Pricing is downstream of positioning with SaaS pricing expert Dan Balcauski

Dan, thank you for joining the podcast. You've got a really interesting background. You run a price consultancy that you founded called Product Tranquility. And prior to founding that company, roughly 6 years ago, you, you really cut your teeth in product. And so I'm really excited to talk to you about why you started the company, what you've learned, how you're helping companies, and also sort of why and how you went from product into price consulting. It's a really interesting transition and one that I'm particularly interested in. So Thank you for being here. Tell us a little bit of your story. Like, how did we get to now?

Yeah, so I appreciate the intro, Fynn, and appreciate the opportunity to be here. Excited for our conversation today. Yeah, I've spent my entire 20-year career in software. Started off more on the value creation side than the value capture side. I actually started in engineering way back in the day, building products, but quickly realized that I was much more interested in why the products we built were interesting to our customers, how it created value for them, and ultimately how that turned into dollars and cents for the business. That led me into pursuing more of the product path. Along the way, I went and got an MBA. I was very lucky during that education. I didn't find out till much later that a lot of even business schools don't have courses on pricing. And I didn't expect at any point I would become a pricing person, but it was of interest to me at the time. So I took a few of those foundational courses and then I went into the product world. As you mentioned, I got a very lucky opportunity working for an incredibly fast-growing company right out of business school. And that company, although it was a software business, in many ways acted very much like what you might think of as like either a private equity firm or a private equity roll-up where we were acquiring anywhere between 3 and 5 other companies per year. The founding teams would go off into the sunset with their brings truck full of cash and that product would land on one of the product leaders, me as one of them, or one of the other members of my team. At any point, we were running 2 to 4 products simultaneously that all used to be separate companies. So it was a really great learning experience to see a lot of lessons learned of early stage companies, both on the product decision side, pricing side, messaging side, a whole bunch of different aspects of the customer journey to learn very quickly. And as you mentioned, I went off about 6 years ago and started my my consultancy, uh, Product Tranquility. And so been focused on helping companies with pricing and packaging. It's a— it didn't start as pricing packaging, that's a little bit of a longer story, so I want to be brief here. Uh, yeah, I've been focused explicitly on pricing packaging for about the last 5 out of the 6 years running my company.

What types of companies are you serving? Are these mostly like mid-market B2B SaaS companies, or is it a broader set of companies that you're helping?

Yeah, well, uh, I focus explicitly on B2B SaaS and mostly what I would refer to as a scale-up. Uh, so I would say generally sweet spot for us is in the $20 to $50 million revenue range, but have helped companies, uh, much larger and much smaller than that. Uh, this tends to be a, a great sweet spot for us. And then, uh, as well, I focus on a lot of what you might term like high-volume velocity, uh, businesses where, uh, you know, so think about ACVs that are less than 6 figures where you've got a significant transaction volume of business going, right? It's very, it's, there are great businesses out there where, you know, you've got ACVs in the 7 figures, but they look very different from a pricing and packaging go-to-market model. A lot of it just tends to be, you know, whatever the sales leaders can, you know, hand-negotiate individual contracts versus the more systematized way you have to approach it if you've got a high-volume velocity go-to-market model. So those are the types of companies that we tend to work with.

Yeah, that is very— so I think you're kind of creating kind of— there's sort of two types of companies in B2B SaaS. There are the maybe kind of more product-led, high velocity, high customer count. There are the more enterprise sales, much higher ACV, much far fewer customers. And how you would think through pricing and packaging in both of those two environments is quite different, I imagine.

Yeah, you can hide a lot of mistakes and you can be a little bit sloppier the larger your ACV gets because you always have this, well, we'll have a salesperson involved in the deal and they can explain it even though it's super complicated. But if you're running a high-volume go-to-market model, you often want a high percentage of that volume to be self-serve. I don't want any sales touch at all. If I do, I want it to be as light as possible. God forbid, I don't want sales engineering or solutions engineering, whatever you might call it at your company, involved in more than 5, maybe 10% of the deals at most, you know, so we, and we have to be able to, you know, run that model such that, you know, those, those deals basically are closing themselves. And so when you have that, it really constrains a lot of the decision-making because you have to make it really easy for customers to self-select into what option is good for them and really be a lubricant for your go-to-market engine.

Yeah. And I think, you know, what I imagine too is in this kind of product-led, high customer volume world, lower ACV, there's maybe kind of far greater need to iterate on pricing and packaging with more, let's call it rapidity or consistency. Like there's more iteration speed around pricing and packaging than there would be in the fewer, fewer number of customers, much higher ACV where you're signing longer contracts. Do you think that that's true and fair?

