AI as a Multiplier for Pricing with Emanuel Martonca

Kristen Berman co-founded Irrational Labs, a behavioral product design company, with Dan Ariely in 2013. Irrational Labs helps companies and nonprofits understand and leverage behavioral economics to increase the health, wealth and happiness of their users. In this episode, Kristen explores the intricacies of pricing strategies, emphasizing the importance of understanding behavioral economics to influence consumer decisions effectively. She discusses how techniques like the decoy effect, anchoring, and the power of price endings (like 99 cents) can drive customer behavior. Additionally, she highlights the challenges of pricing revolutionary products due to the lack of reference points and the creative approaches needed to establish them in the market. Why you have to check out today's podcast: Deep dive into pricing strategies like the Good-Better-Best model, the Decoy Effect, and the psychology behind price ending to help you understand how to make pricing decisions that drive customer behaviors and increase sales. Find out valuable perspectives on how human psychology influences purchasing decisions which is essential for anyone looking to optimize their pricing or marketing strategies. Discover practical advice and real-world examples to see how you can apply these concepts to your own business. "It's all relative. So, what are customers using as a reference point? If it's off your product site, then you need to help them create a new reference point within your product site." - Kristen Berman Topics Covered: 01:14 - Sharing how she transitioned into behavioral economics from her role as a product manager at Intuit 03:42 - How behavioral science tie to pricing and product 06:10 - An example of how behavioral economics influence product decisions 08:50 - Explaining the concept of the "paradox of choice" 11:35 - Turning the path of least resistance into the preferred choice 14:30 - Simplifying decision-making for customers with the concept of "good, better, best" product offerings 16:42 - Explaining the decoy effect and how it influences consumer decision-making 19:09 - The reason behind the presentation of pricing options in the context of behavioral economics 22:43 - The concept of framing in sales in the context of product features and the importance of trials in subscription-based models 25:25 - How people often rely on heuristics, or mental shortcuts, when making decisions about prices 28:56 - Kristen's best pricing advice 29:28 - Various sources of reference points 31:19 - The challenge of pricing revolutionary products due to the lack of existing reference points Key Takeaways: "People don't come in with an understanding of the exact thing that they want to purchase at the exact moment. And so, our job is to help them understand value, and choice helps people understand value." - Kristen Berman "We're using the heuristics on how big the number is to make a lot of fairness decisions." - Kristen Berman "We are relative creatures. We have reference points and we use our reference points to understand value. And so, it's not just the price, it's the reference point that we're using." - Kristen Berman People/Resources Mentioned: Intuit: https://quickbooks.intuit.com/ TikTok: https://www.tiktok.com Airbnb: https://www.airbnb.com Dan Ariely: https://danariely.com/all-about-dan/ One Medical: https://www.onemedical.com Steve Jobs: https://en.wikipedia.org/wiki/Steve_Jobs Apple: https://www.apple.com/ YouTube: https://www.youtube.com Netflix: https://www.netflix.com/ Study: https://play.google.com/store/apps/details?id=com.thesoundagency.study&hl=en_ZA&pli=1Shopify: https://www.shopify.com/ph Connect with Kristen Berman: LinkedIn: https://www.linkedin.com/in/kristenberman/ Connect with Mark Stiving: LinkedIn: https://www.linkedin.com/in/stiving/ Email: mark@impactpricing.com

19 Elo 202432min

This is an Impact Pricing Blog published on June 27, 2024, turned into an audio podcast so you can listen on the go. Read Full Article Here: https://impactpricing.com/blog/how-to-charge-different-customers-based-on-value-received/ If you have any feedback, definitely send it. You can reach us at mark@impactpricing.com. Now, go make an impact. Connect with Mark Stiving: Email: mark@impactpricing.com LinkedIn: https://www.linkedin.com/in/stiving/

