers. And my guess is that they probably were seeing not great like long-term turn is what my guess is.
Kim Talarczyk (33:47.451)
Mm-hmm.
Asia Orangio (33:47.626)
So much so that I want to say that like one of the OG founders actually came back to the company to like come back and like fix it basically. I don't remember all the details. I should probably have looked this up before, but I was thinking of like publicly, like this is a great example. And then also another good example is, gosh, not Zenefits. It's a Z support product that I'm not going to remember. Zendesk, thank you. Zendesk is another good example of this. They have consistently changed pricing over the years.
Kim Talarczyk (33:53.233)
Hmm.
Kim Talarczyk (34:10.469)
Zendesk.
Asia Orangio (34:17.205)
I think that they're actually in a pretty good spot now, but I do think that because of market shifts, I want to say that they're having to go back and think about their pricing. think we're kind of seeing that live in real time, or at least in the last one to two years. But there was a good sweet spot that they had where pricing was very much aligned with where the market was and everything else. But what we're going to discuss is you are going to have to, it's not a...
Kim Talarczyk (34:28.816)
Hmm.
Asia Orangio (34:44.661)
you might have to, you will have to adjust pricing as you go no matter what you do because people are changing, your product is changing and so is the market. income, like new market entrants happen every single day, competitors enter into the market every day. It is folly to not optimize or work with pricing over time. But phase three is a pretty nice phase to be in unless of course you have to completely overhaul everything, which does kind of suck, but you almost have to go back to phase two.
Kim Talarczyk (35:06.267)
Mm-hmm.
Asia Orangio (35:14.355)
or even phase one where you're like, you you have to make a dramatic change and you kind of get back to that. Like this is streamlined and it is in alignment and going with where the market is going. So as the market shifts, you're shifting right with it. But phase two is really where I think the most of the magic happens, so to speak. Like that's where a lot of the effort gets put into. Phase one, you're just putting pricing up to survive basically.
you're really focused on product market fit and getting new customers and all the things that create the foundation for sustainability. By the time that you get to phase two, that's where you're starting to think long-term sustainability and not just short-term, like survival. But phase two is usually when we get tapped to do pricing work. And I think that's part of what we're gonna unpack here in a second.
Kim Talarczyk (36:11.461)
Yeah. Yeah, that sounds good. typically people are coming to us now when people come to us, do they say, pricing is an issue or do they maybe not know pricing is an issue.
Asia Orangio (36:24.309)
Usually it is the latter. It's a great question. Most folks don't think pricing is actually what's holding them back. And I think that's why pricing is an under pulled lever. So if you know me from the microconf and tiny seed space, you have heard Rob Walling, for example, say, you should just double your prices and just see what happens. Like you probably will be making a lot more and he is a hundred percent right. You absolutely should. Once we start getting into phase two though,
Kim Talarczyk (36:37.009)
Mm.
Asia Orangio (36:55.721)
Doubling pricing is a pricing experiment. There are about five to 10 others that you could be executing that could also have a very positive impact on the business. Doubling the pricing and not seeing the churn move much is great. I have, however, seen companies take that advice too literally for too long. So I've worked with actually like two to three SaaS companies in the last two years where they did exactly that.
And Rob's advice, Rob's advice is not bad advice. It is good advice. The issue is, I think some people think that they need to just do that forever. And that's the only pricing experiment that they ever run is just doubling it. But what we have discovered is while there might not be upfront short-term churn, there is long-term churn, so NRR. So going back to Kim's question of do people always think it's pricing, that that's the issue?
Most I would say don't. But when we work with a company and we're troubleshooting growth and like why is growth so slow and identifying root cause often what we find the issue is is because pricing was changed but nothing else really moved with it. And and also pricing was changed in a way that was not data driven at the end of the day. It was more on vibes and you know what works for someone else is not necessarily going to work for you. And so I think there's a little bit of like
misapplication of certain contexts. think doubling your price makes sense if you're only charging like 25 bucks a month. When you're charging 300 bucks a month, doubling your price may or may not pan out the way that you want it to. And you might not see upfront, immediate, sad, scary churn. What we find is it's more like people will wait until six to eight months later and then they're kind of like, why am I paying so much for this? They double the price and I don't really, I don't get why or whatever.
and then they turn. So you might not see it up front. And I think that's the danger to doubling your price without being data driven. Again, that's one experiment that you can execute. I want to talk through some of the others that you can execute. So when it comes to phase two, again, because most folks don't think that pricing is actually what's holding them back, it usually is one of the things. It just might not be the top priority. But when we're troubleshooting growth, pricing is one of the very first things that we look at.
Asia Orangio (39:25.407)
There are a couple of signs. So the first I mentioned before, the first sign that you might need to enter phase two quickly is assuming all other variables are true, you are working towards product market fit, do have pretty, like you're working towards solid net revenue retention at 12 months, you have a consistent stream of customers, assuming those things are true, when you've kind of put those fires out, so to speak.
The next big fire is probably gonna be pricing and monetization. So I look for, is there a relatively good distribution between the plans? Are we seeing heavy churn from one plan versus another? Are we seeing good net revenue retention from these plans at 12 months specifically? And if you've been listening to this podcast, you know what NRR is. So I won't wax poetic too much here, but we do have other episodes that talk about this specifically.
And I'm also looking for when we conduct qualitative interviews, when we capture qualitative insights, our customers kind of side eyeing the pricing in the interview itself. We've had that happen before. We worked with a company a couple of years ago. They were struggling with extremely slow growth. We're talking like 2 % annual growth year over year.
