Okay. Hello.
And thank you all for tuning in to yet another episode of the
professional pricing Society podcast.
My name is Terrence and we do have an amazing discussion ahead
of us. Joining me today is Griff Perry.
He is the co-founder of a company called M A metering and
pricing engine. That makes it easy for SAS
companies to deploy manage and optimize usage-based pricing.
Griff has co-founder John Griffin started.
M after building him selling a backing as Service Company for
video games to AWS, Us prior to launching M Griffin, held senior
digital strategy and transformation roles at Sky
Griff. Are you doing today?
I'm very goodness. Let me see here.
Good good. I'm glad that we're glad to have
you were very interested in this in this conversation today.
Talking about pricing as a growth lever for SAS companies.
Let's just go ahead and just jump right into it.
If you don't mind kind of give us a little brief description of
your background and you know, where you kind of come from
regarding the pricing world. Sure only one thing I would say
from is I'm probably much less expert in pricing or pricing
strategy, then the majority of your audience.
So what I consider myself to be is an expert in the tooling that
allows you to deploy pricing strategies, effectively and
flexibly. But obviously, I picked up a bit
about pricing along along the way in terms of my background.
I've sort of had a career of two parts and the first part of my
career. I would To television, as you
mentioned in Skies, this guy the big pay-tv player in the UK and
in Europe, I did a variety of things and I started off being a
strategist, but because digital was happening, I ended up
focusing on digital strategy and that leaked into digital
products. And so, I became a product
person there, funnily enough. I mean, thinking back on it, I
probably didn't think as much about pricing, as I should have
done about those products, which is possibly be Cuz it's guy is a
is a subscription business and for the most part of the
products that we were building were being bundled in with the
core and subscription, but I'm but I didn't really Flex the
pricing muscle then, but the second part of my career was the
entrepreneurial part. So like you mentioned that my
co-founder who is also called Griffin.
Although it's his surname rather his birth name and we founded a
company called games box and that was a cloud infrastructure
business focused on the Again, stays like you said and we
deployed usage. Well obviously we had to design
our own pricing strategy so that was my first exposure real
exposure to pricing and we deploy the usage-based pricing
strategy successfully in that business.
But the reason I've gone on we've gone on to found meet
areas. We experience a lot of pain
associated with that usage-based pricing model, it's both
operational but also go to market.
And we felt those pain points really clearly, we really
struggled with them and then when we sold that business to
AWS, we then worked our own out at AWS.
They're also a usage-based pricing business or be it on a
much bigger scale. And what we saw is that they had
exactly the same pain points. And so that was the real spark
when we started talking about major, it's like right, okay?
You know, if you're deploying, usage-based pricing, it hurts in
these ways and there's something missing that needs to be
created. That helps solve those hurts.
Sure sure. Makes me.
And that makes complete sense. Now, you know, thinking about,
you know, your background and strategy and kind of going into
the digital realm, you know. Now we're in 2023 and in the
world of pricing you know, why do you think it's going to be a
little bit more important for these type of companies to kind
of hone in on to their pricing strategies moving forward in
this year because life is tougher.
Yeah I mean we are uh Operating in in hard mode, certainly
harder mode and our customers are software companies and so
life got hard for them in for two reasons.
So, one is the general macroeconomic climate is tough
and all their customers are looking to cut costs, cut their
cloth, so that stuff and at the same time, the funding
environment for software companies is changed pretty
radically in the past year. So We've gone from a period of
easy money. Essentially, to the current
situation where new funding is much harder to come by and much
more difficult to justify. And so companies are a thinking,
how do I get by without fundraising or if they are
committed to fundraising the potential investors are looking
much more at the fundamentals. And so for those two reasons
life is harder and I think when life is hard, Harder people look
at pricing much more, keep you because it's seen as a lever to
optimize results in more difficult circumstances.
So I generally I think pricing is much more important now than
it was last year. Sure.
And I think any, you know, pricing professional can also
agree in that in that said to me you know it's it's more
important now than it seems like ever has been now for those who
may not be aware. What exactly is usage-based
pricing? How do we know it's right for
our business and are there any other type of strategies
underneath usage-based pricing? Say every single person
listening to this podcast understands usage-based pricing
because it's it's absolutely fundamental to articles like
Logistics or or energy and utilities or telecoms.
So the basics of usage-based pricing is you pay for what you
consume and what's what's new for?
Our business is its application to Software.
So software is traditionally if you go back decades, being sold
on the basis of a piece of been on an ownership model, you know,
you buy it. And then for the last 10, 15
years, it's been going through a subscription phase where you're
basically. You're paying a recurring fee
for Access. That's the core SAS model.
