Okay. Hello. And thank you all for tuning in to yet another episode of the professional pricing Society podcast. My name is Terrence and we do have an amazing discussion ahead of us. Joining me today is Griff Perry. He is the co-founder of a company called M A metering and pricing engine. That makes it easy for SAS companies to deploy manage and optimize usage-based pricing. Griff has co-founder John Griffin started.
M after building him selling a backing as Service Company for video games to AWS, Us prior to launching M Griffin, held senior digital strategy and transformation roles at Sky Griff. Are you doing today? I'm very goodness. Let me see here. Good good. I'm glad that we're glad to have you were very interested in this in this conversation today. Talking about pricing as a growth lever for SAS companies. Let's just go ahead and just jump right into it.
If you don't mind kind of give us a little brief description of your background and you know, where you kind of come from regarding the pricing world. Sure only one thing I would say from is I'm probably much less expert in pricing or pricing strategy, then the majority of your audience. So what I consider myself to be is an expert in the tooling that allows you to deploy pricing strategies, effectively and
flexibly. But obviously, I picked up a bit about pricing along along the way in terms of my background. I've sort of had a career of two parts and the first part of my career. I would To television, as you mentioned in Skies, this guy the big pay-tv player in the UK and in Europe, I did a variety of things and I started off being a strategist, but because digital was happening, I ended up focusing on digital strategy and that leaked into digital products. And so, I became a product
person there, funnily enough. I mean, thinking back on it, I probably didn't think as much about pricing, as I should have done about those products, which is possibly be Cuz it's guy is a is a subscription business and for the most part of the products that we were building were being bundled in with the core and subscription, but I'm but I didn't really Flex the pricing muscle then, but the second part of my career was the
entrepreneurial part. So like you mentioned that my co-founder who is also called Griffin. Although it's his surname rather his birth name and we founded a company called games box and that was a cloud infrastructure business focused on the Again, stays like you said and we deployed usage. Well obviously we had to design our own pricing strategy so that was my first exposure real exposure to pricing and we deploy the usage-based pricing strategy successfully in that business.
But the reason I've gone on we've gone on to found meet areas. We experience a lot of pain associated with that usage-based pricing model, it's both operational but also go to market. And we felt those pain points really clearly, we really struggled with them and then when we sold that business to AWS, we then worked our own out at AWS. They're also a usage-based pricing business or be it on a much bigger scale. And what we saw is that they had
exactly the same pain points. And so that was the real spark when we started talking about major, it's like right, okay? You know, if you're deploying, usage-based pricing, it hurts in these ways and there's something missing that needs to be created. That helps solve those hurts. Sure sure. Makes me. And that makes complete sense. Now, you know, thinking about, you know, your background and strategy and kind of going into
the digital realm, you know. Now we're in 2023 and in the world of pricing you know, why do you think it's going to be a little bit more important for these type of companies to kind of hone in on to their pricing strategies moving forward in this year because life is tougher. Yeah I mean we are uh Operating in in hard mode, certainly harder mode and our customers are software companies and so life got hard for them in for two reasons.
So, one is the general macroeconomic climate is tough and all their customers are looking to cut costs, cut their cloth, so that stuff and at the same time, the funding environment for software companies is changed pretty radically in the past year. So We've gone from a period of easy money. Essentially, to the current situation where new funding is much harder to come by and much
more difficult to justify. And so companies are a thinking, how do I get by without fundraising or if they are committed to fundraising the potential investors are looking much more at the fundamentals. And so for those two reasons life is harder and I think when life is hard, Harder people look at pricing much more, keep you because it's seen as a lever to optimize results in more difficult circumstances. So I generally I think pricing is much more important now than
it was last year. Sure. And I think any, you know, pricing professional can also agree in that in that said to me you know it's it's more important now than it seems like ever has been now for those who may not be aware. What exactly is usage-based pricing? How do we know it's right for our business and are there any other type of strategies
underneath usage-based pricing? Say every single person listening to this podcast understands usage-based pricing because it's it's absolutely fundamental to articles like Logistics or or energy and utilities or telecoms. So the basics of usage-based pricing is you pay for what you consume and what's what's new for? Our business is its application to Software.
So software is traditionally if you go back decades, being sold on the basis of a piece of been on an ownership model, you know, you buy it. And then for the last 10, 15 years, it's been going through a subscription phase where you're basically. You're paying a recurring fee for Access. That's the core SAS model.
And what's happening now is businesses, are adopting usage-based pricing partly because They're they're imitating a responding to innovators in the market like AWS or day to dog or Snowflake and partly because there are some fundamental Trends which make usage-based pricing work better and a lot of that has to do with Automation and little that's to do with product LED growth. But but yes, the fundamental part of it.
It's, you pay for, for what you use, and it's an alternative to paying for ownership, or for Access or by transaction, or by outcome Now, there are also other pricing strategies outside of usage-based pricing. That you may be aware of the career. Yeah, 100%, hey. Yeah. And what's interesting about business is that they're often used in combination. So so it m. We the Tailwind for our business is absolutely. The growing adoption of
usage-based pricing. I think it's gone from being used by a third or so software companies. Three years ago to almost two-thirds Now, but it isn't these aren't all extreme variations of usage-based pricing, like awx a lot of it is it's hybrid where one of our customers is offering to their customers subscriptions for example, but for the subscription, you get an allowance of stuff. Whatever it is say, it VI calls. And when you exceed that allowance, you're charged
overages. That's an example of usage-based pricing. So It's a, yeah, there's there is a lots of complexity, which we like mmm. That's good. Good. Okay. Now in your expertise and in your tenure of strategy building, you know, who do you think should be involved in developing a pricing strategy? It's Tricky, isn't it? And I and I think this is one of the reasons why people don't pull companies, don't pull pricing as a lever that much so times are good.