They had tested pricing like five or six times in that two years. And everything was flat. Like nothing seemed to be like really working. We work with them, identify root cause. We identified that activation was an issue, but then also pricing was an issue. And we figured out that it was pricing because of two things. The first was when we looked at their NRR chart, we would see some weeks or some months would be very strong NRR and then some would be like all red. And we were like,
what happened in these months or right before these months that led to this? And then they were like, oh, well, we changed pricing like a few times. And I was like, okay, that's probably what it was. When we did the interviews, we heard from customers, yeah, and the pricing is weird. And we were hearing it based on the type of customer. So some customers would be like, yeah, the pricing is fine for where I'm at, but I would never upgrade for these reasons. And we'd be like, hmm, that's interesting. And then we'd hear something similar, but maybe different value metrics. So some people would say, I don't want to pay per seat.
Asia Orangio (41:50.368)
I'm just giving you examples. This isn't like actually the, like what the client experienced, but I'm giving you examples to kind of translate. Some would say like, it doesn't make sense for me to pay per seat or pay per appointment or pay per whatever because of my business, because of these reasons. We talked to other customers in maybe different segments and they'd say something like, I want to just pay by appointment. I don't want to pay for bundles of appointments. And the bundles of appointments is what's getting me stuck. But I would increase how much I'm paying.
But if my business isn't growing, it doesn't make sense for me to pay you more, basically is what it was, which made really, it was really interesting. So sometimes pricing can kind of come up in interviews and that's what made us say, hmm, like we should probably dig into this. It's probably worth unpacking. And we found a lot of things that I mentioned before. So most like 80 % of customers were on one plan. They weren't expanding into the larger ones. And then we kind of thought like,
The smallest plan we figured would be the most popular, but it actually wasn't. It was the least popular and it was because of some of the restrictions on that plan based on where people who would be on it, who wouldn't want to pay more and then therefore turned later. The other thing too is net revenue retention was not great. Like it was at six months, it wasn't great, which means at 12 months it was worse. So that really led to us saying, okay, we got to unpack this and really dig into pricing.
I'll pause there. What comes up for you when I say that? When I describe that.
Kim Talarczyk (43:20.849)
So now I want to hear the rest of that story.
Asia Orangio (43:23.527)
Okay, yeah, so that particular company, when we unpacked pricing, and I'm gonna kinda talk through, like if you're in phase two, this is the process. So we got the insight or the clue that pricing could be an issue because of the interviews that we were doing for another reason. When we actually did the pricing work, this is traditionally the process.
This process, I'm gonna compare it to other processes that you can do. Again, we're gonna get into options a little bit here. But this process is really the, again, it's that busy founders scrappy guide to pricing. And you don't have $100,000 to spend on a pricing consultant, for example. So the scrappy guide is there's willingness to pay, which is a type of understanding what people will pay for a particular product.
There's pricing research, like interviews that you can conduct. And then there are all kinds of other methodologies that we're gonna talk about, but the core that we use are willingness to pay surveys, then there's pricing interviews. And then the third part is pricing design that is based on analysis from the product itself. Those three things combined,
will help you form a few hypotheses. Now what's interesting about pricing is there are many ways to do it. there are a lot of wrong answers when it comes to pricing, but there are actually a few right answers. And what I mean by that is with pricing work, what I have discovered is it's not usually like here's the one pricing that works perfectly. It's usually like we have two to three ideas actually for pricing of what we could do.
One stands out as maybe the better bet. The other is maybe a little slightly more risky or maybe there are different trade-offs. But usually with pricing work, there are dozens of things that are like, that's wrong and we should not do. But there might be like two to three things that you should think about trying. And they may be different structures, but they still could potentially be the thing that helps. There are many different types of pricing.
Asia Orangio (45:45.386)
like structures, like there's good, better, best plans and packages. There's like an all-in-one where you pay one price and it scales based on some value metric. There are all kinds of ways to kind of like slice and dice pricing, but for the most part, you are gonna come away with like two to three of those that you're like, okay, think there may be a little bit of overlap, but we should try these and the others, not good ideas.
When it comes to the process, I mentioned the very first are surveys. So when we do pricing work, the first is to, we have to gather qualitative feedback. And I know you're like, Asia, you're gonna tell me to conduct interviews. Yes, we're gonna conduct interviews and we're gonna do surveys. We're actually gonna do both. So the first is a survey, although I will say, I think for the sake of process, I actually would do interviews first. I mentioned,
Kim Talarczyk (46:28.657)
you
Asia Orangio (46:41.289)
The second step is interviews, but actually it's technically the first step. The first thing we're gonna do is we're actually just gonna talk to customers about the pricing as it is. And what we do is ideally we select 10 of your absolute best paying customers. They don't have to all be your best paying. We could also maybe pick five who are very active, but maybe aren't as vocal. Maybe you don't have an MPS score for them, but ideally we wanna talk to your customers.
both like best paying and then maybe some who are active but maybe possibly neutral. And these interviews are incentivized and the whole goal honestly is to go through and get feedback on the pricing as it is. So what works about it, what doesn't work about it. And then also we do like to ask some Van Westendorp questions. Van Westendorp is a very specific type of pricing questionnaire survey.
Most researchers just use it in surveys, but we actually like to ask it in person. And it basically just asks questions like, what's the most that you would pay for this and it feel like a bargain? What's the most that you would pay for this and it feel like a stretch? What's the least that you would pay for this and it still feels like a good deal? And what's the least that you would pay for this, but it feels like really cheap and you wouldn't buy it. So those are the four Westendorp questions. You would add those also to a survey, but we like to this in person first because
Getting people to commit to a number is actually really interesting, like psychologically. Most humans in general are gonna kind of, there's intent versus action and like a lot of people will verbally describe what they would intend to do, but in real life they might not actually do exactly that. It's very common. But what's interesting is you still get the psychology behind why they pick numbers. And that's the whole reason why we do it. Even if the number itself isn't something that you can necessarily like a hundred percent, you know, put all your money on and like bet on it.