Yeah, you can. I don't know that it's a definite muster that it happens, but you know, that is kind of a corollary to the premise of, of what you were just talking about is like, how often can you touch pricing and packaging? And I believe fundamentally it's a lot of it, your iteration speed is the, one of the base limiters is your sales cycle because you just can't get customer feedback. If you've, if you've got a sales cycle that's 12 months, okay, you could launch new pricing today. And yeah, you can get early customer reactions, but you can't really understand what that meant for conversion or got, you know, even longer retention conversations, right? So, but if you've got a much higher volume of transactions and your sales cycle is 30 days, well, now all of a sudden I've got actionable data on my pricing and packaging changes, you know, within a pretty rapid cycle. So it does allow me to make more rapid iterations.

Is another way to put that, you know, I'm selling a large enterprise deal and it's going to take me a 12-month sales cycle. And in the middle of that 12-month sales cycle, I try to like change pricing. That's got real potential damage to that deal. Whereas if I'm in this higher velocity, more e-commerce oriented product-led motion, you know, I closed a deal 2 weeks ago, the next customer is going to sign in the next 2 weeks. They might see different pricing or different packaging or packaging may have evolved or I've run a promo or I've done a paywall in the trial and those types of iterations drive different price optimizations.

Yeah, well, you always have a consideration anytime you're making a pricing change of what do you do about the deals in flight? And so I've seen companies take very different approaches. So one is, you know, we absolutely do not want to at all get involved in deals that are in motion. And, you know, usually operationally, right, that might be okay if they've, if they've had a conversation, that's not interesting. But if they've, if they've got a, um, a PO issued or a, you know, if we've issued you shoot them a quote, then like, okay, from then on, like, we're not gonna even tell them we're changing pricing. Like, that's just gonna, you know, if they, they find out, be like, hey, that's not relevant to, to you, us, and our deal. I've seen also other companies though use that as a lever to accelerate decision-making, saying, hey, we've, we've got a, we've got the mandate from corporate, quote unquote, that any deals that close after November 1st are going to have to be on our new pricing. So, you know, are you guys going to be able to commit by the end of the month and use that as a lever to move, uh, things forward? And, uh, depends on your tolerance and what you think the— how the change is going to be received, where I've seen companies kind of take either of those directions. But you— I think you have to be aware of that conversation for any price change, even in a highly transactional model, because you're going to have sales reps who are going to be terrified for one reason or another that, you know, you're going to blow up their— blow up their month or blow up their quarter. And you want to make sure that everyone's prepared and comfortable with the change that's going out. So it's always a consideration to figure out what you want to do with deals that are in flight.

And just to be clear, are you serving companies of both types and majority are the higher volume companies, or are you serving like almost exclusively the higher volume companies?

Yeah. So it's an interesting question. So if a company, if their ACV is less than 6 figures, almost 100% of companies will have some deals that are greater than that. Amount, right? Because ACV is an average. And so, you know, it's like, hey, our ACV is $25K, but, you know, we've got some federal government contracts or we've got whatever that are, you know, we've got JP Morgan Chase or Disney is a customer as well. And they're, you know, they bought $500,000 of software from us last year or whatever. So oftentimes, you know, very rarely that you don't have to understand or deal with the enterprise side of things. But, you know, you're looking at sort of the, what is the majority of case? But if a company is you know, only selling the 7, you know, 6, 7, 8-figure contracts, then yeah, I'm usually not engaging with those companies.

Makes complete sense. Tell us a little bit about the challenges that the companies that you're serving are running into. Like when they come to you and they want to work with Product Tranquility, what are they trying to accomplish?