16 Elo 20243min

Florian Bauer is an internationally sought-after expert and speaker on the subject of price psychology and behavioral pricing. He is an honorary professor at the Technical University of Munich and author of several books on price research. He also has a doctorate in Psychology at TU Darmstadt, MIT, and Harvard. In this episode, Florian talks about how discounts can give you short-term gain but cost you long-term. He underscores that there are other means to incentivize customers without diminishing a products' value perception. And that cashback is one thing to consider other than discounts. He also talks about buyers' irrationalities and how to use Behavioral Economics to influence their decision-making and let it work in your favor. Why you have to check out today's podcast: Learn about the psychology of price structure and how it influences consumers' buying behavior Find out what you can, what you should, and what you should not do when giving a discount Learn how Behavioral Economics can help you influence buyers' decision-making and maximize your company's profit "If you want to price or sell something, you have to think in two dimensions. You have to think about what people want. That's the traditional value-based approach. And you have to think in the dimension of how they decide." - Florian Bauer Topics Covered: 01:28 - How Florian got started in Pricing 02:25 - What the psychology of price structure is all about 03:22 - What a price structure looks like 04:12 - What's the psychology behind using cashback than just lowering the price 06:03 - How do discounts differ from cashback 07:39 - The feeling of disconnect with cashback 08:20 - Cashback being an icing on the cake that can potentially make you feel more decided about your choice 10:02 - What's the disadvantage of discounting 11:36 - What behavioral economics means for pricing 16:15 - Different people behave differently when it comes to decision irrationalities 18:00 - His thoughts on the ethical issue about Behavioral Economics 23:22 - What is Behavioral Economics showing us and why this works in the B2B world 25:38 - How heuristics simplify complex decisions 29:35 - Florian's best pricing advice that can significantly impact your business Key Takeaways: "Never ever give a discount without anything the customer has to give in return." - Florian Bauer "That's the issue with discounting. It really works very well short-term. So, you have to gain short term, but you have to cost long-term." - Florian Bauer "If I want to sell somebody something, I need to know what he wants, or she wants, and I need to adapt my sales approach and my pricing model, potentially, to how he decides." - Florian Bauer "For me, the purpose of marketing, pricing, and sales is to influence decisions. So, there is no reason to have a marketing campaign or a marketing team if you would not have the idea that I can influence my customers' decision in my favor." - Florian Bauer "I think when we talk about value and price acceptance, it's very much a story. And there is not one story better than another one. People hate to make decisions, they want to be made decided and with some stories, they are quicker in deciding than in others." - Florian Bauer "Think about that you're not only selling value; you're also managing decisions. If you keep that in mind when you design your pricing model, you also avoid the traditional clash between pricing and sales because you're also able to tell your salespeople how they can actually execute your pricing strategy to make the customers actually follow the decision or the directions you want them to." - Florian Bauer Resources / People Mentioned: Daniel Kahneman: https://en.wikipedia.org/wiki/Daniel_Kahneman Connect with Florian Bauer: Email: florian.bauer@vocatus.de LinkedIn: https://www.linkedin.com/in/profdrflorianbauer/ Connect with Mark Stiving: Email: mark@impactpricing.com LinkedIn: https://www.linkedin.com/in/stiving/

12 Elo 202431min

This is an Impact Pricing Blog published on June 20, 2024, turned into an audio podcast so you can listen on the go. Read Full Article Here: https://impactpricing.com/blog/revamp-your-pricing-strategy-pros-cons-of-4-popular-models/ If you have any feedback, definitely send it. You can reach us at mark@impactpricing.com. Now, go make an impact. Connect with Mark Stiving: Email: mark@impactpricing.com LinkedIn: https://www.linkedin.com/in/stiving/

9 Elo 202410min

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. In this episode, Steven explores the concept of generative pricing, emphasizing how AI can transform pricing strategies through real-time value measurement and dynamic proposal evaluation. He discusses how composable AI applications and generative adversarial networks might drive advancements in pricing and proposal management. Practical advice is also provided on using AI to optimize proposals, including developing effective evaluation rubrics and leveraging AI for better decision-making. Why you have to check out today's podcast: Delves into the concept of generative pricing and how it can revolutionize pricing strategies through real-time value measurement, composability, and AI-driven proposal evaluation. Discover actionable advice on using AI to evaluate and improve proposals before submission which includes tips on developing effective rubrics and using AI tools to enhance proposal quality. Explore the future of pricing in a world increasingly influenced by AI, including the challenges of scaling costs, measuring value, and managing pricing with AI. "Build a system that will evaluate your proposals, including your pricing proposals, before you send them out. You can do this using your currently available AI tools." - Steven Forth Topics Covered: 01:01 - Introducing the concept of "generative pricing" in the context of generative AI applications 02:17 - Elaborating on the concept of generative pricing by discussing the cost dynamics associated with generative AI applications compared to traditional SaaS applications 04:35 - Discussing the differences in cost between traditional search engines like Google and AI-powered services like Perplexity, highlighting the implications for generative pricing 09:28 - Shift in cost structures and the emerging properties of generative AI applications 13:54 - Configuring solutions that optimize the value delivered to customers continuously 16:02 - The potential for generative AI to enable more accurate and transparent value-based pricing models 18:41 - Explore the concept of generative pricing in the context of proposals and outcome-based pricing 22:10 - The idea of making predictions about the future of pricing, particularly in the context of generative AI, using a website called longbets.com 23:01 - How generative pricing necessitates a rethinking of pricing approaches 24:01 - Generative AI and how it affects cost management and value capture 25:30 - Discussing the implications of generative AI on the value and pricing of applications, particularly focusing on composable AI 28:42 - Steven's best pricing advice and actionable steps for leveraging AI in proposal evaluation and improvement Key Takeaways: "Yes, we have to be aware of costs. And the pricing systems are also going to need to be cost-management systems. But what's going to drive the configuration is value optimization." - Steven Forth "Is generative pricing a clear, fully baked concept today? No, it's not. But I believe that generative AI is going to cause enough change that it's going to force us to rethink how we approach pricing." - Steven Forth "...possibly as we get more sophisticated and flexible models, we'll be able to more formally manage the relationship between emotional values and also do a better job of pricing in order to reflect externalities." - Steven Forth "We're going to have to really start designing our proposals and our pricing with the assumption that the consumer or one of the consumers is actually going to be an AI. And I think that also changes how we think about the pricing as well, and we're gonna need AIs in order to generate pricing that other AIs are going to accept." - Steven Forth People/Resources Mentioned: Intercom: https://www.intercom.com Perplexity: https://www.perplexity.ai Google: https://www.google.com/?client=safari Gemini: https://gemini.google.comTheory Theory Ventures: https://theory.ventures Oracle: https://www.oracle.com Microsoft: https://www.microsoft.com/en-ph/ Totogi: https://totogi.com Long Bets: https://longbets.org Connect with Steven Forth: LinkedIn: https://www.linkedin.com/in/stevenforth/ Email: steven@ibbaka.com Connect with Mark Stiving: LinkedIn: https://www.linkedin.com/in/stiving/ Email: mark@impactpricing.com

