Apr 22, 2019
Why you have to check out today’s podcast:
- Learn how Ron and his aftermarket service expertise help clients favorably impact the availability, reliability, support resource footprint and capability level of a product or system for an end-user.
- Find out why cash flow is a huge challenge in a subscription model and why you need finance people to help you with that
- Find out why the price is an emotional driver of B2B and B2C
brands
Ron Giuntini is the Principal of Giuntini & Company, Inc. since 1990. He is in charge of overseeing the day to day business operations, managing various consultants, and heading the business development. He also founded G35 Software, Inc. in 2016 where they employ a start-up, cloud-based, subscription-free application software which enables B2B sales teams to Configure & Price a Quote (CPQ) engaged in Aftermarket solutions.
In this episode, Ron shares his expertise about the aftermarket service, gave an in-depth comparison about subscription and product service models, the challenges involved in developing a subscription model for your business and why you need to involve the leaders and decision makers of the company in the modeling and pricing process.
Tune in till the end of this episode and get that one piece of actionable subscription advice that will significantly impact your business.
“You must model your subscription financially to present to your leadership. If you're interested in moving towards that, you have to have the backup of the CFO because of the risks.”
– Ron Giuntini
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Topics Covered:
01:12 – Ron defines what aftermarket is all about, what the biggest aftermarket sector is and how massive this industry is
05:29 – Difference between subscription and product as service business models
08:17 – Citing Ron’s reasons why robotics leads the subscription pricing model – protecting the brand and IP
10:56 – Subscription lesson from the Hughes Drill Bit, how it started the subscription model for drill bits
11:39 – The interesting antitrust case of United Shoe Machinery Corp.
13:24 – The reason why robotics leads the ‘product as a service’ model – the original equipment manufacturer (OEM) getting the constant feedback
14:09 – Mark tells value-based pricing as the reason why he thinks robotics leads the ‘product as a service’ model
16:00 – Ron narrates a detailed description of his other company G35
17:07 – Explaining further how the probability analysis in configuring price quotes was done
20:13 – How understanding a customer’s willingness to pay and the manufacturer’s willingness to accept relates in estimating costs
21:41 – Definition of forecasted cost
22:41 – The idea of creating a new company role called “price accounting”
23:01 – Pricing as emotional drivers of B2B and B2C brands
24:07 – Wrapping up with subscription advice from Ron – “You must model it financially to present to your leadership. If you're interested in moving towards that, you have to have the backup of the CFO because of the risks. You must model it. That's my recommendation.”
25:21 – Why cash flow is a huge challenge with subscriptions and why you need finance people to help you with that.
Key Takeaways:
“It could sell separately, the hardware and the service. It's all about protecting your brand and your IP. That's very, very important.” – Ron Giuntini
“What I would love to see pricing people do is completely ignore cost. Come up with a price, hand it to the finance people and say, can we sell it for this and let finance decide if it's profitable or not.” – Mark Stiving
“In the B2B world, we have to understand the way buyers make decisions, and we have to think about that. We can't just rely on the data, which is pretty interesting.” – Mark Stiving
“Never talk about subscriptions without having that model, having developed it and going to the leadership (team). If you don't, they'll throw you out of the room and ask you - When you're an adult, come back.” – Ron Giuntini
“Cost estimation is an art form itself and what always confuses me is that a lot of pricing people don't really look under the ‘comoda’ in regards to what, what makes up that cost.” – Ron Giuntini
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