Yeah, well, I guess, you know, I can answer that a couple of different ways. You know, I'd say like there's a couple of different challenges that we see over and over again, which is, you know, you've grown sort of beyond your initial customer segment. So maybe you were selling to, you know, one customer group and now you're trying to go into another customer and for whatever reason now your pricing doesn't match the value that those customers receive. And so it's becoming difficult to do that. Companies have grown their product either organically or inorganically. So they're adding significant new capabilities that could be a separate new product or a separate, entirely separate tier, or maybe they've acquired another company and now they need to rationalize pricing packaging. Because what happens there is that you will often see in M&A, there's, if you read any press release from any CEO who's acquiring a company, they're talking about synergies, et cetera. And there's always a line item of like, well, we'll be able to sell our products to each other's customer bases. But if your pricing and packaging isn't in sync, you end up with the acquired sales reps from both companies who are only comfortable still selling their own products because they don't understand. There's, there's education in terms of like, what are the capabilities? What are the use cases? Maybe it's slightly different. Uh, you know, there could be, you know, different user interfaces, et cetera. But then on pricing and packaging, if they've got to completely change the way that it's priced and packaged as they bring in this new thing, they know all of a sudden that's going to confuse everything and slow everything down. And they're more worried about getting the deal that's in front of them. And so, you know, a lot of times that becomes a consideration that can build up. And I like to think of that as commercial debt, right? Especially as companies acquire multiple companies, right? That can get even worse. Those problems grow. It's not linearly, it grows exponentially, right? Because if you think just in the simple case, I buy, there's a company, we have a good, better, best offer. I acquire another company has a good, better, best offer. I now have not 6 combinations, but 9. It's 3 squared, right? And so I had another one. I've now got 27 combinations, right? So as you do that, it gets very complex. Um, so companies are often trying to struggle under that. You have the companies that have— maybe they've just added capabilities all the time. They had sort of an all-in-one offer. And then I've had companies come to my door, say, hey, like, we've built this product to such a scale that we now look and we're in— we're with our one offer, we have— we cover 5 different Gartner Magic Quadrants. So we've got to figure out how to break this up into, you know, coherent, uh, you know, groups. So it's, I would say all those challenges, you know, and then kind of, you know, metrics-wise, you know, we started to see this a lot as, you know, the macroeconomy started to shift back in '22, '23, uh, where companies were finding, you know, net new customer acquisition much harder to come by and were starting to really struggle with, you know, how do we increase things like net revenue retention? And so those were big sort of core key business metrics that they were trying to drive. So those are a bunch of different, areas that we see, but, you know, all of those could be broken down to problems in their packaging that they ultimately need to rectify to make sure that the value is clear to their end customers.

Yeah, that's great. And what I think I hear you saying is like, you know, a very common challenge is we've achieved product market fit with an initial customer base or an initial market segment. And the markets that we are now capable of successfully selling into are evolving. We're either moving up market or we're moving into an adjacent market. And that requires an evolution of how we think about packaging and pricing. The other scenario could be we're acquiring companies, we end up with a true multi-product offering that we need to figure out how to operationalize from a pricing and packaging perspective. And that's, I imagine, got tentacles into product experience as well as into sales enablement, as well as into, you know, how we just model the entire business thesis. And is that a good read? Is that a good replay? Is there another challenge that you would sort of add on top of those two big ones?

No, I think you captured it well.

Okay. So one thing that I always get interested in is just, you know, those two scenarios in and of themselves are very complex for businesses to manage. They're complex for product and engineering. They're complex for sales. They're complex for finance. They're complex for marketing. As you start to help companies think through this type of evolution in their business, where do you start? How do you start to help them rein in the complexity? You described sort of like the the permutation sprawl of SKUs, for example, is enormous. Like that has a massive impact on how a seller is enabled. It has a massive impact on how product thinks about access. So where do you begin? How do you help companies simplify and focus and prioritize?

Yeah, great question. And, you know, I, over time, I realized that, you know, as companies try to really get a handle on this, they often face 4 big problems. So they don't know who their customers are. They don't understand how their product helps customers. They can't explain why their product is special. They forget that pricing is more than just picking a number. So to kind of help solve these problems, I ended up creating what I call my services model for SaaS pricing. Services, it's SVCS, stands for segments, value, competition, strategy. So let me break it down. So the first 3 elements, so S segments, who are your customers? You know, what do they need? V is value. Like, how does your product help customers? Why is it important to them? C is competition. Like, what other choices do customers have? And these first 3 elements I really think of as inputs to the overall pricing process because your pricing power comes from the differentiated value you have for a particular segment beyond the competitive alternatives that are available. So then those 3 elements filter down into the final piece, which is, you know, S for strategy. So, you know, how will you sell your product to the right customers? And I use strategy in the Michael Porter sense of the word. Where strategy is about making trade-offs. So you can't make everyone happy. So we have to choose. And this is often, you know, where the rubber meets the road because there's probably a bunch of people who have been in those strategy meetings where they're, I don't know, maybe you're doing OKRs and you're like, oh, we want to do this and this and this. And everyone kind of walks out of the room and be like, well, we've just, yeah, those are pulling us all in different directions. Just because we put goals and numbers next to them doesn't mean we have a coherent sort of focus. And so this really, you know, it's like, which customers will we focus on? Like, how will we show them that our product is the best choice? And how will we package and price that to make it easy for customers to buy? Because ultimately pricing isn't just about picking a number. It's about understanding your customers and making smart choices about how to align with the value that you're providing. So would you like to give just a quick, like, example on that, right? So why does, why is something like that necessary? It's because we often end up in these exercises with a set of choices that are rarely do we have like a clear winner. So if we think about something like our pricing metric, so the unit of value that we charge a customer for is at per user, per gigabyte of data transferred, or per API call. What we'll often find is that there'll be certain segments of customers who that's a great fit for and others who it's a not great fit for. And we'll end up with different rank orderings. And so this really dry, it's one of these areas where the strategy meets the pragmatic where it's like, okay, we have to figure out upfront, like, who do we really care about serving? It's not that we won't sell to the other people, but we have to make this appealing for this market that we're going after. And so we're going to put our weight more heavily on this metric than this other metric, given those customers and how they matter to our business.

