Hybrid Pricing and Pricing with AI with Steven Forth

Steven Forth is Ibbaka's Co-Founder, CEO, and Partner. Ibbaka is a strategic pricing advisory firm. He was CEO of LeveragePoint Innovations Inc., a SaaS business designed to help companies create and capture value. Steven is what I consider one of the great pricing thinkers in our industry.

In this episode, Steven enlightens us about hybrid pricing models and explains why we should adopt it. He also shares why pricing people need to change the way they see AI along with the work they do in pricing.

Why you have to check out today's podcast:

• Understand one of the unstated rules of pricing that talks about pricing power along with insights into future risk
• Find out how artificial intelligence (AI) can help address concerns regarding the connection between pricing and predictability, and why pricing people should change how they see AI in line with pricing
• Discover the reason on why most of us need to adopt hybrid pricing models and why the two pricing metrics in that should be independent of each other

"Most of us need to adopt hybrid pricing models, and the two pricing metrics should be independent of each other. If the two pricing metrics track each other closely, why bother having a hybrid pricing model? You need two metrics that are relatively independent of each other, and that will give you the flexibility you need to respond in a difficult economic environment."

– Steven Forth

Topics Covered:

00:42 – Steven's insights on what a hybrid pricing model looks like

02:30 – Issues on pricing model that applies credits/tokens to usage

04:44 – Predictability; whoever has the best insight into future risk has the greatest pricing power

09:37 – Pricing people vs. the recent trend: AI and how it sets prices

12:02 – The Achilles heel of value-based pricing, and the hybrid pricing practice in companies

18:09 – What real value-based pricing is about

20:52 – An optimal pricing model if you want to combine two metrics

24:31 – Confused buyers don't buy and renew

27:18 – Three reasons why calculators don't expose their logic

28:42 – Steven's pricing advice

29:42 – Connect with Steven

Key Takeaways:

"If you have enough data, you can actually get pretty good at predicting future usage." – Steven Forth

"One of the unstated rules of pricing is that whoever has the best insight into future risk has the greatest pricing power. The better we get at prediction, the more accurate we can get at pricing, and the question then becomes, who has the data to make those predictions? And I think in many cases, it's actually the vendor who has better access to data." – Steven Forth

"This whole question of predictability and pricing is going to be a key question for pricing over the next three to five years, and the artificial intelligences are going to help us to answer that question much better than we've ever been able to answer it before." – Steven Forth

"If you're optimizing value for the customer, you're optimizing the amount that they're willing to pay you, so if you just do it to optimize revenue, you'll end up shooting yourself in the foot because you'll trigger that negative feedback loop." – Steven Forth

Connect with Steven Forth:

• Email: steven@ibbaka.com
• LinkedIn: https://www.linkedin.com/in/stevenforth/

Connect with Mark Stiving:

• LinkedIn: https://www.linkedin.com/in/stiving/
• Email: mark@impactpricing.com