In this episode of Science of Business Podcast I will be speaking with Stephan M. Liozu, PhD about science and practice of setting prices in modern firms.
Dr Liozu is a leading expert in value-based pricing, supporting businesses from different branches in XaaS transitions. Through over 15 years of experience he published 10+ books and written scientific papers for renown journals in the field, including Journal of Revenue & Pricing Management, MIT Sloan Management Review, and Industrial Marketing Management.
Some of the questions on my list include:
➡How important is innovation in pricing for modern firms?
➡What are price setting and price getting skills?
➡What are some pricing strategies more business owners should be aware of?
➡How are we unconsciously limiting the pricing value?
➡Can anyone transition their business model into a XaaS?
Radek: Welcome to Science of Business podcast by Valueships. My name is Radek. And together with experts from various industries, we discuss new research pieces and their application in business life. If you're a manager or you want to be up to date with science that can be applied in your work, this podcast is made for you.
Good morning to those listening to us in the States, and good afternoon to those in Europe. Welcome to another episode of Science of Business podcast. Today, my guest, Stephan Liozu is dealing with value-based pricing. He's the founder of Value Innoruption Advisors. Thank you for accepting our invitation.
Stephan Liozu: Good to be with you. Thank you for having me.
Radek: And the topic, value-based pricing, this is what we will be discussing but first, I wanted to refer to one of your papers about pricing in general and about innovation in pricing. It was published in business horizons in 2014 and one of the things I found out in there is that you mentioned that the majority of managers do not really invest in pricing innovation but only focus on product innovation. I wonder, it was eight years ago, how is the business now? How is innovation pricing?
Stephan Liozu: Well, I would say it's probably improved over the last five years, not by choice but due to these disruptions that keep happening, whether it's political disruptions, conflicts or health crisis and companies have no choice, for example, when companies have to move to e-commerce because they have no choice then they have to innovate in pricing by adopting platforms and e-commerce tools like price scrubbing or competitive benchmarks. So, then they have no choice but generally speaking, in the strategy of pricing, because of still the very low penetration of pricing in companies, which is how many companies have pricing teams because pricing is an afterthought then you don't see a lot of pure innovation in pricing. You see it in some world, in some sectors like the sass world or product as a service because it's a radical change but in the traditional core business, I would say in b2c, b2b, it's still lagging, still lagging.
Radek: You mentioned some of the big names including Netflix as one of the companies that implemented both product innovation and pricing innovation in the same time. Then we have one that we don't like that much as the clients, which is the Ryanair model of pricing. That was also one of the ways to innovate in terms of pricing and I wonder watching those big brands, they kind of emerged as disruptive in pricing. And so, how do we as company owners who are already established who tried some pricing schemes, how often should we innovate in pricing? Where is the marker we should use?
Stephan Liozu: Well, first of all, let me tell you that Netflix, for example, didn't start as a very good pricing innovator and I don't think they did a fantastic job at value-based pricing early on when they actually competed against blockbusters and other video rental store location. They gave a lot of value away for free because they wanted to penetrate. They did penetration pricing to disrupt and establish Netflix as a substitute, right, but then because they didn't do maybe the best job then they still behind the curve on pricing and you could see they still struggle with changing then their pricing metric, they still struggle in raising prices although they're getting better but it's not a kind of, I would say a leadership position in innovation just to be realistic. So, back to your question though, you got two situations. The pricing innovation is led as a result of business model innovation or product innovation or service or software innovation. Or the second situation is innovating pricing which then leads to a business model innovation or product innovation. And the second one is often neglected. Pricing can be a very good source of innovation to drive the business, whether your version or you do new segmentation on your packaging or you derive a new innovation from the data that you have in the software space. So, it's how customers preference change and you could derive that through willingness to pay or, you know, so there's a lot of things you could do in pricing through pricing research that can really bring value. Most companies, when they do innovation and pricing, they'll be in the first scenario where, hey I have a new product or I’m going to launch a new feature and I’m going to price it and maybe it'll be different.