I love the framework. One question that I'm interested in digging deeper into is you said that companies don't actually know who their customers are and understand their value to those customers. And I agree with you. I've seen this before. Why is that the case though? Because you would assume that a startup doing $20 million in revenue, $30 million in revenue, achieved product market fit, has realized the insight that has led to the business being that successful, has deeply understood the customer base. So why is that not truer?

Oh man, this is such a great question. And I wish I had the magic unlock answer for it. This is, I've thought about this question a ton. So I will tell you what my hypothesis is, but it's, this is very hard to sort of verify in practice. This is what I think happens. And it's going to be depending upon your audience and your listeners, right? They may relate to this or not. But I think if you're a founder or a founding team, you're like, what is he talking about? Like, all I do is I talk to my customers. I know every, I know every feature they've requested. I know that my first name, their last name, I know their kids are, I know the first package they bought, right? I I remember when we did got their bill wrong. Like I know my customers. And so if, if that wasn't the case, they probably would not have made it past square one. But what I think happens, this is kind of what I've seen is like, okay, so that, that, that team grows. Eventually CEOs, co-founders, they become managers. They become separated from the front lines of the business and they still try to keep in touch, right? I mean, they probably try to have regular customer conversations, whether that's at conferences or, you know, just, but, or they try to get BI dashboards that sort of tell them what's going on, or they get reports from their, their frontline. And that works until you have one of these kind of structural shifts that I was hinting at earlier, where it's like, okay, now we're, we've built new capabilities that fundamentally alter our value proposition that maybe we're trying to appeal to this other customer segment. And now you, you've lost that in the kind of the core decision-making unit. And maybe you now have like lower-level product managers, et cetera. But it's just, I think there's a masking of that sort of deep understanding of customer insight. And it's also not that, it's not that nobody has any idea who the customers are, but this is what I was referring to as well with, with the strategy portion, which is, you know, you can go around the executive table and everyone, if you talk to them one-on-one would say, Oh, I know who our customer is. And we say, okay, describe it to me. Right? It'd be like the sketch artist, the FBI sketch artist. Like, what is it? What did he look like? Like, did he have a big nose? Was he wearing glasses? 6 foot? And if I do that as a consultant, everyone would be confident they know who the customer is, but all the sketches will be slightly different. And so then it just ends up in this chaos where it's like, you guys all don't have the same shared view of who it was. And I think it's just one of these things that happens gradually. It's like a lens that sort of goes out of focus where it's, is everyone sort of feels like they still have it. It, but it's changed underneath them and they're not quite aware. And so then when it comes to some of these hard trade-offs, maybe they haven't thought of these nuances or there's been new developments or new competitors that have come in, right? And just with their focus area have not been as closely attuned to it. So I think that's what's going on for the most part.

I think that's a great hypothesis. I think it's a very viable hypothesis. I would buy it. It reminds me too, though, of like maybe a very common challenge that a successful founder faces, which if they achieve product market fit, they inevitably stop spending as much time with their customers at some point. Like that just starts to erode. And it might be amongst the kind of like biggest issues or challenges for founders is to find a way to retain, remain very close to the customer base and have a ton of proximity to not just how the customer kind of achieves value, but how that value translates to pricing and packaging. Yeah, I think that's fascinating. Okay. You've worked with a bunch of companies. You help them, you help them organize, you help them understand their value, price their value. Then what happens? Do they go off and hire you again in 2 years, or do you try to set them up to establish a real practice in the business around pricing and packaging monetization that they can be more autonomous and skillful and successful with?

