“Thanks for the Lecture on Price”

Hey, it's Tony. One of the most telling questions you can ask a B2B executive is, how do you set your pricing? This seemingly simple question is often met with a blank stare, a long pause, and a response along the lines of, well, we take multiple factors into consideration. You might also hear the old saw, well, it's part art and part science. This is a tough question because setting price is tough. Markets shift, new business models emerge, and most importantly, customer demands and needs evolve. At the end of the day, price should be a reflection of customer value, not simply a calculus of costs plus. This is easier said than done, however. Today's episode of the Uphoff on Media podcast provides a framework and a system for setting price to value. You can download the price-to-value framework and use it in your company from the post on on Uphoff on Media's Substack. This episode is titled, Thanks for the Lecture on Price. Okay, let's get to work. Most B2B companies run a third of a pricing process and call it a strategy. Positioning, the part that turns price into value, is the part they skip. The largest contract Computer Intelligence had ever sold came down to one meeting. I was leading sales and marketing for Ziff Davis's research business, and on the other side of the table was the president of a large enterprise software company. We gave a long presentation, slide after slide, breaking down the pricing. When we finished, he looked at us and said, thanks for the lecture on price. Perhaps we can now have a discussion about value. We had presented the price as if it were the value. Software companies and services firms still make that mistake every day in the market. has stopped letting them get away with it. 3 in 4 B2B software companies changed their pricing or packaging in the past year. Most of them changed the model. Almost none of them changed the process that sets the price. These numbers come from Kyle Poyer's 2026 State of B2B SaaS and AI Monetization Report, a survey of more than 230 software companies that was done this spring. Hybrid pricing jumped from 25% of companies to 37% in a single year. Per-seat pricing hangs on mostly at the top of the market. 29% of companies above $150 million in ARR still use it. And when the survey asked which pricing model investors would prefer, hybrid was the outright favorite at 35%, ahead of outcome-based Pricing at 26%, and usage-based pricing at 24%. Flat fee and seat-based pricing barely registered at 10% and 5%. The clearest sign the shift isn't finished, the single loudest monetization complaint in the survey, especially among flat fee and seat-based companies, is not enough expansion revenue. That's exactly the symptom you'd expect when what it costs to deliver the product changed, and the price never fully caught up. Even at the earliest stage when a company has no pricing legacy to unwind, more than a third of companies under $5 million in ARR are still choosing flat fees, a model with no built-in mechanism for expansion revenue at all. The gap says more about leadership than about software. None of this is really a software story. I've been brought in as CEO 5 times, most often to turn around a business in decline or to lead a significant transformation, and pricing It was one of the first things I examined. Not because it's a marketing question or a finance question. Pricing is the fastest read there is on whether a leadership team understands its unit economics and whether it has a real process for setting price to value and managing it over time. A real pricing process has 3 parts. Market analysis. What competitors, substitutes, and the buyer's other options cost, including the option of doing nothing. Financial analysis, what it costs to win and deliver a unit and what margin that leaves. And positioning, what the outcome is worth to the buyer and how the offer is framed so they can see it. This is where price turns into value. Most companies run one of the 3 and call it a process. Cost-plus shops do the financial analysis and stop. Rate card followers do the market analysis and stop. Positioning, the part that connects price to value, is the one that gets skipped. It's exactly what that president was asking for. 3 questions tell you whether the process exists at all. Number 1, what was the price set against? Cost, a competitor's rate card, or what the outcome is actually worth to the buyer? Number 2, what process produced it? All 3 analyses run on purpose with someone accountable for the result, or whichever department had the loudest voice in the room the year it was decided? And number 3, how is it monitored? A number someone checks every month against current delivery data, or a number everyone quotes from memory that nobody has verified since the day it was picked? A leadership team that can't answer all 3 in one plain sentence each is running a guess it stopped checking a long time ago. The bigger mistake is usually what you're pricing, not the price. When I came in as a CEO, the pattern I found most often had little to do with the rate. It was the menu. Products were priced à la carte, line by line, when the customer was trying to buy an integrated solution that worked like a recipe. We were selling ingredients to people who had come for dinner. At ThomasNet.com, moving from an à la carte to solution pricing lifted our average sale by nearly 40%, and the integrated programs performed better for customers than the same products bought One at a time. At Pipeline360, we built a branded demand solution that combined