Value-Based Pricing with Aggelos Mouzakitis - Productized 24 TalkInTen

We’re excited to bring you exclusive content from Productized 2024, our third conference of the year! This series continues our TalkInTen format, where we deliver concise, impactful conversations with industry leaders driving innovation in product and business agility. Each episode is packed with fresh insights, actionable strategies, and real-world examples to help teams and organisations thrive.

In this episode, we’re joined by Aggelos Mouzakitis, an expert in growth and value-based pricing, to explore the critical role pricing and packaging play in driving revenue for B2B SaaS companies. Aggelos walks us through the complexities of value-based pricing, offering practical advice on how companies can structure their pricing models to maximise value for their customers while boosting their bottom line.

Aggelos on LinkedIn - https://www.linkedin.com/in/growth-product-manager/

Episode Highlights:

• Value-Based Pricing as a Growth Strategy: Learn why pricing is more than just a financial decision—it's a core part of your positioning and growth strategy.
• Packaging for Success: Understand how to segment your customers and tailor your product packages to meet their needs effectively.
• Key Dependencies: Explore the factors that influence pricing decisions, including growth stage, go-to-market strategy, and customer segmentation.
• Real-World Case Study: Aggelos shares a case study of a company with flawed pricing, revealing how the right pricing strategy can transform business performance.

Here is the synopsis of Aggelos's Workshop:

Whether you're facing challenges in growth or grappling with setting prices for your product plans, this workshop is perfect to help you learn how to leverage value-based pricing like a scientist, ensuring your offerings are not just priced right, but are perceived as valuable by your customers.

If you enjoy our episodes, please leave a review and stay tuned for more great episodes from the Product Agility Podcast!

Use code PROD24 for 15% off training courses at Sheev.

Sheev - https://www.sheev.co.uk

Host Bio

Ben is a seasoned expert in product agility coaching, unleashing the potential of people and products. With over a decade of experience, his focus now is product-led growth & agility in organisations of all sizes.

Stay up-to-date with us on our social media📱!

Ben Maynard

🔗 https://www.linkedin.com/in/benmaynard-sheev/

🐦 https://x.com/BenWMaynard

💻 https://sheev.co.uk/

Product Agility Podcast

🔗 https://www.linkedin.com/company/productagilitypod/

💻 https://productagilitypod.co.uk/

🖇️ https://linktr.ee/productagility

Listen & Share On Spotify & iTunes

• Spotify - https://open.spotify.com/show/0lkwAYJzVSuk5zfJ1vIDZq?si=4c691fb12f124a56
• iTunes - https://apple.co/3YvTX8p

Want to come on the podcast?

Want to be a guest or have a guest request? Let us know here https://bit.ly/49osN80