Yeah, it's a great question. So I, I ultimately would love people to be off and be autonomous and not have to, you know, contact me again. And I feel like there are certain points of maximum leverage where it makes the most sense to bring in an outside consultant, especially where decisions are maybe contentious. And so you have a third party, like, what are the one of the foundational things that I've realized over time, having done this for a number of years is, you know, I'm an engineer by training. I love the data aspect. You know, I go talk about, you know, Van Westendorp or transactional data analysis all day, but it's not a data problem and it's not an engineering or science problem for the most part. It tends to be a political problem. And so these issues can often be, you know, especially when they are large or there's a lot of divided versions of truth in the room can be helpful to have a third party who doesn't have a political stake in the decision involved. But ultimately, I would love like for the most part companies to, you know, be independent. Now I do have companies that are like more like advisory clients who are like pricing experts in their own right, but do enjoy, it's more, you think of it more like like some, some mix of almost like executive coaching where I'm like being an unbiased helper on the outside to help them, you know, point things out before they have to get in the big room and have it pointed out for them. Or, you know, give them confidence in the decisions that they're making. But yes, I try to set companies up to be self-sufficient ultimately. It really, it depends because it depends highly on the stage that they're at and kind of what their intentions are going forward.

Well, I have a follow-up question there, but you said something that's interesting, which is the political aspect. Is there a most common point of political friction? Like, for example, you've got a CRO who is really trying to drive more enterprise deals and feels like product-led growth is cannibalizing enterprise deals. Like, is there a really kind of consistent, this is the most common political point of friction that you see?

Yeah, it's an interesting, uh, you were in my intro, right? You were talking about how I used to be in product management and I view a lot of it it as very similar to product because, you know, my time in product management, it's an interesting job because it is highly political. And why is that? It's because it affects everyone in the organization and you have a significant amount of leverage to help or hinder. So, you know, our heads of support would be happy if we never released another feature again. We got to give them equity to make sure that they're aligned with us doing that because every time we release new stuff, support volume is going to tick up, right? We change something, somebody moved my cheese, I'm going to have a bunch of support tickets. You know, sales wants you to build just that one feature for that enterprise customer so I can close this deal. Marketing wants that one thing so they could talk about it at the trade show that they're going to. The CEO wants to be able to tell his board that he built something with AI this quarter, right? So everyone has a stake in what you do and they're all just be like, if these product people just get out of the way, like I know the answer. Like all they tell me is no. So pricing ends up being very similar. Everyone has a stake in the outcome. They've all got their metric that you can help them move. And so it doesn't come from a— in our day and age, we could use the term political as if it's negative, but it just means like, okay, we've got separate interests. How do we all come to a same agreement given those separate interests? And so it makes a lot of sense. We incentivize the sales team based upon their quota that they make this quarter, and the sales leader is going to get fired or not based upon that, right? So of course, he's going to lobby super hard for you to make it easy for his— him and his team to make their number. And likewise around the table. And so it's not any sort of one particular issue, but it's the fact that they all have somewhat different perspectives on what would be most impactful for them and their organization, right? CFOs could be really concerned about gross margin percentage, and etc., right? So they're all going to have that perspective. Yeah.

All right. You opened up a tributary that I really wanted to talk to you about, which is product and how product— product's role in pricing and packaging in your kind of standard high-growth scale-up B2B SaaS company. And I think you painted the picture quite well. Product is sitting in the middle trying to sort of arbitrate and prioritize across all these different interest groups with all these different incentives. And what's the right decision for the business? And I, I'm going to try to kind of wrap this question into two parts. The first part is, what would you say to a director of product at a typical $20, $30 million company to help arm them with the skill sets, sort of the approach to learning, to be really successful in that role, to be very commercially minded and very successful? And second, Have you developed a point of view, a strong point of view on who should own pricing and packaging within a company of this nature?

