Nov 4, 2019
Why you have to check out today’s podcast:
- Learn when to use pricing metrics and pricing models
- Learn how and which pricing model to use to fit your customers’ needs and to align towards their cost and revenue goals
- Learn about how he closed a $200-million dollar deal without having to reduce its price despite the customer’s feedback of such price being triple as the one offered by another vendor
Kota Sarma is a Certified Pricing Professional and passionate Pricing Leader with over 25 years of experience in Pricing of Products, Software and Services, Subscription Pricing, Advanced Pricing Models, Commercial Analysis & Analytics, Business Planning & Modelling in Telecommunications, Polymers, Natural Gas industries.
In today’s episode, Kota shares with us his expertise in pricing especially in terms of using pricing metrics and pricing models which best suit customers’ needs. Also, learn about how not to reduce your pricing by switching pricing models and setting up price structures that meet customers' cost and revenue goals.
“In some situations, I've seen, the business model itself is a totally new model and customer is not sure of the success. What happens? Customers will try to get the best price from you, which means the lowest price from you. Instead of dropping your price, you can change your total price model, a price structure and see that it needs a kind of risk-sharing model. You can propose your risk-sharing model where you grow with the customer.”
- Kota Sarma
Topics Covered:
02:02 - How did he start his career in Pricing
03:34 - How is a gas transportation sector priced as compared to an ordinary commodity
04:09 - Should you be doing a lot of cost-plus pricing in a regulated commodity
05:12 - Who sets the price in a gas transportation sector
05:45 - Is the cost of raw materials included in the pricing for polymers
07:13 - What are the pricing differentiators for polymers
07:44 - Conjoint analysis and customer value index
08:44 - The different pricing models he uses and how it works
14:01 - Of price metrics and price models
15:00 - Structuring your price based on customer need
19:26 - How to manage to offer different customers with different price models
21:02 - The immense value of a salesperson who does value conversation
24:12 - Pricing advice that will give impact to one’s business
Key Takeaways:
“Anything is possible but if you cannot measure it, then there is no use in using that price metric. It has to be measurable, number one and it should align with a customer revenue model. That is important.” - Kota Sarma
“If their revenue model is per user, I cannot have per usage. I cannot charge them per usage it has to be aligned with their revenue model.” - Kota Sarma
“Price levels are obviously different depending on the value, the scope and configuration, the time. There are so many terms and conditions and in a way each transaction is unique.” - Kota Sarma
“Don't let your salespeople approve your pricing. They should be aware of their proposals, they should propose a price and somebody else has to approve.” - Kota Sarma
Links and Resources Mentioned:
Connect with Kota Sarma
Connect with Mark Stiving