5 Elo 202431min

This is an Impact Pricing Blog published on June 13, 2024, turned into an audio podcast so you can listen on the go. Read Full Article Here: https://impactpricing.com/blog/collusion-vs-implicit-collusion-navigating-legal-and-profitable-pricing-strategies/ If you have any feedback, definitely send it. You can reach us at mark@impactpricing.com. Now, go make an impact. Connect with Mark Stiving: Email: mark@impactpricing.com LinkedIn: https://www.linkedin.com/in/stiving/

2 Elo 20243min

Leah Tharin brings B2B SaaS to the product-led growth retention light. Advising organizations to bring growth, product, marketing, and sales in line, scaling to move down or upmarket. She works in the operational details and not the hypothetical clouds with her clients. In this episode, Leah explains the differences between product-led growth (PLG) and sales-led growth, highlighting the benefits of usage-limited freemiums in PLG strategies. She emphasizes the importance of focusing on core value and customer experience when designing freemiums. She advises on pricing strategies, recommending minimal price changes during the early stages and frequent experiments as the company matures. Why you have to check out today's podcast: Find detailed definitions of key business concepts like product-led growth (PLG) and sales-led growth (SLG) that offer valuable comparisons to help you understand their differences, as well as applications. Learn practical and actionable advice on pricing strategies, emphasizing the importance of initial pricing for early-stage companies and the need for frequent pricing experiments as the company grows. Deep dive into effective business practices, such as leveraging freemium models and understanding the importance of customer value in pricing strategies. "If you cannot convince people to use your stuff for free, then I think you should not have any price on your product." - Leah Tharin Topics Covered: 01:32 - Why she describe the relationship between pricing and value as stressful 03:09 - Defining a product-led growth 06:47 - Leah expanding the product-led growth definition to include interactive demos and automated marketing tools 08:49 - How companies adopt product-led growth to improve cost efficiency and compete with more agile, cost-effective competitors 11:22 - Sales-led growth defined 14:20 - What does a product-led growth focuses in getting into 20:02 - Understanding a Freemium product offer 24:10 - Why she prefers a Freemium model that is usage-limited 26:46 - An outcome-driven way of looking at the minimum viable product 29:31 - Leah's best pricing advice Key Takeaways: "Traditionally we talk about product-led growth in the terms of trials, freemiums, getting something for free forever until you buy it, and so forth. But I also talk about it in the context of getting an interactive demo where you understand what they now do inside of this demo." - Leah Tharin "...what we try to do in product-led growth is exactly this. It's not so much about how much the customer spends in the initial payment with us or like even the first couple of months, maybe even year. It is about the lifetime value, how fast we can escalate this of course as well because this is also a sign of customer value." - Leah Tharin "For commoditized markets, product-led growth, if it can be done, it's not always the right thing, but definitely the choice that you have to make. In new verticals with extremely complicated integrations, we tend to be more sales-led for sure." - Leah Tharin People /Resources Mentioned: Netflix: https://www.netflix.com Spotify: https://open.spotify.com Hubspot: https://www.hubspot.com Salesforce: https://www.salesforce.com Connect with Leah Tharin: LinkedIn: https://www.linkedin.com/in/leahtharin/ Website: https://www.leahtharin.com/ Connect with Mark Stiving: LinkedIn: https://www.linkedin.com/in/stiving/ Email: mark@impactpricing.com

29 Heinä 202432min

This is an Impact Pricing Blog published on June 6, 2024, turned into an audio podcast so you can listen on the go. Read Full Article Here: https://impactpricing.com/blog/price-segmentation-in-action-why-geography-matters-for-your-wallet/ If you have any feedback, definitely send it. You can reach us at mark@impactpricing.com. Now, go make an impact. Connect with Mark Stiving: Email: mark@impactpricing.com LinkedIn: https://www.linkedin.com/in/stiving/

26 Heinä 20244min