Yeah. Yeah. I'm happy to take both. I'll, unless you have a preference, I'll take them in the order they were asked. So, you know, for someone who is a product leader in a B2B software organization, I think, you know, we were talking about this a little bit before we recorded, but, you know, probably for worse, you know, product management education is evolving. And I still think that there's a dearth of proper foundations in really building business cases. And then that also boils into pricing and packaging. I think, you know, as you are growing in the organization, you know, one of the things that you have to realize, say you're going from an individual contributor product manager to a director of product or chief product officer, the rest of the organization doesn't really care about your engineering and product management voodoo. They don't want to hear about Agile or SAFe. They don't care about your sprints. They don't really understand that, you know, the engineers are all fully booked. What they're going to understand is you being able to make arguments in the language of business. And so, you know, as that product leader, you know, it, you know, you, there has to be an understanding that says, okay, We're getting this one-off request from sales. I know this never happens, but you're getting this one-off request from sales to close this, you know, whatever, $1 million deal with JPMorgan Chase. It's going to be 10 lines of code. Like it shouldn't even take an afternoon. The question is, what is getting pushed off the plate? You can't then refer to, well, you know, we don't have enough story points left in the sprint and our, you know, engineers are over capacity because we have this other architectural thing. Like everyone's eyes are going to glaze over. So we have to be able to make the case back to the business, say, look, this is the one part where a pie chart is— pie charts are terrible diagrams, but I actually vote for pie charts in this scenario because the great thing about a pie chart, it can't get greater than 100%. You can make a bar chart go above 100%, but you can't make a pie chart go above 100%. So something has to move. So we have this $1 million deal with JPMorgan Chase, but what the thing we'd have to move out another quarter is this set of capabilities that we promised we're going to help launch our new initiative into whatever, the fintech industry, that was going to be a $10 million opportunity. So is everyone happy to sacrifice this one-off $1 million opportunity for a $10 million opportunity? And so it's really being able to talk in that language versus talk in the language of what you may be more familiar with from growing up in sort of the product and engineering worlds. I will say on your second point, yes, my general point of view is that product marketing is generally the best place to own pricing in the B2B SaaS organization. Why? Because they usually are at least also the caretakers of positioning. And I believe your pricing and packaging is a function of your positioning. They are in a strategic level in the organization where they need to understand the competitive landscape, the value propositions to be able to direct, you know, good messaging. So very well aligned there. Usually someone who's able to speak in the language of business and have a seat at the table. I think product management can own own it. The problem I've seen is that usually product management is so overwhelmed with other things that they just don't usually have the bandwidth to give proper, you know, rigorous attention to pricing and packaging. So that would be my only concern, but I think product can definitely own it well. I do not generally recommend that finance or sales own it. I just do not think the incentives are properly aligned in those organizations.

Say more about that. What do you mean?

So I think, you know, finance is generally too far away from the customer. And so, you know, one of my fundamental beliefs is that your pricing needs to heavily align with value and that value does not become apparent because you have a great spreadsheet. Finance people can make some great spreadsheets, but you cannot really capture like the understanding of the value the customer is getting. They are a— again, these people are all stakeholders and important stakeholders, but I do not think they should own it. And sales, I do not believe in putting Dracula in charge of the blood bank. I just think that this is the insane incentives are just dramatically misaligned in that case.

Okay, that's hilarious. So I'm going to go out on a limb and try to answer. I was thinking about how I would answer my first question, and I'm going to try to answer it and then see how you would critique it. And I want you to feel at full liberty to tell me where I may have missed. But if I were—

Okay.

We're talking to like a director of product at a $20 to $30 million SaaS company, and I were trying to say, here's what but here are kind of several things that I think you do and you become a hero at your company and you really accelerate your career as a product leader. I think what I might say is first, you build a way to be deeply in touch with the recency, frequency, and monetary value, recency, frequency of usage, and monetary value of your customer base. You're, you understand how the customer base is using the product and their financial worth to the company. That's, that's number one. Number two, you deeply understand sales objections as well as moments in a product-led motion where customers drop off. Point three, you regularly get in front of customers and run willingness to pay conversations to understand how the market is continuing to perceive value and translate value to price and package preferences. And price metrics and all of the things. And 4, you have a framework that you have normalized across the executive team for communicating trade-offs that the executive team has bought into and accepts. Those 4 things make you increase your probability of being a hero within your business because you can really drive commercial value, enterprise value, better than you could without those tools. Tell me where I missed, what you like, what you dislike.

I think all of those pieces of advice are on point. I don't have concerns with any of them. I think your number 4 aligns. You maybe said it a little bit more succinctly than mine. I think that your 4 aligns with what I was talking about. I think I helped teach an 8-week course on product management and leadership. So I think all of those points are valid points I've told product leaders that they need to care about before Anything that we missed?

And the reason I'm interested in this is because to something you said earlier, which I agree with, it feels to me that the kind of the standard product management education that most product managers receive in some ways ends up sort of lacking a vocabulary around pricing and packaging or lacking a sort of framework or toolkit or something to align the product roadmap with with the commercial pricing and packaging and monetization roadmap. And so I'm really trying to understand if there are, you know, if it's education, if there's tooling that would enable your average product manager to come become more of an enterprise value driver across your standard SaaS company.