Radek: Another driving question. I imagine we have a lot of fears in terms of pricing change because whenever we do that and often, what we think of price change is to increase the prices or to make the model so that we earn more on every client we have and the fear is how the market will respond. So, I wonder how do you tackle this issue, this anchor.
Stephan Liozu: Well, I mean the best way to do it is to do pricing research and I know value ships does a lot of pricing research and other companies do that but not many. If you look at the number in 2010, McKinney came out and say only 10% of companies do solid pricing research. Right now, leaders the neglect pricing research. They still think it's very expensive, very complex and takes too long but you have great platforms that could do research, AB testing, experimentation, you could do conjoined, you could do willingness to pay research very quickly. Another couple of days to test your hypothesis and to validate how the market will respond to your price changes or your innovation. So, I mean if you go blind and you don't know what you're doing and you're not going to test it then obviously, you may face some backslash or negative responses.
Radek: Can you name some of the platforms? I think our listeners would value that.
Stephan Liozu: Yeah. So, one of them I’m working with actually, it's called epic conjoint. Epic conjoint is a marketing decision tool that allows you to do conjoint analysis in a matter of couple days and they do also max div, they can do segmentation based on the conjoint. It's all highly dynamic. You see the results live, you could do simulation out of the tool. So, it's phenomenal. So, if you ask leaders today, what is conjoined to you? Oh, my god, like oh my god, it's very complex, I need to know statistics, it's going to take six months going to burn 200,000 euros in budget. Not anymore, not anymore. So, check out epicconjoint.com and that's one of the tools. There's others obviously. You can have access to panels to do quick testing but just through your website, you could do AB testing very quickly and see the preferences. And you'll see that not a lot of companies do this and for some reason, it comes back to the lack of capability, lack of skills or even knowledge about pricing research.
Radek: Wow. Awesome. It was just the introduction and I already have some practical outcomes. So, please keep them flowing. And moving on to, before we jump into value-based pricing, I also wanted to refer to one of the papers that surprised me in some way. It's about pricing, orientation pricing capabilities and film performance and this one was published in management decision. So, in there, one of the results was that competition-based pricing gives even worse results than cost based pricing and especially worse results than value-based pricing. And I wonder why is that? Because in many circumstances, I think the market does compare to their competition and try to set their prices based on competition. Why it's not the best tactic?
Stephan Liozu: So, first of all, that paper, as you read it, you see a lot more research that was done on competition based strategies and how that destroys value and there is actually a very famous papers from Fred Kolopi and company on the track companies for 20 years and look at those who do competition-based strategies and most of them disappeared. And I think there is a propensity when you do these kind of strategies to enter in price wars to fight non-stop and to have that war, I need to beat competition and the end result is a mindset that destroys customer value share, all the value. So, we tested this. Based on that, we tested these three pricing orientation and which one lead to superior pricing performance and the result shows clearly that competition based pricing is a negative relationship to profit. And again, I would anticipate that is because you mimic your competitors and some of your competitors are going to be low cost, low price so you certainly do not want to follow their behavior. Other competitors in b2b play lots of games, they fake price increases, they have deals outside of the traditional pricing strategy so you really don't know and following competition or even following a market where the market is highly commoditized, it's a spiral to the bottom. So, obviously, I would need to study that a lot more, what constitutes competition based pricing and the effect but I would imagine that it's the same type of situation price wars, mimic, flock behavior. Everybody reduces prices so I reduce price for no reason or for maybe a good reason but so, in a sense, cost plus pricing or cost based pricing is more internally focused. You have less irrational reactions and you understand your cost so you still do not leverage customer value but it's actually a more stable approach. My overall philosophy is you can't adopt one orientation. You need to adopt the three C's of pricing. You need to know competition, you need to know cost, you need to know customer value. And adopt customer value as the primary and still have the other two C's to make good and sound pricing decisions.
