AMA: Brex Product Marketing Lead, Jesse Lopez on Pricing and Packaging

A pricing launch is never easy; you must educate internal and external audiences on your pricing model's "what" and "why." Some key learnings based on my past experiences include: 1. Over-communicate pricing plans to GTM partners (e.g., sales, customer success, customer support, etc.) to ensure there is a clear understanding of your pricing strategy (e.g., positioning & messaging, competitive differentiation, objection handling, etc.) and pricing timeline (announcement, go-live, post-launch reviews, etc.). Many companies execute flawless pricing executions on their website and external channels. Still, they fail to enable their internal stakeholders to roll out pricing plans and empower them to answer questions from prospects and customers. 2. Be transparent to your existing customers and communicate your pricing plans before enacting changes, if possible. If you plan to gate features on a future date, begin to message them as a "premium" or "added-value" capability to prepare your customers for a forthcoming announcement. If you have a large user base, you should consider offering them more time to transition to a new pricing model and use those extra weeks/months to reinforce the value of your paid offering. 3. Keep it simple for new customers by creating a pricing model and messaging that is approachable and easy to understand. Many companies typically complicate pricing news by building complex pricing models and explanations. If your pricing model requires multiple reads or clarifying questions, you probably need to revisit your plans. 4. Don't rush plans; you only get one chance to get them right. I have seen many companies underestimate the scope of their pricing plans. As a result, they encounter issues operationalizing or migrating customers to a new pricing plan, further delaying their pricing timeline. 5. Build feedback cycles with GTM teams and external channels (e.g., app store feedback, reviews sites, etc.) to monitor customer sentiment and optimize content as you roll out pricing.

Rolling out pricing and packaging for a new product launch requires a well-planned execution plan that informs multiple audiences as to "what you are selling," "how you deliver value," and "why you are better than alternatives" in your product launch. The plan should include critical phases for enabling internal audiences, educating customers and partners, and collecting feedback from internal and external sources to optimize the rollout process. Key audiences to consider in your planning: 1. Internal stakeholders 2. Existing customers and prospects 3. Channel partners 4. Marketplace (e.g., website, app listings, review sites, PR, etc.)

Education, education, and more education! Adoption takes time and education. Many companies plan for a pricing rollout by writing an informative email, which drives awareness of change but not adoption. Some key tactics to drive adoption from your existing customers when pricing variables change: * Leverage in-app messaging on how variables have changed in context to the announcement (e.g., modals, tooltip, banner, etc.) to drive targeted education of changes and increase adoption. Track the performance of adoption tactics and document them to help inform future communications. Tip: Consider A/B testing alternative approaches to understand how channels and messaging impact adoption. * Trigger follow-up messages via email or in-app that support your initial announcement as your existing customers perform an action or complete a task related to the change. Tip: Triggered messages can make your message more relevant to your customer base and help connect the dots (e.g., the variable has changed from X to Y and the impact to you is the following). * Interview existing customers who did not adopt/embrace changes and understand what information could help them be more receptive to changes and where they would prefer to learn from them. Tip: Understanding areas of confusion and how customers prefer to learn about changes can help optimize your communications and increase adoption * Trigger a quick survey to assess awareness of variable changes and collect customer feedback. Tip: Usually, open responses in these surveys help inform additional content needed to drive adoption strategy.

Your pricing and packaging are components of your competitive positioning - the way you group features or the value metric you use to charge a SaaS fee helps frame your offering to your target audiences. For example, suppose your packages serve different audiences with differentiated needs. In that case, your competitive positioning requires packaging that clearly states the positioning, benefits, and features each audience desires from your product category. Pricing is equally essential to positioning your offering competitively, as your value metric and pricing tiers will help set your position in the market. For example, an enterprise package typically has yearly vs. monthly subscription options. Knowing how your target customers buy your product category and how competitors price and package their products can help frame your pricing strategy. If your company chooses to create an alternative model to the rest of the industry, assess the incremental costs and resources required to train your GTM teams and educate prospects and customers on your pricing model.