I, I agree. I agree with 100% with all of those, uh, points that you just made. And I think, you know, You know, kind of hitting below the surface of my answer was, you know, hinting at what you just named, which is, you know, it's very difficult to understand what like even a business case would be if you are not sort of comfortable with having that ability, right? It's like if we think about what we think a revenue opportunity could be, right? Revenue at the simplest form is P times Q, price times quantity, right? We have some idea of maybe quantity of customers we could reach, you know, working with our marketing peers and doing some marketing sizing analysis. But I also have to understand like, what do I think customers are willing to pay for this? And I've got to figure out some way that I can come to some justification other than like, we'll just wing it and see what happens. A lot of companies do wing it and see what happens, but there are more effective ways to go about it for sure.

This is another observation I've had. I wonder if you think it's true or false. I feel like I've seen sort of a maybe 3 types of product managers. And actually I could probably name many more types, but in terms of their impact on revenue at a business, this is, I think, what I've seen. I've seen a product manager that really functions as a project manager. They're kind of managing Jira tickets, they're interfacing across engineering, they're sort of like, they're getting stuff done, but they don't have a substantial impact or opinion around monetization. Monetization. There's another type, which is, you know, maybe a bit more self-trained, where they have found themselves in product and realized, hey, I'm actually interested in monetization. And I have a really kind of interesting seat to drive value. And they go out and they self-train. Like they look for resources, they take Reforge classes, they take your classes, they get comfortable with willingness to pay, and they start to like be really, really kind of additive. And often this is in the context of, I think, like, you're not your unicorn type SaaS company, but you're like your company that they found a way to product market fit. They're good businesses. They're going to get good returns for their investors, but they're not like making the headlines, right, of TechCrunch. And then I think you see a type of product person in the, the most publicized SaaS companies, the real unicorns.. And they're often like, from an archetypal perspective, like they've trained as engineers and data scientists. They often come from like elite institutions. They're incredibly sharp commercial thinkers. And like the only reason they got into those positions was because they were incredibly sharp from a commercial perspective and a pricing perspective. What do you think about that observation?

Yeah, I mean, I think it's valid, right? I think you have, you know, I I, there's, there's definitely folks who are, uh, I would say kind of the most common, the way, the way I might frame, if I had to pick 3 personas, is the, is the person who came up through engineering. So they're really, they're really capable and really know how products get built, right? But maybe lack, um, sort of the business sense or design sense, right? You've then got, you've got more the consultant, right? So this is your person who, like, they were also hire— they were also interviewing at, at McKinsey and Bain, but then, you know, Google gave them an APM job, right? Um, so, so sort savy business thinkers, but have never touched, you know, the technical aspects of product. And then you maybe have the ex-customer, right? Domain-specific, you know, maybe they, maybe they even came from like sales engineering, right? They just know like customer needs inside out, but they've never built a product. They really can't think through a business case, right? Those are kind of in my experience how I see sort of those, those, those three. And so, you know, there's, there's very few unicorns out there and myself included, right? I think like If I think of my flaws as a product leader, I don't have great design sense, right? So like, I can't design a user experience flow out of, you know, I could get myself out of a cardboard box. Like, it's bad. You know, I was usually never the domain expert when I start in a role. I find that particularly curious. I'm insatiably curious. So actually, I really enjoy like getting up to speed on that part of it.. But, you know, so, so I think those are kind of been my, my flaws, you know, as a product leader. So I think you really see those type, those two types. But yeah, I think we're, you know, just thinking through, right, kind of giving some people, if there's actionable sort of takeaways from our back and forth here, definitely, you know, look at like willingness to pay tools, right? There's, there's Conjoint or discrete choice type methodologies methodologies. There's your Van Westendorp type methodologies. I mean, they all have Wikipedia pages. There's good books on them. You know, folks want to— interested, I'm happy to reach out and, you know, resources. I think those are interesting. But, you know, also what I'd have folks walk away with is, you know, I've also made that mistake, which is that when thinking about pricing and packaging, it was mostly about that number, about that price. But it's really the the deep insight comes from you spending most of your time on how you charge. So how are you designing those offers in a way that makes sense, that maps to your customer segments? How are you choosing your price metric such that it makes sense and aligns with the value that customers receive? And those, I've also done blog posts and webinars on those as well. But I definitely encourage your listeners who are interested in that space to dig into that aspect as well. Quantitative research methodologies are interesting and useful, but I find found that those other can be even much more impactful.