Sometimes the number doesn't matter as much as the why behind the number. In fact, I would say that's almost always the case, especially like an in-person interview. But we typically conduct pricing interviews. We actually will also conduct, sometimes we'll actually conduct UX pricing interviews where we have either customers or prospects, like audience members, strangers who've never seen your product before and have never used it. We actually will have them review the pricing page to see does this make sense? And like, does it feel like this would be valuable and or?
Asia Orangio (49:01.301)
You wouldn't ask it exactly like that, because obviously that'd be very biased. But your goal is to understand what are their first impressions of this and what makes sense and what doesn't make sense. What's confusing as heck? What did they miss? What questions do they have? What anxieties come up for them as they review the pricing page? So UX interviews are a critical part of this. And then the main 10 interviews, so the UX you don't need that many of, you just need like five. But the main pricing interviews, you need about 10. You want to mix the people.
Kim Talarczyk (49:12.279)
Mm-hmm. What do they miss?
Asia Orangio (49:31.329)
and really talking through, again, what works about the pricing and what doesn't. Are there any frustrations or stresses? Are there ever any moments where you're like, this doesn't make sense to me or what have you? And then similarly, you can also ask expansion questions like, is there a reason why you haven't expanded or moved up to the next tier? And understanding all the ins and outs of that. So gathering that insight already, if you were to just do that alone, you would get 10 things to go and execute that would
that absolutely would help impact growth, like a hundred percent. I can actually guarantee that because I've given that advice and that feedback for free and I've gotten people calling me back being like, I did what you told me in that call that we had. They didn't even pay me for a project. I just told them, do this. And they did. And then they came back and they were like, we've actually increased like revenue by 30 % just by doing this one thing. And I hate to promise silver bullets, then it's not a silver bullet, but.
It's one, it's a small thing out of the million things you can do. But just doing those interviews, you'd be shocked at what comes back and what small things you can do to make a big impact later.
Kim Talarczyk (50:41.233)
For the Van Westendorp questions, are you giving a range or are they pulling a number out of their hat to start?
Asia Orangio (50:51.827)
Yeah, this is a great question. So I mentioned interviews being one step. The other step would be a survey, because 10 interviews is a lot. But you really want, like if you have hundreds of customers, you want to the survey if you can. The Van Westen door, there are two ways you can think about this. You could have it as just like a blank open box, like an open text. That will give you less normalized data.
So if you don't mind normalizing that data, because it's an open text box, you don't mind normalizing it later, then it's fine. You probably could put a requirement of it that it's like number only or something, so you only get numbers. But sometimes people will write paragraphs in those little text boxes, and they'll be like, well, I would do 50, 100 is just too much. I just want to do that. And you get a lot of extra back talk. Not that it's bad. It's just you get a lot of.
mental justification or validation in that box and that may or may not be helpful for you. It just depends on thinking in context. I think the way that we like to do it now is we like to just have it be a, I think we do the open text if I'm not mistaken. I think, but I do think it depends on the client.
Kim Talarczyk (52:01.809)
Yeah, we've done a bow. I feel like we've done ranges as well. And yeah, yeah.
Asia Orangio (52:06.131)
We've done both.
Ranges, I think, are really helpful when you know you're going to get hundreds of survey responses and you want to ensure that the data is normalized. So what you do, for example, the issue with this is the range, you don't want to cap yourself at the same time. So if you offer a range of numbers, so meaning there's a drop-down selector or maybe there's a slider bar and people can slide zero to $10,000 or whatever.
Kim Talarczyk (52:27.835)
Right.
Asia Orangio (52:39.381)
Depending on your product, you might only offer zero to a hundred, or if you're enterprise, you might be like, you know, minimum 5K to 60K. it, it really depends, I think on like what numbers are you dealing with here and who your customers. You also might have some that are enterprise and some that are small. And you know, you got to adjust the survey based on that. I think that is part of why we do open text is because
If a client has a lot of different types of buyers and they're paying different amounts based on their size or some other factor, then we do the open text because then you can at least filter based on the type of buyer. But that's a good question. So I do think it depends, but if you want normalized structured data, you would offer the range like a slider or like a dropdown of some kind and offer like numbers that people can just select. Otherwise an open text would be.
would also work, but keeping in mind, you're gonna get a lot of like people who are going, like they're like in a choke hold about the number that they put down. They wanna explain it or what have you. And some people don't put numbers at all. You gotta deal with that too. Some are like, I hate this question, I'm not answering it. And it's like, okay. But Van Westendorp survey, so that's another step. We did the interviews typically first because...
Kim Talarczyk (53:53.712)
Alright.