Transcript

0:00

Welcome to a very special series of episodes of the Product Agility Podcast, broadcasting for two days, direct from Lisbon Portugal and product ties 2024. This year, we're bringing you more exclusive bite-sized wisdom with our talks in 10 format, where we're going to be diving into actionable insights from some of the best and brightest minds in product leadership. And attendees this year are being spoiled with talks and workshops from the likes of Radakadat, creator of radical product thinking and rich Moronov, author of the art of product management, helping us all find some joy in what we do. But it would be a pretty shitty conference if it was just two people. There are so many more people here, and they're going to be getting as many of them as possible on here to share their talks in 10. Now before we begin, a huge thank you to our sponsor, Sheev Limited. Sheev is the company which has bankrupted this podcast pretty much since day one. I want to take an opportunity just to share with you and make you aware we do some awesome stuff. Whether it's training your product teams or coaching your product teams with clarity and alignment, or you know just a simple thing I've actually making OKRs work in organisations, these are all things that we are very good at. So do head over to www.sheev.co.uk, see what we do and get in contact with us. Also check out the show notes for a tasty little discount code over any of our courses. Grab a notebook because the next 10 minutes are going to be packed with action tips from the best in the business. And here begins a talking 10. It's nearly buffet time here at the product I is 24 on day three and I'm joined by Agilos who ran a workshop yesterday amongst another topic value-based pricing. I got that right didn't I? Yes exactly it was value-based pricing and how did you find the workshop? It's a very dear topic to me. Value-based pricing is pricing over pricing and packaging especially for B2B SaaS companies is at the moment the only silver bullet, the only growth hack I cringe by saying that thing but it's true if you mess up your pricing and packaging you literally can mess up pretty much every revenue and growth metric of your business. So I was like okay that we have recession, businesses want more revenue, pricing and packaging is the thing to teach them in order to increase the revenue. The truth is I regretted it because it's a kind of it's a very demanding topic. I had three hours and it has so many dependencies and so many factors that are baked in to make a decision. It was a difficult one but then I think that it went pretty well. Did you present people with a case study but say from what were people bringing their own contexts? So the idea was that I taught them a little bit. I spent about half an hour to teach the basic principles of value-based pricing and then I gave them a real company. I didn't present the name of the company but it was an actual client that I used to have with a very bad pricing and packaging. I gave them all the information even the inside out of the company because it's such a cross-functional exercise that the personality of the founder and the CTO and how they perceive change and what is the status of their data. All these little things are very important into restructuring their pricing and packaging. So I gave them a real case and I asked them to ask me questions and I played good into the exercise where I was basically telling them that this question that is the answer to that and that is the answer to this and we played it as a little game. Now did that game work smoothly as I had as I envisioned it before? Not really but it kind of worked. And he mentioned there's also dependencies. What kind of dependencies normally then kind of crop up in a pricing model? I mean I will just mention some that I have on the top of my mind because there are way more. What is the growth stage of the company? I have companies reaching out to me that are on an early stage looking at the fancy pricing and packaging of their established competitors and thinking that oh I should have that too. And I said them look the only thing that you need at these early stages is the smallest trade-off, the smallest friction that you don't want the user to think. You are trying to prove that someone put the hand in the wallet and gave you a small amount of money to get some value and then you manage to retain them. So don't think about fancy packages and trade-offs. Just go with the simplest thing. So one dependency. What is your stage? Another dependency? What is your go-to market? Are we going, are you going free-mill, free trial? Are you product led over? Are you sales led? Then what is the value ladder of the business? What are the segmentation criteria of your customers? The real segmentation criteria are based on industry, based on use case, based on persona, based on jobs to be done, based on what? What are the dimensions? Then what is your true competition? The category competition? All users might be using other alternatives to do the same thing but not necessarily other software. So there are so many things. I just mentioned three or four that are extremely fundamental but then even these break down into even more things. Another thing. What is the performance of your current pricing and packaging? Is it actually problematic? In what aspect? In what is your retention? How do you activate? What are the activation points? So it's crazy. It's crazy man. Like there are a lot of things and literally you have to imagine it like a table full of boxes and you have to open all the boxes in the same time, take a distance and look at them, look at the big picture and then have any investigators mindset, collect clues and then get all this clues into one dashboard and move away and just try to see the story that unfolds and where that leads you. I love it but it's hard. I've already guiding principles when it comes to deciding upon a pricing strategy. There is one very strong guiding principle and that is basically the 3P hierarchy. The 3P hierarchy imagine it like a pyramid and at the bottom of it it says positioning. At the middle of it it says packaging and at the top of it it says pricing. So in reality pricing and packaging is a positioning exercise ultimately. If you don't know how you position and for whom then you cannot build packages for these segments and therefore you don't even need to go to the pricing part. Another very good guiding principle is that you shouldn't worry about the price point. Basically pricing and packaging is a growth exercise. It's mostly about, as I said, positioning segments and packages. Lots of people consider it a financial exercise. Oh it's not, definitely not. If you mess up the price point itself that's no puppy will die but if you mess up the way that you have structured your packages and for whom that can mean that you have missed product market fit whatsoever. No matter how good the product is. So how do you get about discovering what that product market fit is? So you got a segment and you can say what's the package for that segment? Like how do you get about that process? It depends. The first it depends. Are we talking about a semi established company, a company that has already a growth rate or a new one? Let's talk about a new one. I find that more interesting. So what you have to prove is that there is a segment of the market. Now what is that segment and how do you define that segment? It depends that wants the value that you are getting and gets retained for that value. Now the reality for lots of businesses is that they have multiple segments. So they see retention rate and growth rate as one thing but in reality they have to segment it and see which of these segments actually get retained more, get activated more and why? What makes them get retained more and then focus their positioning on them and therefore not try to create a pricing and packaging that is for everyone but the pricing and packaging that is for the use cases or the customers that seem to have a fit with what they're doing. So it's a complex exercise that you have to reverse engineer what works and then bring it at the front. I really like the topic. I did a bit of research on it. I was looking at the packages for a product that we're launching and I found it just genuinely quite satisfying to try and think of different ways to cut it up. But I think for the listeners, I hope is that they can look at some of the packages with the products that they use and actually begin to look at it. And once you can have understand some of the rules, you can be dissected a little bit because it's a real kicker when you're using a product and you're really loving it. But I just want that one thing like, okay, that's having a bit of their money because I really, really want to do this thing now and that's where they're going to make their bucks. And it's very clever when they hook you in that way. So it's a science or an art but it's really effective when it works well. Even what you mentioned now, it makes me excited. I want to geek out about it because it's a whole strategy of how to use addons. And should you have an addon for someone to get it as an extra to put some customization in already not so much customized packages or should you include a mega feature in one of the packages to improve the conversion rate of that package. There is a whole logic behind it. And again, like a gazillion of factors that you need to consider. And as much as I like it, is a demanding topic and a very impactful exercise. Yeah, yeah, I'd love to geek out with you a little bit. But like, I would say another episode, but it's almost like to sit down and throw some stuff out. I just find it really interesting. I mean, I never really got a short period of time left. But are there any products out there that you look at the way that you structured it? You think, okay, if they're done, a really smart job in the way they structured this. I very much like the way Canva did it. Actually, I remembered Canva yesterday because one of the participants mentioned it that at some point they increased their price three times. And I remember that increase, that 3x increase, because it was delivered. The bad news of the pricing increase were delivered with new features. So I love that because it was a very good implementation of delivering the bad news with extra fancy features. It is one of the best practices out there. And also I liked it because Canva basically changes their pricing every 6 to 12 months. They increase their pricing all the time. And they're still at the top. And we all love them. So they do an amazing job. And yeah, good job to whoever is in charge. Awesome. Yeah, round applause for them. Thank you so much for coming on. I've really enjoyed it. It's actually going to lit my mind up a little bit after a site post lunch kind of last. So yeah, thank you very much for that. If people want to find out more information about you or have questions about any of this, is LinkedIn the right place for them to find you? Absolutely. You can find me in LinkedIn. I have an obviously Greek difficult name to spell. If you are you admin LinkedIn and you manage to spell my name correctly, I will spend some serious time to actually give you free advice. But if you don't, I will just give you friendship. Well, it's, you know, I won't make it easy for people. I'll misspell your name and I won't put the link in the show. Thank you so much for coming on. Thank you very much. I love you. And everyone, thank you very much for listening. If you have enjoyed this episode, as I keep saying, please make sure you let us know on social media. LinkedIn is our favorite. So thank you very much. And George, thank you very much for being an excellent producer. Thank you, George. We'll see you soon.