Yeah, I think that's great. That's a great way to make this, this back and forth actionable. One more question before we start to close out, and that's, I'm curious how you thought about the second-order effects of AI on monetization and pricing and B2B SaaS. What have you— I imagine your, your thinking is evolving as all of our thinking is evolving, but how do you think about the second-order effects over the next few years?

Oh man. Yeah, I spend all my free time in the AI world when I'm not thinking about pricing stuff. It's, so I read a good blog post. I think it was Andrew Chen. He's at A16Z now, but formerly at Uber and very good kind of product and growth thinker. And he was talking about like, imagine cars when cars first appeared. Like you could do this thing where you just looked at every place there was a horse and just in your mind copy pasted a car in its place. Oh, there's a horse in the field. Pulling a plow. Well, I'll just, I'll just put an automobile in front of it, right? So now I got a tractor, right? There's a, there's a horse pulling a carriage on the street, right? But it would not have led you to the ideas around like, oh, our cities are going to look entirely different. Like Los Angeles, you would never design a city that way outside of the automobile because it's just completely unnavigable, right? The interstate highway system or like, right? So man, thinking through those second order effects is quite interesting. I think one thing it's, I'm, I'm of two minds. I'm constantly, I think it's one of the most exciting times to be in technology. And I also, I go through this, like these flagellations of I'm super excited and I'm super terrified because I look at what these capabilities are and I'm like, I'm not going to have a job anymore. And I don't know, I don't know anybody's going to have a job anymore. But then I'm also encouraged by, I was reading a book the other day and it was saying that Today, there are more travel agents than there were in like 1993 before like Travelocity, Expedia, Priceline came about. And it's because one of the rationales was like, look, just because we have access to all this information doesn't necessarily make it like easier. It's like you go on Amazon, there's, you just want to book a trip to Italy. You search Italy travel and there are, I think, 8,000 books for Italy travel rated 4 stars or higher on Amazon. On. So you're like, all right, now what do I do? Right. And so you call up a travel agent, which, you know, I'm not one to do that, but like there's a business, like there's hundreds, hundreds of thousands of travel agents in the world. And I just didn't realize that. And so I think about, you know, I'm getting to a really long way to answer your question. But when I think about the second order effects, I'm thinking about, I think some of this discussion around, oh, like we're all going to rewrite our CRM. And just like completely replace Salesforce or Pipedrive or whatever you might use. I just, that's an interesting thought experiment. I just, I think that goes, that's, it's not, I don't really see that as being an interesting idea. It's kind of, it's one of those first order things like, okay, maybe it's there, maybe not. But rather, you know, what we, I think that the idea is like, do we have the ability to write software and automations for stuff that never was economical before? If you think about like inside a Fortune 500 company, There's a million processes that, yeah, you hire Accenture or Deloitte or whoever to come in and build some custom software that hooks your ERP and whatever systems together. Right. And that's a giant project, but that's only one of like, you know, there's a list of like 999 other projects that are never going to get done. But now with, you know, an internal IT guy can be like, oh yeah, I can just automate. I can vibe code that together. And so we have the ability to create software, I think, at a scale that's never been had before, which I think the— if, if I had to put my— place my bets, we're going to see a massive expansion in software, not a contraction, as people are looking at the world.

Fun riff. Thank you for that. And this, this entire conversation has been so much fun. I especially enjoyed kind of the deep dive on product and its relationship to pricing and packaging. So thank you for that.

Yeah, it's been a blast.

Cool. Um, Dan, thank you so much. The closing question I like to ask every guest on this podcast is Is there a single moment in your career that you view as like the inflection, like from that moment everything else changed?

Yes. I would say that it was more, more personal than sort of career-focused, but it did have career impact as well. I did a large group awareness training and within there I was able to identify the voice in my head that is not me and recognize it as not me. And if everyone's like, what is he talking about? That voice that just said, what is he talking about? That's the voice I'm talking about. So there is incredible power in understanding that you are not your thoughts. And so that has allowed a freedom of personal and professional direction that I think would otherwise have been impossible because that voice will keep you trapped in what's come before and not allow you to explore the opportunities. Is that voice in the back of every entrepreneur's head being like, you should really wrap this up and get a real job. Your parents are disappointed in you. And you just realize, like, oh, that's just that voice. That's not actually me.

That's one of the more unique answers I've heard to this question. And it sounds— maybe you have, maybe you haven't studied meditation, but I love the answer. I think it's very instructive to many, many.

My company is called Product Tranquility, so you're not, uh, far off base.

Okay, Dan, thank you again.

Thank you so much, Fynn Glover.

It's been a blast.