Asia Orangio (54:01.354)
that helps us structure the survey that comes later. So with a willingness to pay survey, usually we're doing Van Westendorp of some kind, but we'll also include other questions that help us qualify the response, meaning like how can we gain information about the person to help us understand who this is or like what type of buyer they are, and possibly their jobs to be done. Also possibly we get into features and then modes, but the survey is also critical because we also include
what we call max diff types of questions. So instead of doing Likert scales or prioritization questions where it's like rank each feature one through five based on, I guess it's technically still Likert, it's just combined, but like rank each feature like one through five of what's most valuable to you. So we find like those are not nearly as helpful as what we call max diff, where maybe you have like a feature set in a grid.
and we say what's the most valuable feature here and what's the least valuable feature here. And then we analyze the data based on what people say, but they can only select one thing that's the most valuable and one thing that's the least valuable and they have to answer that question. Maxed if questions, we use it for several things. We use it for feature questions, helping them prioritize features. also use it to help understand add-ons and like what would be most valuable as an add-on.
we use it to understand preference for how people would like to pay. So for example, if you're stuck on value metrics, so let's say like you could charge for a number of different things. What you could do is you could do a max diff question and you could ask, what would be the most ideal way for you to pay for the product? Or you could word it like, what would be the most, which of these is the most valuable to you?
from the product and you could have each of your value metrics written in a way that makes sense to people. So we typically just do like number of users or this is highly dependent on your product. you know, fill in the blanks. But if we're a scale, if we're like a scheduling app, it would be like number of users or number of calendars or number of integrations or number of blah, blah, some volume, percentage of transaction. So like maybe,
Asia Orangio (56:25.747)
you take payments through your app, or through your scheduling app, and it could be like percentage of the app fee or whatever, whatever. But you can actually ask people, what would you prefer to pay for? How would you prefer to pay? And select most like most valuable or least valuable. And they have to only pick one for each column. So they can't, they're not gonna be able to select like, five things are most valuable, because that doesn't, that's the opposite of most valuable. With most valuable, it's gotta be the one thing. What's the most valuable out of this list?
and then you conduct your analysis from there. So we use that across the board in the survey. Usually the survey's anywhere from like 15, it's usually about like 15 questions. Pricing surveys, so one thing that we do talk about are optics. You don't necessarily wanna blast to the whole world that you're about to change pricing. Usually you wanna email a subset of customers. Hopefully you get at least 25 to 50 responses.
Although I will find, I find sometimes when it comes to pricing, people have opinions. So out of everything that you do, research wise, pricing will get you the most feedback, hands down, because people are very sensitive generally about what they're paying and how much they're paying. So if you wanna manage optics here, if you have a very large customer base, you don't wanna spook anybody, you might just wanna send it to a portion of your audience and not like everybody. But if you have a small customer base, then this might not matter as much.
But what makes sense to me is just making sure that people understand that you are going to be sensible about this and that it's not just, you know, each individual that you're thinking of. You're also thinking about like the whole, like the group, each group that can be identified. So that's step two of phase two is the survey. It's a lot of analysis. Then we get into step three, which is product, product analytics, which is one of my faves.
Kim Talarczyk (58:12.955)
Okay.
Asia Orangio (58:22.005)
There are a number of ways to do this. So like really fancy pricing consultants, they go hard on step three. They go hard on step three because this is where the data is dating, so to say. So they are deeply analyzing, usually, if the good ones are at least, deeply analyzing overlap of what features are getting charged for in each plan versus how much usage is actually happening in each of those.
plans for each of those features. And you end up with some really interesting charts and graphs here. I've seen some cool shit, I'll be honest. Like I've seen some pricing consultants create some like wild things. like, whoa, how'd you do this? But it's basically like, I think anyone technical could actually do this. It's interpreting it that's hard in my opinion. basically it's several charts of what are people actually using and how does that overlap with other features?
and that helps you identify what should probably be in certain plans based on cohorts that you're analyzing. So let's say, for example, you were to look at one specific type of segment, and it's a specific type of buyer, ideally with data that you're collecting about them, like, you know, so you can actually do this analysis. This is often an issue that I see for a lot of companies. They're not able actually to do this analysis because they're not collecting anything or enriching anything, but I digress. But they're basically looking at an overlap of, for this specific segment,
of our customer base, what's the overlap of all the features from what they're using? And how is that different than maybe other segments? And what you might find is that certain segments use specific types of features in a particular way, and that can actually influence how you think about structuring your plans. So the pricing interviews and the willingness to pay survey, those things influence now what we're gonna go and dig deeper into based on the answers and the data that we get back from that.
So it's hard to say exactly like what should you be analyzing in step three, because it does depend on what you get in step one and step two. But step three, this is where we're opening up, Amplitude we're opening up, PostHog, Mixpanel, whatever your platform is. And we're probably doing some really intense database queries of understanding product usage and ideally like user type slash plan type, like whatever segmentation we can do from here to unearth patterns.
Asia Orangio (01:00:48.179)
based on actual user usage data, based on real use data. And this is the key is this shouldn't be hunches and vibes and feelings. This should be actual data-based, actual real insights-driven pricing work. Because what you run the risk of is, yes, let's listen to what customers and audience members and prospects are saying and what we're hearing and gleaning from that. But most people, when it comes to usage at least,
they either overestimate or underestimate. It's rare that people are just like dead accurate on how they actually use things. Used data is gonna be a lot more reliable in this scenario. So the combination of all three of those things, because you're gonna get a lot of information back from this. Now we have to synthesize that into pricing hypotheses of what do we think pricing, like what form or shape can pricing take based on the known knowns?
the known unknowns and then you won't know the unknown unknowns, those don't surface. And are there unknown knowns? Are there unknown knowns? No. Well, maybe. I guess those are like assumptions that we're not aware of or we're conscious of. It's like things that you know they're not aware of, but which is possible. Possible.
Kim Talarczyk (01:01:59.781)
You
Kim Talarczyk (01:02:10.321)
Now you're just confusing me, so I don't know. That one I got lost.
Asia Orangio (01:02:14.965)
There are certainly known knowns and then there are likely known unknowns. So things that we know that we don't know. Like we know we don't know what this is gonna do. And there are the known knowns, which is we know what we know. And yeah, unknown unknowns you won't know at all. It's impossible to know those. But yeah, I guess there could technically be unknown knowns. Those are your assumptions though, is what I'm thinking.