Radek: I’m wondering about the price wars. I imagine a situation where we offer similar products and then our competition just replicates our model but decreases slightly their margin. How do we exit this war or because I imagine the fear among companies is that there is so many price comparisons, so many tools people can use so they will find the cheapest one and then if we don't follow, if we don't enter the game, we might lose all the customers in the long term. How do you fight this belief?
Stephan Liozu: Well, I mean, first of all, you have to have true innovation and so you have to have so much differentiation that it's very impossible or it takes very long for competition to match you. So, the foundation of value-based pricing is to have great differentiation and have switching costs whether they are technical or marketing switching cost, right, which means customers have a tough time substituting you. Now, competition may copy you to a certain extent and it's your role to show how much better you are versus competition and this is something that you do in value-based strategies. You constantly demonstrate your superiority through marketing, pricing and selling, right? And you make it very rational to buyers that I am better than competition, right? Now the third then point is competition is the same, right, and then it becomes pricing tactics and changing your business. Well, that's changing your approach to market, this is why then companies are moving to subscription, pay-per-use, outcome-based, bundles, hybrid systems because you always stay one step ahead of competition. Now, some industries are very quick in the technological upgrades and competition catch up very fast. That means you have to do faster innovation, right. So, it's the name of the game. At the end of the day, you look at what influences positively pricing power, its innovation and differentiation. That means you cannot dissociate innovation and pricing. Now, in the sass world, how many actually companies do very fast and non-stop innovation? You look at this timing of scaling and typically you scale, you pivot, you introduce new features but maybe it's not fast and dynamic enough.
Radek: Wow. Like I started to think in the back of my head if there are any branches of business where it wouldn't be possible to differentiate by some simple innovation and even in pure e-commerce, I realized that sometimes I’m choosing one brand over the other because the way they pack their shipping. So, if they use paper tapes instead of plastic tapes, it's already a win for me and it's the reason why I’m sticking with one than the other without comparing the prices. So, I fully agree.
Stephan Liozu: Well, this is that you would do conjoint and tell them, look at maybe packaging is a variable for you, that's very important and you could do rapid testing on conjoint. So, in the conjoined world, you could set up panels and you do ongoing conjoint to test different packages, right? And you'll see based on what's happening in the world, whether it's conflicts or raw materials going up or the preference will go high or low and maybe now the national origin of the product is much more important because of these tensions around the world, maybe the green is important today, it wasn't important three months ago. So, this is why pricing research and affordable pricing research is important. It cannot be an afterthought.
Radek: Wow. This leads me to, not yet to how to do that research but something that is I think a prerequisite is that we are acquiring some skills and another paper that I was reading from you from MIT Sloan management review on rethinking your pricing strategy and over there, you mentioned the price setting and price getting skills and just for the listeners who never were aware of this distinction, how do you define it?
Stephan Liozu: Yeah, first of all, I mean these two pillars are essential and in that paper, we try to make it very simple and the price setting, price getting are using terms that are understandable by everybody, right. So, there's a group of people in your organization that are going to set the price, right. They're going to product managers, marketing managers, NPI people, innovation managers, we're going to work on price setting, which is deciding which strategy do I use and how do I do my value models, my cost models and my competitive analysis to get to a price that not only satisfy my targets of ROI but also capture a fair amount of customer value. So, in the price settings capabilities, you have all this the stuff that we talked about already, the understanding of the pricing strategy, to be able to do price sensitivity analysis, being able to do pricing research and managing the three C’s of price setting. So, it's quite intense but it's important because then that goes into all the guidance and all the strategies that you would communicate to the other side of the go to market teams, which is sales, customer success and all these teams, right, which are going to be deploying and executing the pricing strategies. And this is how we get to price getting. The price getting is the materialization, the operationalization of pricing strategy through tactics. The discount structure, the rebate structures, maybe some packaging changes, the dynamism of your pricing, tactics, the systems you use, the governance, how do you structure your teams, all that stuff is price getting, right? The overall goal there is price realization, to be able to stay as much as we can true to our strategy. So, if my strategy says we need to have an average selling price of 10 euros per product then the price getting is to stay as close as possible to the 10 euros and that KPI is price realization. So, different teams, different approach but when you look at the payback and the impact of pricing, you need to manage both. 50% of the impact will come from the setting, 50% will come from you're getting and imagine if you don't do one or the other and then you're missing the point and you're not ripping the fruit of your pricing investments.
