Value-based Pricing for Subscription Businesses with Arjun Patnaik

Arjun Patnaik is Head of Pricing & Commercial Finance at Pine Labs. He used to work at GE as an Audit Manager.  In this episode, Arjun talks about how the role of pricing is richer in subscription businesses than any traditional business as it allows you to pull many pricing levers. He shares how triangulating the three important factors of knowing your value, communicating it, and figuring out people's willingness to pay drives the whole point of pricing.    Why you have to check out today's podcast:  Learn to differentiate and understand how pricing works in a traditional versus subscription business Learn about the whole customer lifecycle and lifetime value in pricing subscription Find out the three pillars of subscription pricing where everything flows from there   “Don't undervalue yourself. Don't leave money on the table. Do the hard work. Don't just go for a cost-plus or competition-based pricing. Spend the time, talk to your customers, understand their value equation and willingness to pay. It's going to pay off. So, spend time, money, and effort on pricing, and it will pay you back.”   - Arjun Patnaik    Topics Covered:  01:46 - Arjun's accidental entry into the world of pricing  02:46 - What pricing for him is  03:56 - What was GE's pricing approach, as he used to work there  06:13 - How was it like for him moving from cost-plus pricing to value-based pricing  08:51 - Why is the role of pricing much richer in subscription business than any regular sales business  10:18 - What he thinks of subscription pricing  14:11 - The business he was involved in at GE  14:56 - Talking about businesses transitioning from traditional ones to subscription  15:58 - His thoughts over Finance people being the wrong people to run pricing  17:59 - The need to marry data and solid customer research    Key Takeaways:  "When I think about pricing, I need to think about the whole customer lifecycle, especially in my business, right? So, I need to think about, at what price is my sales team acquiring customers efficiently? So, at what price can I maximize productivity and lower the cost of acquisition? - Arjun Patnaik  "Beyond just the core product that I'm selling, which I'm getting the recurring revenue for, how do I sell more services to this customer because it's much easier, you get a much larger bang for the buck, monetizing compared to acquiring." - Arjun Patnaik  "I think that's why we need to marry data, which we have an abundance of, with solid customer research. Because if someone says the customer wants this versus that and they're not able to prove that, it just comes down to, like, a bit of faith, experience, and gut feel. But then I just believe in customer research, and there are so many tools in pricing to figure out what the price range is." - Arjun Patnaik    Resource Mentioned:  GE: https://en.wikipedia.org/wiki/General_Electric   Connect with Arjun Patnaik:  LinkedIn: https://www.linkedin.com/in/arjun-patnaik-63abb56/   Connect with Mark Stiving:    Email: [email protected] LinkedIn: https://www.linkedin.com/in/stiving/