From there, mean, yeah, you'll craft those hypotheses. Like I said, usually you'll come away with like two to three different ways to think about pricing. And now what needs to happen is you go into the fourth step, I didn't talk about, which is you're actually implementing some pricing experiments, we'll say. And you're now fully living phase two of the pricing journey, of the monetization journey of...
you have conducted this analysis and if you've never done this before, the first time you do it will feel very intense. There's a lot of information, there's a lot of data running around and you're not sure what is signal versus noise and that is very overwhelming, I will say, without a partner in this or without someone who's experienced. You can learn this. I'm not saying that it's not learnable. It absolutely is.
I'm only speaking as someone who's done it several times across different companies. And I'm also still learning. I'm coming across new pricing approaches and strategies all the time. And I'm like, I can't wait to try this. Learning being my number one motivator here. Demonstrating learning. But all that to say, I can imagine if it's your first time doing this, it is really freaking hard. And you're like, I get why founders don't. I totally get it, because it's a lot of work.
Kim Talarczyk (01:03:49.585)
haha
Asia Orangio (01:04:02.262)
important is that there is work and that there is a process. doesn't have to be, you know, you're covering your eyes and you're just like picking something, which I think is a lot of what happens today. I think a lot of it is, oh, let's just like, uh, do what so-and-so competitor is doing and then call it a day, which
Kim Talarczyk (01:04:21.018)
Right. making, like you said earlier, the company that was making multiple changes. But if you're not basing it on these three phases and looking at data, then now you're sort of willy nilly changing things and you don't know what the effect is.
Asia Orangio (01:04:39.358)
Right. Or even
When I think about pricing and really a lot of the work that we do, especially when it comes to like root cause analysis, we are ultimately looking at, we're trying to use to some degree the scientific method of we have observed, we are forming hypothesis, we are gathering information and data to inform that hypothesis, and now we are going to design experiments, run them, and then learn from them. And then we're gonna do it all over again.
And I think that feels very daunting if you don't know what information or data to pay attention to. Again, signal to noise is really tough in general in growing businesses, especially SaaS businesses. But I think it's especially tough in pricing. And so I think the typical process is there's a lot of product analytics. I think what most technical founders in particular are comfortable with is
Kim Talarczyk (01:05:12.292)
Mm-hmm.
Asia Orangio (01:05:39.438)
let's analyze the product, but what they're missing is the qualitative. And that's why that doesn't work all the time. You might get lucky and spring gold, but when you just look at the product and you do your database queries, but you never do the interviews, what ends up happening is you don't actually know what to dig into or what to peel back or what to segment or what to look at
from a cohort perspective versus like a baseline and everything perspective. And so that is where we get into your options for like, okay, well, what can you do? Like, what are your options when it comes to executing the pricing work? So, or even coming up with a strategy or the process or what have you. So if me talking through this process made your eyes gloss over and you're like, I'm not doing that. Not only am not doing that, Asia, but I'm also never gonna pull the pricing lever because it just sounds too hard.
I get it, it is hard, at least the first time you do it, but then once you do it, you start to get a, it's a muscle that you build and you build that muscle, you get more repetitions. And the thing is, is I've done pricing a bunch for a lot of different companies, but within your own company, you need to be able to do pricing at least once a year because that's about the frequency that you'll need to look at it, be truth be told. So every year there should be some type of pricing review. Is it still the right pricing based on how much we've grown?
based on what we're hearing, yada yada. And you can go through those first three steps that I mentioned in that phase two, which is pricing interviews, pricing UX interviews also, let's not forget about those, and then running that willingness to pay survey. And then yes, let's do some back-end product analytics work. what I find is product data can't tell you why something is happening, and it also doesn't necessarily tell you where to dig further, and that's why you need the qualitative.
because the quantitative is great. Don't get me wrong, we love the quantitative, but you really need both so that way you can understand, what actually, where should I be looking based on what we've heard and what we're seeing in the surveys and things like that. So your options are, and there are, you do have options here. The first is DIY, do it yourself. And I do recommend, if you're like me and you just like learning shit and trying it and,
Kim Talarczyk (01:07:46.992)
Mm-hmm.
Asia Orangio (01:08:07.797)
creating your practice around being the CEO and the arbiter of growth for your business, do it. I highly recommend that, especially if it's low risk, especially if that excites you, if that gets you excited. If that does not get you excited, then DIY is out. Not to say that our founders that we work with don't get excited about it, it's just much more like,
Kim Talarczyk (01:08:29.137)
you
Asia Orangio (01:08:36.713)
their energy, their bandwidth, they are focused on a million other things. And while they would love to drop everything and go learn pricing, realistically speaking, they're not able to, or they're not, or whatever. Which I get, I totally get, that's a lot of reason why founders hire folks like us. So if DIY is exciting to you, I would also say too, if you're in the bootstrapped context, so you're not VC, if you're VC, I'm actually gonna recommend that you hire a consultant slash agency for this, or somebody.
Somebody should be a pricing expert, either within your own organization or you hire support here and then you learn it and then you deploy it. Because you will probably waste a lot of time if you are VC funded trying to figure out how to do it yourself. So I will say that. But if you're bootstrapped and you're profitable and you're excited about DIY, do DIY. There are a number of people that I would recommend that you follow. Patrick Campbell used to be, I say used to be, he still kind of is like the king of pricing and also the king of churn when it comes to like how.