Radek: Yeah. That was a revelation for me when I was reading it because I do take a lot of time in thinking about my price setting but then in some products, I also create some discount opportunities for people to get them at Bergen costs and also together with affiliate links and all the possibilities to give back the revenue to someone else, I realized that in some situations, it's all about price getting and I really loved one quote from that paper of yours, which is ‘you only need to be brave for one second’ and it's when the guy asks for a discount and you say no.
Stephan Liozu: Yeah. I have another paper that you haven't seen probably is, its pricing and the sales force and really being, I call that being a superhero for one second. When you have to be strong, you have to be a really superman or batman and you say, no, you respond but then you respond with the right responses, a value response, right. You explain why no. So, it's not a matter of I’m saying no for a second. Either I’m going to exchange value and price or I’m going to say explain a no and reminding the customer the actual value you deliver to them with rational numbers. So, you can't just say no and leave because the customer is not going to be happy but you have to explain and you enter in value discussion when the customer is forcing price discussions.
Radek: Are there any other traps in price getting apart from agreeing to any discount requests from our customers?
Stephan Liozu: Yeah. There is a lot of games that procurement people are playing. So, I have a book called differentiation tolerance and differentiation value, where I explain the ten traps that the procurement people will try to put you in; fake pricing, writing on the board, time pressure, you know. It's just they'll do anything to get a discount that's because that's what they paid for, right. They pay to optimize procurement cost and they're going to try to play the relationship card. Remember we've been together for 10 years and at the end of the day, they are well prepared and part of the price getting skills in is to get a sales force better prepared than they are with data driven decision, with objections and responses, with confidence building capabilities. And to get to that point, you can't have the traditional training session, let's put all the sales people in the room and bore them for two days with presentation. You have to let them practice, you have to practice answers. You got to be in tough shadow kind of a shadow conversation with peers to practice the objection and to manage the emotional reaction to the buyers playing games. So, I don't want to get too much into details but that aspect of confidence in price getting is very important.
Radek: Yeah. I’m looking forward to get my hands on the book so I will also ask you later for the title and we'll share that in the notes.
Stephan Liozu: Yeah, it's all my website stefanyozoo.com. You go to stefanyozoo.com. You click on papers and book. A lot of my papers are posted then and the books are all listed, all 12 of them.
Radek: I will add that also but I think we can now move to our main topic, which is the value-based pricing and you already mentioned some of the hints that you based out on the customer value on how much do they value the product and in the paper, you even gave a very specific case study about setting value for the yogurt and you mentioned that through the empirical research, you defined some of the features that the customers value and you put a price tag on them and just to give an example, you mentioned that for this specific yogurt that you were pricing, the value of it being low sugar and healthy for teeth is costing 30 cents per piece. And I wonder if you could give us a little bit of backstage for such campaign. How do you actually set such values using this approach?