And what's happening now is businesses, are adopting
usage-based pricing partly because They're they're
imitating a responding to innovators in the market like
AWS or day to dog or Snowflake and partly because there are
some fundamental Trends which make usage-based pricing work
better and a lot of that has to do with Automation and little
that's to do with product LED growth.
But but yes, the fundamental part of it.
It's, you pay for, for what you use, and it's an alternative to
paying for ownership, or for Access or by transaction, or by
outcome Now, there are also other pricing strategies outside
of usage-based pricing. That you may be aware of the
career. Yeah, 100%, hey.
Yeah. And what's interesting about
business is that they're often used in combination.
So so it m. We the Tailwind for our business
is absolutely. The growing adoption of
usage-based pricing. I think it's gone from being
used by a third or so software companies.
Three years ago to almost two-thirds Now, but it isn't
these aren't all extreme variations of usage-based
pricing, like awx a lot of it is it's hybrid where one of our
customers is offering to their customers subscriptions for
example, but for the subscription, you get an
allowance of stuff. Whatever it is say, it VI calls.
And when you exceed that allowance, you're charged
overages. That's an example of usage-based
pricing. So It's a, yeah, there's there
is a lots of complexity, which we like mmm.
That's good. Good.
Okay. Now in your expertise and in
your tenure of strategy building, you know, who do you
think should be involved in developing a pricing strategy?
It's Tricky, isn't it? And I and I think this is one of
the reasons why people don't pull companies, don't pull
pricing as a lever that much so times are good.
You pricing is roughly right, you don't touch it because any
changes are painful. So in terms of who needs to be
involved, it takes a village. It is pretty much all the
functions across the company so it's definitely Finance.
It's definitely sales is definitely marketing is
definitely product and it's definitely engineering.
And then for each of those areas you actually got to consider
sub-teams. So to give you an example in
finance, that's both commercial Finance or financial planning
and Analysis people who are thinking about the effects of
change pricing and forecasting, different Revenue, mats But then
there's also different constituency which is a billing
operations or the thin Ops people who are responsible for
actually calculating and bending invoices.
So they're worried about the operational impact of pricing
changes and you get sort of similar sort of sub,
constituencies all the way all the way down and it's, you know,
it's hard and in our business it m we often dealing with it's
quite large companies who are adopting different pricing
strategy for the first time and what they realize is that
they're actually going through quite a significant business
General business transformation. It's not just about implementing
pricing, they've actually got to change the way their teams work
with each other and the tooling that they share and it's not
unusual for us to be in a room with two teams from a, from a
customer who never spoken to each other before.
Or that's because I used. Yeah, it's kind of interesting
and they sort of introduce themselves and start laughing
and we get our right, you know? Okay, so this is all they do for
you at the good news is that this is our main drain.
We do this every day so we can be quite helpful about get
guiding them and orchestrating their efforts.
But the underlying point is involves a lot of different
teams and learning a whole bunch of new tricks.
Yeah, I can only imagine learning different.
Trends are learning different. Aspects every department or
sector everyone. You know, it's a risk
essentially it's going to take a village of a company in this
regard to I guess develop a priori legitimate pricing
strategy and they're also used to take into consideration as
well. The data that every Department
brings to the table, like how can data play an important role
in this process overall as well? Well technically it's very
important to actually we think of ourselves as a date, a
company but it's important, it's important for two reasons.
Reasons. So, one is about design and one
is about operationalizing. So, on the design front, you
know, constant pain point we see people going.
Well, I've got some ideas about pricing, but I don't know, which
is the right one. And, you know, to answer the
question you've got to understand how customers are
using your product, how they segment into different groups.
And so you need to like you again.
I'm sure that most people are listening to this podcast.
I'm the first thing you do is you collect data like, what's
going on? What do we know about what's
going on? And then you find a way of
testing it. So that's that that's the data
to fuel design. Bellamy operationalizing side of
things, this is probably more. So of usage-based pricing than
perhaps other pricing strategies but information about what data
about product usage and how much a customer is is spending is
valuables throughout the business so you don't need it,
just to drive your billing. Your sales team will also need
that information so that they can You can have informed
conversations with the customers, they don't want to be
ignorant also much that customer is using and how much they're
spending. And they also they need that
information so they can make an time their conversations because
you really want to talk to a customer if their usage is
spiking up or spiking down, or approaching a threshold above,
which they might be throttled or judged overages.
So that that data about usage and spend Critical for the sales
team to give you another example.
It will also be very important to your product team because,
you know, usage-based scenario pricing is actually part of the
product. You can't send a customer an
invoice with a single line item once a month.
The End customer completely reasonably wants to know how
much they using and how that usage converts into spend any
given point through the billing cycle, you know, could be the
second day of the month, it could be the seventeenth day of
the month, but They need that information.