SaaS founders think about it, Patrick still has tons of content out there to this day about pricing from Price Intelligently and also from ProfitWell. So brush up on pricing through them and the resources they offer. They actually have a guide to pricing that I think is very, we've learned a lot from them. I certainly have. I learned about MaxDiff from Patrick. So like highly recommend using that in your pricing knowledge.
or like intelligence gathering, so to speak. But there are others like Kristen Berman of Irrational Labs. So Kristen, I believe it's, I'm pretty sure it's Kristen and not Kirsten. I'm pretty sure it's Kristen. Kristen Berman love the work that they do at Irrational Labs, but they have a lot of like willingness to pay content. They also have like guides on how to, how to, like they literally spell it out. Here's how we do pricing. Here's how you can do pricing. If that overwhelms you, obviously you call them.
But all that to say, so those are some of the options to learn. There's also a book called Street Pricing by Marco Svidera, think. He spoke, I saw him speak recently at, I think it was one of the microcomps, microcomps, New Orleans possibly, and Street Pricing, I don't necessarily align with every everything in it, but I would say 90 % of it.
Asia Orangio (01:11:00.721)
is a great, it's like a great guide again to pricing. Now, assuming that pricing is an issue or challenge that you have, and you know that pricing is a challenge or issue, tapping a pricing specialized consultant could very well make sense. So folks like Irrational Labs, I actually don't know if profit, or I don't know if Price Intelligently is still active, I feel like they are. Marcos also of Street Pricing, I believe he has his pricing consultancy.
It might actually be Pace Pricing if I'm not mistaken. I could be wrong. I could be wrong. I can't remember what his pricing consultancy is. But OK, so if that is available to you, so just so you're aware, there is a huge range of how much you will spend on a pricing specific consultant. like folks who are specialized in this, there is a range. There are some that are minimum 100, 200k for a project.
Kim Talarczyk (01:11:35.089)
Mm.
Asia Orangio (01:11:59.058)
There are also some that are that plus a future revenue fee. I'm not gonna name any names, but there are some, I've seen some pricing consultancies basically say, not only will you pay a base fee for this, but we will also charge future revenue for the next two years. So they'll basically take a percentage of your revenue for the next X whatever, but only for the percentage that grows. If you contract, like, obviously that doesn't happen, but, so there are some that do that.
Then there are some that do really small bite-sized pricing projects, like we're talking like the one to 20K range. I say one K that might just be like a pricing audit and maybe they just look at your pricing page. And then there are some that are like, they will walk you through a pricing project with the intent to kind of show you the process and show you the ropes, help you design the new pricing, but then
From there, you can hire them again or you can go and start developing your own pricing practice internally with some advising or coaching from them over time. We fall in the latter, so we're more in that latter bucket where our pricing projects, it's a one-time project, it's a four to six week process, and the intent is to show you how to do this, that way you can do this in the future, and then maybe you just tap us for advising over time.
and also possibly even to remind you to look at this every year, because it's at least every year depending on how fast you're growing. So those are the options. I think some are gonna be obviously more palatable to others. So I think for the earlier stage folks, the smaller folks, paying 100K or 200K for a pricing project is just not gonna be realistic. That won't make sense. And while pricing is a great lever,
And it certainly could 10x you. Like I've seen companies just focus on pricing and they literally 10x. But the, the risk factor here is that pricing would have to be the only lever for you to pull for that, to make that true. And like, it would have to be pretty intense growth for that to be worth it. For my larger companies. So for companies that are more than 5 million, 10 million in error are a hundred K to 200 K on pricing is going to be nothing. That's going to be like a drop in a hat to me.
Kim Talarczyk (01:14:12.655)
you
Asia Orangio (01:14:21.649)
The real tricky part to me is if the pricing consultancy is charging future revenue, like a percentage of future revenue, for example, that is the only scenario where I'm like, I just don't know if that is worth it in the end. I know some consultancies do. There are some companies though that like, there are some enterprise SaaS companies where that would not be an issue. Or if it is, it's like a very small percentage of the revenue. Like it's not like that much.
It pays the pricing consultancy, but to the company hiring them, it's really not that big of a deal. There is also a difference between your mileage may vary on the data fidelity here. So those fancy pricing consultancies where you pay 100K minimum, the data fidelity is extremely high. Don't get me wrong. Usually they are doing very, very deep, intense
Kim Talarczyk (01:15:01.393)
you
Asia Orangio (01:15:18.165)
analysis on the product side, the qualitative side, like they're doing everything that I mentioned and probably a little bit more. Usually the data fidelity, like the fidelity of the insights that you get from them is extremely high. Like we're talking like 90 % plus. Like if you do exactly what they're saying, you will probably grow X percent. Like they can actually even predict like how much you're gonna grow based on what their models say. Sometimes they actually, I say sometimes, a lot of like the fancy ones, they actually might have like,
their own platform or system that runs these models and they can actually project like how much you're gonna grow. Like literally based on the different scenarios that they predict. It's pretty cool. It's pricey. It's cool.
Kim Talarczyk (01:15:54.106)
Hmm.
Kim Talarczyk (01:16:01.507)
Yeah, I would imagine enterprise level solutions, Companies that are selling that are looking into something like that if the price point is much higher.
Asia Orangio (01:16:11.605)
Yeah, exactly. When the price point is that high, and I would say even, I wouldn't even say necessarily always enterprise, because again, if you are, if you're five million in ARR, 100K is not gonna be, you'll probably get sticker shock at first, but when you think about it, that 100K will probably unlock the next five million. Rand and I used to talk about this all the time. Like he used to say, you know, I'll spend the 200K if it means I'm gonna unlock two million.
Kim Talarczyk (01:16:33.713)
Yeah.