Stephan Liozu: Well, so this is typically the result of a conjoint analysis, right. In a conjoined analysis, you will have potentially eight to ten variables. Ten max, seven-eight variables are typically what you would use and one of them would be the low sugar good for your baby, right, another one maybe the green package, another one could be the flavor, another one could be the brand, right, the quantity. So, you would define the seven or eight and then within each of the variable, you would have different performance level. Yes/No or sugar, no sugar and pretty much you would create a panel of customers and you would do choice cards and customers would look at this and tell you which one do you prefer, right, and obviously, there's a lot of science behind the system. So, you do these surveys and at the end, what the conjoined analysis will give you is what we call the utility of each of the variable and the difference in price value contribution at each level. So, let's say you say no sugar good for the baby, it's a very high impact on what you could charge on pricing, right, and it will give you the value, the 30 cents because we derive that from the preference from customers when they choose the cards because in the cards, there is a price level, right. Each one of the variable is priced so they will look at the variation in the responses and the connection between the sugar, no sugar good for the baby and price and they derive what's called the utility of that variable and that's fantastic. And that right now, you could do that on a new product. I mentioned a company before, epic, we could do that in three days, in two days or even Sunday if you want. You get if you're not sure of the value of that one feature whether it's a software or yogurt or an industrial product, you do a quick conjoint. In two days, 10,000 euros if it's a big opportunity and not only you get this utility and the ideal product profile but you get a market share analysis and a sensitivity to market share based on price and you make a data-driven customer-centric decision and that's essential in value-based pricing as you can imagine.
Radek: Yeah. And it also seems simpler than when you just are stuck with the only information that you need to ask your customers about the price because what people tend to do is that, okay so how much would you pay for my service and that's all the market data that they gather.
Stephan Liozu: Well, obviously, willingness to pay research is also an option and you could say what's the highest price you would pay, what's the lowest price you would pay and obviously, it's more direct questioning and it works very well but you really have to also look at the bias in the responses because specifically in some markets where there is a very big commoditization mindset, customers, all they want is cheap. You look at telecom, for example, it's always, yeah I want the same but I want to pay less, right? So, you have to factor that in and I would say, for me, conjoin is a much better way of doing this but those are two different methodologies with different objectives, right? So, and again, that could be done very quickly in about a couple days and sometimes, you have to do both because it's not the same type of answer you're getting.
Radek: How regularly should we conduct such analysis because one thing that comes to my mind is that I should have that, I should do that now because for my training, all I know is how much people pay for it. I know what are the distinctive features of it but I don't know how much they're valued. So, I would definitely just run this analysis to understand better what is my position on the market with the evidence-based training I serve. Then I wonder, should I do that again in two years or how do you work with that?
Stephan Liozu: Well, so obviously, you can't have a 2 million euro budget to do pricing research so but there is a big difference between 0 and to 2 million, right. So, I would say you start obviously with your radical, disruptive innovation, things that you want to launch that are new. You do a bit of research to position it well up front. That's one thing. And then you have your core business, your main source of bread and butter, I would say type of offer and you want to not wait two years because you want to look at the amount of disruption out there, the amount of competition and what other people are doing. So, you constantly need to be moving, right, and it's a matter of constantly in a kind of an agile fashion, introducing new things, launching new programs, bundling different things. And if you have a little bit of money doing every six months, maybe doing a touch-up or a trial of different things and some of that doesn't cost too much money. You could put it on the AB testing and if you have traffic on your website. Others, maybe test it through a very quick conjoint and remember, if you put the conjoint, you don't have to put 10 variables, if you put that at four variables you get less number of respondents, faster response, less expensive. So, it's a mindset of testing non-stop and I think every six months, six to twelve months depending on the dynamism of your market is reasonable.
Radek: I’m wondering about AB testing and maybe you need to fix my assumptions about it because what I imagine when we talk about pricing is that we present different website to different customers with different pricing model or different prices and then so my question is about the ethics of such behavior or generally, the impact it could have on our brand when someone realizes that they paid more or less than someone else in the same time.
Stephan Liozu: Well, yeah. But usually, you offer different things. So, obviously, if you offer the same thing and you change the price, you run into discrimination, issue of price discrimination. You have to have a good reason to have positive discrimination and typically, you do that through segmentation. Like, for example, you could create functional packages instead of being a good, better, best. You could introduce feature add-ons for two weeks and see the response to that. So, it needs to be different and it needs to create differentiation in the mind of the customers. Remember that customers exchange value and price when they do these testing, right. They look at this, oh wow, great value, I will buy it or they say, no I don't care about this, I’m not going to buy it, right. And that's what you want to look at. So, you need to be creative but I agree with you that in the back of your mind, you want to keep the ethics, the legal things and be careful and not create things that you can never deliver. That's a key. If you create a package that is going to be available five years from now and you start selling it and then that's unethical.