So product teams want to basically create building
dashboards and so they need the same information which has been
pipe to the billing system and it's being pumped for the sales
team. So if your usage based
businesses usage and spend data is like blood, it needs to
percolate through out the org to have its full effect, which
makes dead is full effect. Otherwise, you're not really
managing it effectively. Hmm.
You know, it's a living Beast, isn't it?
You know, you You put out your pricing but you, you need to
actively manage your customers. Your want to agree slightly
different pricing terms for different customers depending on
who they are. Particularly, if you've got
slightly larger customers and that information in allows you
to do. It's if you're not being
proactive, your, you're not optimizing, it's not something
you can set. And forget sure, last question
for you all know students in your direction, going away from
our customers, you know, what, advice would you give to
companies thinking about raising their prices?
You know, especially this year 2023.
It's Tricky, isn't it? Well, I mean, particularly in
software, which is the vertical out, great.
And a lot of people are doing it.
I think there was news, there was news this week about
Shopify. Put their prices Zoom put up
their prices. And there's definitely a lot of
supply-side pressured to do it because, you know, input input
costs are going up. Plus, you know, if you're
looking to optimize results, you should be relatively bold about
searching out. You know, the Headroom in your
pricing, right? I'm not answering a question.
I'm explaining why it's difficult, right?
So what how would I would? I would I do?
I mean I for a start I would really think about what your
pricing power is, you know, some software vendors are about
effectively critical infrastructure.
So M own businesses is pretty critical infrastructure.
I mean, you know, we're right at the core of billing customers
and the more critical you are the more pricing power, you have
the other end. Of the scale, you know, if
you're just a nice to have been in these in this economic
climate, you're already vulnerable even before you put
up, your think about putting up your prices people looking to
make savings. So definitely consider your your
pricing power. I would also do what we were
talking about. Just a second ago is that you
know, you're going to need to socialize these changes with
your customers so that they understand them and believe them
to be fair. So communication matters a lot
and then I guess the final thing is it there is There's a lot of
opportunity to be quite sophisticated about price Rises.
It doesn't have to be sort of like, just a standard lift
across your customer base. You can do to private price on a
customer bases but if you don't want to do that, there are other
techniques as well. And usage-based pricing which is
what you know, the Tailwind for business.
What we tend to focus on is one example that so If you let's say
you're a subscription business, where everybody just paid
subscription price and there was no additional fee depending on
weight of usage, if you basically keep that model.
But introduce an allowance is a usage, allowance associated with
this description. And if you exceed it, you'll pay
more. What you end up doing is
extracting more willingness to pay from your heaviest users who
believe it to be fair. And so because The conversation,
you can have to them is where you're using it a lot.
So, it makes sense that you pay a little bit more than everybody
else and most people go. Yeah, I guess that's a good
point. Maybe.
I can think about how I could use a little less, but I don't
object to the principal about, I'll be paying a little bit
more. So, it's just it's worth
thinking about slightly stealthy tactics like that where you can
effectively price discriminate between your, your customers.
Because that tactic there would actually, the average selling
price will definitely increase. But the It doesn't have to be
associated with a significant headline with price, rise, which
is something that might trigger, you know, reconsideration of
observing people want to use your product.
Sure? Okay, makes perfect sense.
Wagner of Pierre. I really do appreciate your time
with us today. That's all the questions I had
for you for this particular discussion.
Did you have any, you know, questions or concerns for PPS or
myself? No husband.
Okay, I don't have any concerns. I like talking to pricing
experts, like I said, like I'm not a pricing expert myself, I
just happened to work with lots of people who are and and I see
all the creative, one of the things that they're planning and
M, we hope to make it easy to implement those and make them
happen. Sure, absolutely.
Do you or or your company have any kind of resources available
for listeners? That may be interested to learn
more about you know, you were or Open.
Yes. If you if you go to our blog, so
m.com M built with the 3. Meter.com /blog there are a
bunch of resources there around it sort of observed Behavior.
You know we're looking at pricing strategies and the
impact of those pricing strategies and we're sort of
shining a light on what seems to be working and what isn't
working like this is us looking at the at the outcome rather
than predicting. And what might happen.
Like I said when I pricing experts but there's a bunch of
stuff in there and also included with that is a bunch of stuff
about the operational challenges of implementing usage-based
pricing, which people should be aware of for.
It's not it's not easy but it is doable.
If you know where you're headed, okay, good good m.com that's M3,
t er.com. Here's a readily available blog
section for those may be interested in learning more
about Griffin Perry or Has company.
Hey I want to thank you again, mr.
Perry for your time and for our viewers listeners tuning in
today, one. Thank you all so much for your
time as well. Until next time, we will see you
again on the professional price inside podcast.
Have a good one.