Asia Orangio (01:16:41.735)
or a million, because that ratio of investment to growth is like almost nothing. Like, yeah, like, yeah, I'll 10x that. I'll invest in that to 10x.
Kim Talarczyk (01:16:42.138)
Right.
Kim Talarczyk (01:16:48.175)
Yep. Yeah. And I mean, we've worked with companies where we've helped troubleshoot and you have said pricing could be a lever. You can go hire a fancier pricing consultant to do this work. that might be something to untap.
Asia Orangio (01:17:04.265)
Yeah. Yeah.
I've, there was a company that we worked with that was a year ago and, they were, they were at 3 million. And I was like, you know, I mean, it's a, the ROI here is a little tight, but like, if you spend 200 K on this pricing consulting firm, you probably will make your next three to 6 million in like a short amount of time. so I've absolutely recommended that before. And I think also too, they had a ton, they have like 10,000 customers.
actually maybe a little less, like 8,000. But I remember thinking the fidelity needed to be high and paying that much would be worth it in that scenario. Now let's talk about when you wouldn't pay that much. So you wouldn't pay that much if you don't need the fidelity to be high. For example, if you know that pricing has not changed for 10 years, or you know that you've only really been kind of like tinkering with it for the last like two to three years,
but you've mostly ignored it. That is where you probably don't need high fidelity. You probably just need to do anything. Do anything in a structured way with a provider that can help you walk through it. That is where paying the 100 to 200K might not make sense at first. You might not have the financials for that, but you might have a 15 to 20K project. And that's kind of where we would fall. And there are some that
are maybe in the more like the 50 to 80K range. Not from us, but there are some pricing firms I do know that do charge like in that range as well. I would say again, like if you know that you need to make any progress on it and you just need to pull, you need to get comfortable with pulling that lever. Working with a partner like us could be a great way to do that, but there are also others. So there are like pricing consultants who are, it's like a one man show type thing or one woman show and
Asia Orangio (01:19:02.235)
they're coming in and helping with that very specific thing. And it's like a, it's a very tight project, tight deadline. And you probably won't spend a hundred K, but you'll spend some number. and, and that in theory will work as long as you are learning from that process. I don't think it's, and you know, I say this, I was going to say, it might not be sustainable to keep hiring people for this. I only say that though, because I do think that you need an in-house pricing expert.
of some kind that could be your CRO. But I think the CRO needs to still be informed to some degree by product data. And I think that's kind of where your mileage may vary on your CRO. someone in-house needs to learn this, and to some degree, until you need maybe really fancy analysis. And that's maybe where pricing consultants still make sense. The larger you get, though, the more that pricing consulting firms
Kim Talarczyk (01:19:45.713)
Yeah.
Kim Talarczyk (01:19:55.91)
Yeah.
Asia Orangio (01:20:00.34)
become less of like sticker shock and more like this is, you know, almost, it's like an extension of your team basically.
Kim Talarczyk (01:20:09.531)
Yeah.
Asia Orangio (01:20:11.049)
But not to toot our own horns, but if pricing is something that you know that you need to make progress on, but you're stuck and you just need to get in the rhythm of executing the process so you can continue to do that year over year. Some companies quarter over quarter, it or not, but for most at least once a year, like let's look at pricing and just make sure it all makes sense.
We're a great partner in that scenario for sure, especially if you don't need 99 % fidelity, if you need like 70 % fidelity. We really thrive, I think also in that scenario too, where companies that we work with, typically bootstrapped, if you're VC funded, chances are you don't have enough data for data fidelity. So even like a provider like us would still be like really valuable in that scenario. But just getting in the practice and the habit of doing it.
and then walking you through the process of how it's done. So that way you can then go and do this again. And maybe you tap for, you know, just like a little bit of like high level advisory in that way. But the goal is to get you learning how to do it. So it's not so scary. And also, so you don't waste your time testing 20 different things for two years and not growing or whatever it is. We just recently did this for a client and they have actually tripled their annual growth rate, which is really cool.
Kim Talarczyk (01:21:33.679)
Yeah.
Asia Orangio (01:21:34.346)
So anyway, so not to do it on horns. However, if you are struggling with this, this is something that we do help with. And specifically with founders who, I get it if you're like, I don't want to learn this. If you're like, you don't want to do DIY, you want it to be assisted, then yeah, like we're like the perfect partner for that. And then as you grow and you scale and you get to the 5 million, 10 million range, the fancier pricing consulting firms are going to be also, I actually think that that's where like,
Kim Talarczyk (01:21:37.393)
You
Asia Orangio (01:22:03.294)
spending that much on pricing, it's gonna be a no brainer, because what you're gonna unlock is gonna like eclipse whatever it was that you spent. That's why I do think at some point, those firms are very worth it. And some of them do offer like small offerings, like I know Pace Pricing, if I'm not mistaken, they do a pricing like review like for a very small amount. I do think they might offer, they might offer smaller projects, but we've been really impressed with their work in the past. Anyway, all that to say.
Kim Talarczyk (01:22:25.019)
Mm.
Asia Orangio (01:22:32.657)
So that is my busy guide to pricing. To give you context for how fast this can go, four to six weeks is all you need. You can actually do pricing interviews and do the pricing survey in as little as two weeks. The hard part, honestly, is the exactly what you're imagining, which is designing your pricing hypotheses, coming up with those ways of structuring the data, analyzing it, in my opinion, is actually pretty straightforward.
