Product Offers & Pricing in a Post Covid-19 World

Laura FayLaura Fay VP & Managing Director, Research & AdvisoryMember | Guru ✭✭✭✭✭

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  • Steven ForthSteven Forth Managing Partner Founding Partner | Expert ✭✭✭

    Hi @Laura Fay

    We are really looking forward to this webinar. An important and timely topic. One company I have been impressed with is Hubspot. You can find this by Googling "How HubSpot Is Responding to COVID-19 and Its Economic Impact."

    One tactic people have been taking is modifying terms of trade. That is to say, payment terms, length of contracts, volume commitments and so on.

    Any guidance you can give on how to think through exactly how to modify terms of trade, and for how long, and how to communicate this would be great.

  • Laura FayLaura Fay VP & Managing Director, Research & Advisory Member | Guru ✭✭✭✭✭

    @Steven Forth Hubspot is one example i have teed up in the webinar. thanks for the additional reference.

  • Alexander ZieglerAlexander Ziegler Program Director, Business Development for Training & Skills Founding Member | Scholar ✭✭
    edited June 16

    Working in the Education area I have seen lots of discussions during the last weeks around "we need to lower the prices" for everything that is Digital. I have seen people rethinking content of Cloud based offerings to get the costs and price down. I'm wondering if this is really a trend? Is it needed? What is the industry seeing? Is this is long-term trend to smaller offerings?

  • Steven ForthSteven Forth Managing Partner Founding Partner | Expert ✭✭✭

    @Alexander Ziegler I have been thinking a lot about this as well. We have a microlearning offer and uptake has been slow in part because of the deluge of free content in the Covid 19 period. I don't think lowering prices is the answer when the alternative is free. The answer will come from understanding value in different market segments and then delivering differentiated value to those segments with willingness to pay. I look forward to @Laura Fay 's thoughts on this. I have created a decision tree to help frame our own decisions on what and how to price in our learning offerings.

  • Alexander ZieglerAlexander Ziegler Program Director, Business Development for Training & Skills Founding Member | Scholar ✭✭

    @Steven Forth it is interesting for me to read that your microlearning had no uptake and you assume it is in competition with free content. Independent on COVID19 we have seen a similar challenge already two years ago, where smaller paid snippets of learning did compete with free pre-sales digital assets. I like your thoughts that it is the value of assets that should define the price.

  • Steven ForthSteven Forth Managing Partner Founding Partner | Expert ✭✭✭

    We are not giving up on the microlearning. And it did have some uptake, but much less than we had expected. We are doubling down though and expanding the program and increasing the price. One key thing with pricing is to define the next best competitive alternative. (I worked closely with Tom Nagle, author of The Strategy and Tactics of Pricing for many years and learned a great deal from him). I think our initial positioning did a poor job of positioning use relative to the next best competitive alternative, which in this case is not free webinars but high priced consulting engagements. An iterative process.

  • Denise StokowskiDenise Stokowski Group VP Platform Products Founding Member | Scholar ✭✭

    Has there been any notable increase on moving to more consumption based model vs set annual pricing ? One of the distinctions I am making is an annual subscription price that might have a set limit vs true consumption based pricing that varies month to month based on actual usage?

  • Laura FayLaura Fay VP & Managing Director, Research & Advisory Member | Guru ✭✭✭✭✭

    @Denise Stokowski I believe you are referencing per user subscription pricing (unlimited access to set of features) vs. metered consumption?....

    Assuming so, the most recent survey data on this shows that ~40% of companies are engaging in per user based pricing (a traditional license model hold over) and ~30% are offered metered consumption. Examples of the consumption model include

    ·         AWS EC2 – capacity used.

    ·         Microsoft Azure SQL Database – capacity used.

    ·         Google Security Command Center – volume of data transferred.

    ·         SAP Cloud Platform – capacity, data rates, API calls, and more.

    ·         Splunk – GB volume of data transferred into splunk cloud.

    Adobe has what I might call a hybrid of per user and consumption. There is a base monthly subscription providing access to a core set of features, and then a per feature add on. Only paying for the features used.

  • Laura FayLaura Fay VP & Managing Director, Research & Advisory Member | Guru ✭✭✭✭✭

    @Alexander Ziegler and @Steven Forth

    On the topic of the "demand to lower prices for all things digital", we are seeing more pricing pressures during this COVID era.

    Discounting prices in response is easy to do, but risky for the longer term, as it can erode the perception of value.

    Under these pressures, preserving price performance may require to redesign the value prop to continually unlock value incrementally (to Steve's micro learning example). This is a trend for tech products in general.

  • Denise StokowskiDenise Stokowski Group VP Platform Products Founding Member | Scholar ✭✭

    @Laura Fay "Under these pressures, preserving price performance may require to redesign the value prop to continually unlock value incrementally (to Steve's micro learning example). This is a trend for tech products in general." Have we seen examples of redesigning the value prop for a more :land and expand: strategy result in an improved CAC, i.e. can it do anything to decrease the initial acquisition cost due to smaller initial land deals?

  • Alexander ZieglerAlexander Ziegler Program Director, Business Development for Training & Skills Founding Member | Scholar ✭✭

    I think it would be usefule to see examples of somebody in the community who did it, and ideally somebody who can confirm that it worked

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