Radek: All right, okay. That's clear. So, actually, and I think it's worth mentioning because it might be also the way people would think about AB testing. So, now it's clear for me that you actually play more with features, you play more with pricing models rather than just charging different prices for the same product in the same time.
Stephan Liozu: Well, it's a price setting and the price getting but it needs to be balanced. So, keep that in mind for sure.
Radek: Great. I wonder if there is anything else about value-based pricing that you think a newcomer should know before getting into it.
Stephan Liozu: Wow. I tell you, I studied value-based pricing for 15 years, I practiced it, I did my PhD on it and I’m still learning. So, I could go for 58 hours on that podcast with you. The thing is very best pricing, although it's a methodology and there is a lot of steps and things you can do, it's not like six sigma. It's not an easy, okay I’m going to deploy. It's going to be different for every company and that's hard to understand for a lot of people. They think oh yeah, here's a methodology, I write a book, I’m going to do it. And there is 50% of the methodology is science, 50% is art and the art is difficult. In six sigma, it's 90% science and then maybe some skills but it's pretty much repeatable. Value-based pricing is not repeatable. Either within the same company, you will have different methodology deployed and that's the trick.
Radek: Yeah, and also this is something I wanted to ask you because when we started to talk about price setting and price getting skills, you started to list all the competencies you should acquire and I wonder where is good enough for a manager? Should we get a little bit of sense about it but then or for CEO and then just find someone who knows it and could consult us on it or it actually makes sense to build a pricing team in-house?
Stephan Liozu: Well, first of all, everybody should have basic knowledge, right, the four P’s of marketing includes 1p and that p is price. So, that's essential that even pricing is included in corporate strategy when you look at positioning and you look at the value statements, value props or so, I would say there is a need for general culture and value and pricing across the board. Now, if you get started, you want to make sure that your product managers are excellent in pricing and it's not a choice. It should be part of the requirement, it should be in the job description and for that, you could be certified in pricing through the professional pricing society in the US. It's called the CPP, certified pricing professional and you get the required skills and then you get certified maybe in value-based pricing. I have my own certification there that I offer and that's it. Now, the same could be told on the sales guys. You need to be able to be good at pricing and negotiation and value selling and so, and eventually, I often discuss that with sass companies, eventually, you want to have a pricing and packaging or monetization expert in your team because then as you scale, everybody gets more busy or busier, sorry, and you want to have an expert that makes it easy for everybody, especially on the price setting, right. So, maybe not at the beginning but I had a discussion with a software company in in France two weeks ago and I told them, I think next year you're ready to have a full-time value-based pricing monetization because you have about 45 sass offers and now you're getting it to the point where someone needs to inject pricing innovation, value-based pricing science beyond what your solutions manager know, right?
Radek: Okay, I think that's also some sort of a benchmark to know how big one should be to have full-time pricing staff. And this leads me to the last question because if we are not there yet, if we're still running prices as a part of our job description. Recently, you wrote the paper on the biases in setting prices and if you could maybe just tell us a few of what we should be aware of, what limits us, what holds us back when setting prices in our heads?
Stephan Liozu: Yeah. So, there is a lot of different things happening in our head, right. We believe the myth. There's a lot of myth in pricing, right, like pricing is only price increases. I don't know, someone came up with this, right? And it's so much behind it, so much involved in pricing and value but we do have fears when we set the price, when we get to price, we are paralyzed by the lack of confidence, lack of courage sometimes at the top level, right, by CEOs that don't want to take risk. So, there is also what's called the confirmation bias, where we think we know everything and we're going to go and do our own things with that research, yeah. We know our customers, right? And because we're scared of doing that and because we don't know then we say yeah, we know enough or we can do it and that could lead to disastrous decisions. And you see that the problem is a lot of the bad decision and pricing are published and not enough of the good decisions are published. So, you hear a lot of bad things with Netflix or Jesse penny or other companies that screwed up their pricing because the managers thought they could do it on their own, right. And so the bias that we cover is really related to things that are happening psychologically in managers but also fears, the fears of rejection, the customers walking away. Fears of uncertainty are big in negatively influencing investments in pricing.