It's really more about how you translate that into actionable pricing steps to take. And then all the development work that goes into changing and adjusting the pricing. What I typically recommend is only rolling out new pricing for new customers. That way you don't have to worry about sending messaging to your existing customer base until you know it actually works. And I think that this is part of the process too, which is when you execute, when you launch new pricing,
just do it for the new customers and track their progress for the next six months. If you notice that those new pricing plans have infinitely better NRR, you'll know within two to three months if it's tracking that way. But at the six month mark, if they have infinitely better NRR than your existing core base, then that's a really good sign that that pricing is probably better for the whole customer base. And then you can start thinking about how to roll out that new pricing to existing customers.
But I recommend it this way because, you know, Rob Walling says this all the time, but he's like, listen, run your pricing experiment on new customers only. So, you know, it's on the website and it's the way that new users experience it, but maybe don't roll out to existing customers because if it doesn't work, you'll know very quickly. And if it also doesn't work, you can roll it back in theory also pretty quickly. If you have really complex, like engineering in the background with pricing,
maybe it's time to also think about simplifying that. I'm not technical enough to tell you exactly what that would be, but I do know that there are some pricing environments where maybe like charge B is getting used and it's actually really tough to charge for a certain thing in a certain way or there's another one that comes up often that founders struggle with. I'm not gonna remember the exact name, but sometimes it's like not straightforward how to like.
Asia Orangio (01:24:52.915)
technically charged for something or to have it show up correctly in certain reports. But all that to say, if you know that you have pricing environments that are not conducive to what you need to do, this also could be good excuse to streamline that. Anyway, I digress. The goal is really to get it operationalized and then also, again, once you set it, just focus on new customers. Don't try to roll it out to the whole customer base yet until you know that this is like,
way better than what you've got. And sometimes you learn that really quickly, but sometimes it takes like six months.
Kim Talarczyk (01:25:28.059)
Yeah. I like it. Busy Founder's Guide to Pricing. And I think we've found it can be very daunting. And even when you say, you should do it every year, in my head, like, my gosh, that's so much. But when you kind of learn it and you do it once, to your point, it does get easier. And it can become a practice then in the business and a growth lever.
Asia Orangio (01:25:40.692)
It does sound like a lot.
Asia Orangio (01:25:54.1)
And I think too, you might not have to do four to six weeks pricing sprint every year fully, like completely. It might just be every year you're looking at your pricing plans and you're just taking note of a few different metrics of like, what's the distribution between all the different plans? What does churn look like? Net revenue retention look like at 12 months for each of these plans. And also you're just getting that critical eye of
Kim Talarczyk (01:26:07.621)
Mm-hmm.
Asia Orangio (01:26:23.753)
do these value metrics and things that are in these plans make sense? And I think as long as you're doing that every year, you might make a couple of tweaks here and there, but maybe you don't overhaul everything every year. So I do want to clarify that, because I'm not saying that. But I am saying, we shouldn't be, OK, we did pricing, and then now we're not going to think about it for five years. We shouldn't do that. That, to me, that's crazy, because pricing quite literally is one of the easiest levers to pull.
Kim Talarczyk (01:26:48.943)
Yeah. you could still, you could talk to a few customers the following year after you've done a, right? I mean, eyeing a little bit of qualitative, a little bit of quantitative data yearly over time. Yeah, that makes sense.
Asia Orangio (01:27:01.909)
Yeah. And also too, you know, a lot of teams don't do surveys like regularly, but if you run like an annual survey, just generally, could like slide in a pricing question just to kind of get general like a pulse check of, hey, how do you feel about pricing? Does pricing still make sense? And maybe that is what triggers you to dig into it further if you notice one year or one, you know.
Kim Talarczyk (01:27:21.168)
Yep.
Asia Orangio (01:27:27.893)
quarter or whatever frequency you're doing, maybe there's a quarter that's bad or something. you're like, oh, a lot of people are really unhappy with the pricing. Or you're getting a lot of feedback that it's not working. So that's kind of where it's like, it is a little bit intuitive. But I do think we've got to be intentional about it. And I think part of it is there's just no good way to operationalize around it without just committing to it. And I think part of the issue is mentally and energetically committing to thinking about pricing and monetization.
Kim Talarczyk (01:27:55.984)
Yeah.
Asia Orangio (01:27:56.625)
we're in that now for, for, you in my fractional CMO role, you know, we've been talking about pricing all year and I think now we're finally like, okay, we got it. Like we have to commit to this, but the commitment part is the hard part because there's lots of things you got to commit to. But yeah, I agree. I agree. it can, it can be small. It doesn't have to be big. You don't have to overhaul it every year, but you do need to think about it intentionally every year, at least, at least, because the assumption is that you are growing.
and your market is changing and your product is changing and that's why. And pricing needs to catch up as it needs to really be the thing that carries you through. Because we've just seen it a million times now. Companies will set pricing and then not think about it for five years. And then they're like, why aren't we growing? It's like, well, this is the easiest lever to pull that we're not actively pulling. that's, know, anyway, cool. Did we cover it? Did we do everything?
Kim Talarczyk (01:28:56.145)
feel like we did it. I feel like you did it.
Asia Orangio (01:28:58.613)
Yay. Okay. If there are any questions about pricing, I'm an open book. I will literally tell you anything that you need to know. But thanks again for listening and for joining us. And yeah, and if you take the motivation code, take, you tell us what you got. What were your top five?
Kim Talarczyk (01:29:12.067)
Yes. Yeah. And Asia will tell you everything about pricing because of her motivation code. So use her. This is what she wants to do, people.
Asia Orangio (01:29:16.762)
So true, I want to demonstrate learning.
I mean, that and like five other things, but yes, one of the five. Cool, thanks Kim.
Kim Talarczyk (01:29:24.311)
Yes, of course. All right. Yeah. Have a good one.