programmatic display and data-driven demand generation under one price. Campaign performance improved by more than 35% on average, and average order size and customer retention both went up with it. Neither move was a discount or a price increase. Both decisions weighed unit economics and customer value together— what each sale earned us and what the customer was actually buying. That's the question the software survey never asks. It tracks how companies charge. It doesn't track whether they're charging for the thing the buyer came for. À la carte pricing almost always lands in the bottom half of the map below. Every line item gets priced against its own cost, and nobody prices the value of the combination. Here's where you should go to Uphoff on Media on Substack and download the price-to-value map and plot your own business on it. Be honest about the vertical axis. It's the line between a lecture on price and a discussion about value. Most teams that think they price to outcome are pricing to last year's rate card. Most companies are hiding in one of 2 quadrants. Flying blind is the default position for any company that inherited its pricing instead of designing it. No process behind the number, no one checking it, A rate everyone repeats because no one has ever been asked to defend it. Cost-plus discipline looks like the safer place to be. There's a process and someone reviews a number on a schedule. But if that process is only the financial analysis, running a price against cost instead of what the buyer actually gets, the discipline, discipline is rigorously protecting the wrong number. That quadrant is more crowded than it looks. When the same survey asked what drove pricing on new, AI capabilities, the most common answer at 54% was internal costs and margins. Even the newest thing these companies sell got priced against what it costs to deliver, not what it's actually worth. Value left on the table. This shows up when good instinct meets no process. Someone in the room already senses the outcome is worth more than the invoice says, but there's no positioning work or pricing policy to charge for it consistently. So it varies deal to deal and disappears into discounting. And price to value is the only quadrant where the answer to all three diagnostic questions is a current verified number instead of a guess repeated until it sounded like fact. The map covers the first two questions. The third decides whether you stay where you land. The price nobody rechecks drifts back toward flying blind, whatever quadrant it started in. Each quadrant. has one move out of it. If you're flying blind, put a process in place starting with the financial analysis so you know what a unit costs to win and deliver before anyone debates what it should earn. If you're in cost-plus discipline, keep the financial rigor and add the other 2 parts, the market analysis and the positioning work that turns price into value. If you're in the value left on the table quadrant, turn the instinct into a process. Do the positioning work, Write the pricing policy and stop letting each deal renegotiate it. And if you're in price to value, put the number on a monthly review against current delivery data. That's what keeps it there. B2B marketing has less excuse than software does for missing this. Agencies and consultancies carry a version of this cost that almost never gets allocated to the deal that required it: discovery calls, a strategy deck. built before the contract exists, a campaign concept pitched on spec to win the account. That's a real cost of winning the business, and most agencies book it as overhead instead of against the account it won. So gross margin can be right in total and wrong for every individual account, and leadership ends up pricing off a number that was never true at the unit level. And every one of those hours just got cheaper to produce with agentic AI drafting the first pass of research, the deck, or the campaign brief. A marketing services business that hasn't repriced against that changed cost is making the same mistakes software companies are only now getting measured on, just with a campaign instead of a product roadmap. I built Uphoff Advisory on the bet I laid out in the post Solo Scale: The New Business Model AI Just Made Possible, that a services business can run priced and structured like a software company. The test above isn't one I'm suggesting to readers from the sidelines. It's the one I run my own business against. The model matters less than the number underneath it. Every business should be checking 2 numbers every month side by side. What a unit of whatever it sells earns once every cost of winning and delivering it is counted, not just the ones that show up on an invoice. And what that same unit is worth to the customer who buys it. Per seat, per hour, per project, per outcome, the unit changes. The process that keeps those 2 numbers in the same conversation doesn't. Market, financials, and positioning run on a schedule with someone accountable for the result. The investors funding your category have already worked out which pricing models reward value. Your buyers are next. Sooner or later, someone across the table will thank you for the lecture on price and ask to talk about value. Have that discussion before they ask, or a competitor will have it with them first. Well, that's it for the episode. If you found this useful, please do one thing: follow the Uphoff on Media podcast on Apple or Spotify and leave a rating. It's the single best way to help another operator find this. I'm Tony Uphoff, back at it next week.