The role of PMM in pricing strategy varies across companies. There is never an "ideal" time to make pricing changes. My core belief is that a pricing strategy should be an active discussion between product, marketing, and GTM teams that is never locked but optimized as opportunities arise (e.g., clarify value, messaging, competitive differentiation, etc.). In organizations where PMM leads pricing decision-making, you should: * Actively monitor your competitive landscape and understand how your pricing compares to competitors. * Capture feedback from all customer channels (e.g., customer review sites, sales & customer success teams, interviews, and surveys) to understand if pricing is understood and perceptions on the price-to-value equation in customers' minds * Monitor adoption and usage metrics to understand what features and capabilities your customer base value the most, as that can inform how you message or justify the value of a paid package to new audiences. Based on the insights you capture across internal and external channels, you can lead discussions with your x-functional partners on what aspects are working and not working in your pricing strategy. You can prioritize what strategic shifts are needed to optimize your plans as a team. Whereas for your organizations where pricing does not lie in PMM responsibilities, you can actively advocate having a seat at the table by collecting and synthesizing competitive and customer insights into pricing and sharing them proactively with your x-functional partners. Explain why this matters to pricing strategy to spark the right conversations in x-functional discussions and product planning meetings.

Both - pricing is a team effort. PMM and PM should be in lock-step when building, executing, and optimizing a pricing strategy. Some considerations on critical phases of pricing strategy development: * Competitive differentiation: Both teams should proactively build a comprehensive understanding of the competitive landscape (e.g., how competitors price, what pricing/packaging models they offer, what makes their offering different or valuable, etc.) and form a joint POV on what makes the most sense for their product. * Customer research: Equally as important is conducting interviews and fielding surveys that help frame how customers value a given product and what features are most important to them. Joint research among PMM and PM teams helps build pricing and product strategies that help explain the value your product delivers to your customer base and * Feasibility assessment: As pricing and packaging plans are being developed, PM and PMM should have feasibility discussions with engineering and GTM teams into what features and capabilities are "must-ship" vs. "nice-to-haves" before launching a pricing model or change. Feasibility discussions range from how to gate certain features or experiences for paid customers to how to collect payment from new subscribers. * Launch strategy: Messaging and launch communications will be critical to the success of any pricing model launch. PM and PMM should align on who will lead customer research and messaging development - typically, PMM takes the lead. Still, the PM team needs to be brought into the process as messaging will need to be consistent across product experience. * Adoption tactics: Product adoption is a core goal for PM and PMM teams, so both teams should set up feedback cycles and track adoption/usage product metrics together to assess the effectiveness of a pricing launch. Joint reviews of feedback and metrics can help identify and connect solutions across a customer journey, which leads to better outcomes for the product team.

It would be best if you considered both options when determining a pricing strategy for a product - based on my experience, the answer typically lies between both options. You want to articulate what value you deliver to your customers and ensure your price is competitive. Typically, when you base your pricing on competitive alternatives, customers can easily compare options across the marketplace and understand how you position vs. competitors. Marketing efforts usually anchor messaging that helps differentiate your offering through unique or better features vs. your key competitors (e.g., more options or faster outcomes vs. product Y). Whereas pricing based on the value you deliver to customers entails more education to internal and external audiences as you need to educate what value you provide and why they should care about it. Marketing efforts typically anchor on social proof (e.g., testimonials, case studies, quotes, stats) to validate the value you deliver to your customers. 

With limited context into your exact situation, I can share some initiatives/tactics I have employed in the past to execute price increases or restrictions to features: 1. Understand your customer base, assess the impact of pricing or feature changes for different customer audiences, and build communications based on those insights. There may be some customers that recommended changes may disproportionately impact, so preparing tailored communications by key audiences can help soften the pricing news across your base and help address critical questions your customers may have. For example, in a past role, our team decided to delay pricing changes by six months for a select group of customers who a separate pricing change had recently impacted. 2. Be ready to justify pricing changes beyond macroeconomic or cost of doing business rationale. Ensure your announcement and related messaging anchor on the value your product offers to your customers vs. just informing them of the changes. Educate your internal stakeholders on the "why" behind the pricing/packaging changes (e.g., research conducted, options explored during pricing discussions, and the reasons for pricing) and the "how" to explain differences to customers. 3. Be transparent about your intentions as you release features by crafting messaging that communicates the incremental value that each feature or capability delivers to your customers. Many companies build features over multiple quarters to justify future-state pricing, so it is essential to communicate your vision to customers and build trust with