Radek: And from your experience, how often do fears come true? And also, is it done then? Or how do you react when actually what you're scared of happens and people reject your pricing, how do you work with that?
Stephan Liozu: Well, this is part of the continuous skills development. You have to make the teams aware of these biases and fears and you do this through socializing a lot of the pricing concepts. Now, you don't want to send them very complicated papers like the one you refer to, which is full of statistics and you want to keep it simple but you look at some of the books around irrational framing or decision making and we need to kind of explain to managers that it's okay to be uncertain but let's look at data driven decision, let's make evidence-based decision. Let's look at the past and how we looked at bad decision or good decision in the past. So, this is why I tell I most of my work focuses on the soft side of pricing because I’m not a technical pricing expert. All right? I’m more of a social organizational and behavioral type of pricing expert, where I will talk to teams, I would coach the teams on these biases and explain to them how this shapes their decision and how, you know, in the past, irrational decision led to not good results so in pricing managers or pricing experts, generally speaking, are very good on the technical side and not enough good on the psychological, on the organizational side of pricing.
Radek: A new idea came across when you were saying that, is that one of the potential data sets that we are overlooking is the data from our sales teams and observing how they behave with prices, how much do they negotiate and then learning from the actual work they're doing instead of just feeding them with some sales books and without actually working on what is real.
Stephan Liozu: Yeah, you need to give them psychological safety when you train them or they need to be able to experiment in a room among peers in a safe environment that it doesn't look stupid because they like to win but they don't like to feel ridiculous. So, when I do pricing negotiation training or responding to objection training, you let them practice in a safe environment and it's uncomfortable for them but they do it two times, three times, four times and then it become better. They have to rehearse, they have to repeat, they have to prepare. So, it's not the same as going out and pick up an invoice or to pick up an order. You had to prepare psychologically very well.
Radek: Wow. So, I’m looking through my notes and I see a lot of things I’ve learned over this short conversation like the very first thing is to remember that the different pricing models including cost-based pricing competition based pricing are not to be totally excluded and something that they assumed and you convinced me not to but just not to focus too much on them and especially about competition to let go of the price war and try to distinguish yourself as a value that you offer that the competitors cannot really offer. It also helped me to understand for the price getting skills that you really need to dedicate a lot of time to, once you set the prices to walk the talk and to make sure that you're not shooting your foot with some discounts, with some negotiation failures that actually end up with coming back to the original prices before the change, before the adjustment. And we talked about the value based pricing and the importance of the conjoint analysis to investigate it, to dedicate some time, to learn how to understand better your customers. And lastly, about the safety for pricing. And I wonder as a concluding remark, if there is anything you would leave me with as a final recommendation.
Stephan Liozu: Well, I would say if there is a lot of startup, owners or founders listening to this podcast, I would say put value and pricing in your discussions from the get-go and focus on your value prop, your differentiation statement, your business model. And the more you do that up front, the easier it is to do price and it cannot be an afterthought. I see too many founders and too many companies’ startups, sass companies that do not know the problem they solve, the wow differentiators, what makes them unique and then translate that into a business and pricing model. And I would tell them, this is a very big priority on top of your technology. Just don't underestimate how much that will change the success in scaling.
Radek: Thank you very much. So, to all our listeners, I would refer you to stefanyozoo.com to learn more because there is a lot and that still needs to be covered in value-based pricing and for today, I think that's already enough. Thank you.
Stephan Liozu: Thank you.
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