You pricing is roughly right, you don't touch it because any changes are painful. So in terms of who needs to be involved, it takes a village. It is pretty much all the functions across the company so it's definitely Finance. It's definitely sales is definitely marketing is definitely product and it's definitely engineering. And then for each of those areas you actually got to consider
sub-teams. So to give you an example in finance, that's both commercial Finance or financial planning and Analysis people who are thinking about the effects of change pricing and forecasting, different Revenue, mats But then there's also different constituency which is a billing operations or the thin Ops people who are responsible for actually calculating and bending invoices.
So they're worried about the operational impact of pricing changes and you get sort of similar sort of sub, constituencies all the way all the way down and it's, you know, it's hard and in our business it m we often dealing with it's quite large companies who are adopting different pricing strategy for the first time and what they realize is that they're actually going through quite a significant business
General business transformation. It's not just about implementing pricing, they've actually got to change the way their teams work with each other and the tooling that they share and it's not unusual for us to be in a room with two teams from a, from a customer who never spoken to each other before. Or that's because I used. Yeah, it's kind of interesting and they sort of introduce themselves and start laughing
and we get our right, you know? Okay, so this is all they do for you at the good news is that this is our main drain. We do this every day so we can be quite helpful about get guiding them and orchestrating their efforts. But the underlying point is involves a lot of different teams and learning a whole bunch of new tricks. Yeah, I can only imagine learning different. Trends are learning different. Aspects every department or
sector everyone. You know, it's a risk essentially it's going to take a village of a company in this regard to I guess develop a priori legitimate pricing strategy and they're also used to take into consideration as well. The data that every Department brings to the table, like how can data play an important role in this process overall as well? Well technically it's very important to actually we think of ourselves as a date, a company but it's important, it's important for two reasons.
Reasons. So, one is about design and one is about operationalizing. So, on the design front, you know, constant pain point we see people going. Well, I've got some ideas about pricing, but I don't know, which is the right one. And, you know, to answer the question you've got to understand how customers are using your product, how they segment into different groups. And so you need to like you again. I'm sure that most people are listening to this podcast.
I'm the first thing you do is you collect data like, what's going on? What do we know about what's going on? And then you find a way of testing it. So that's that that's the data to fuel design. Bellamy operationalizing side of things, this is probably more. So of usage-based pricing than perhaps other pricing strategies but information about what data about product usage and how much a customer is is spending is valuables throughout the business so you don't need it,
just to drive your billing. Your sales team will also need that information so that they can You can have informed conversations with the customers, they don't want to be ignorant also much that customer is using and how much they're
spending. And they also they need that information so they can make an time their conversations because you really want to talk to a customer if their usage is spiking up or spiking down, or approaching a threshold above, which they might be throttled or judged overages. So that that data about usage and spend Critical for the sales team to give you another example. It will also be very important to your product team because, you know, usage-based scenario pricing is actually part of the
product. You can't send a customer an invoice with a single line item once a month. The End customer completely reasonably wants to know how much they using and how that usage converts into spend any given point through the billing cycle, you know, could be the second day of the month, it could be the seventeenth day of the month, but They need that information.
So product teams want to basically create building dashboards and so they need the same information which has been pipe to the billing system and it's being pumped for the sales team. So if your usage based businesses usage and spend data is like blood, it needs to percolate through out the org to have its full effect, which makes dead is full effect. Otherwise, you're not really managing it effectively. Hmm. You know, it's a living Beast, isn't it?
You know, you You put out your pricing but you, you need to actively manage your customers. Your want to agree slightly different pricing terms for different customers depending on who they are. Particularly, if you've got slightly larger customers and that information in allows you to do. It's if you're not being proactive, your, you're not optimizing, it's not something
you can set. And forget sure, last question for you all know students in your direction, going away from our customers, you know, what, advice would you give to companies thinking about raising their prices? You know, especially this year 2023. It's Tricky, isn't it? Well, I mean, particularly in software, which is the vertical out, great. And a lot of people are doing it. I think there was news, there was news this week about Shopify. Put their prices Zoom put up
their prices. And there's definitely a lot of supply-side pressured to do it because, you know, input input costs are going up. Plus, you know, if you're looking to optimize results, you should be relatively bold about searching out. You know, the Headroom in your pricing, right? I'm not answering a question. I'm explaining why it's difficult, right? So what how would I would? I would I do?
I mean I for a start I would really think about what your pricing power is, you know, some software vendors are about effectively critical infrastructure. So M own businesses is pretty critical infrastructure. I mean, you know, we're right at the core of billing customers and the more critical you are the more pricing power, you have
the other end. Of the scale, you know, if you're just a nice to have been in these in this economic climate, you're already vulnerable even before you put up, your think about putting up your prices people looking to make savings. So definitely consider your your pricing power. I would also do what we were talking about. Just a second ago is that you know, you're going to need to socialize these changes with your customers so that they understand them and believe them
to be fair. So communication matters a lot and then I guess the final thing is it there is There's a lot of opportunity to be quite sophisticated about price Rises. It doesn't have to be sort of like, just a standard lift across your customer base. You can do to private price on a customer bases but if you don't want to do that, there are other techniques as well. And usage-based pricing which is what you know, the Tailwind for business.
What we tend to focus on is one example that so If you let's say you're a subscription business, where everybody just paid subscription price and there was no additional fee depending on weight of usage, if you basically keep that model. But introduce an allowance is a usage, allowance associated with this description. And if you exceed it, you'll pay more. What you end up doing is extracting more willingness to pay from your heaviest users who
believe it to be fair. And so because The conversation, you can have to them is where you're using it a lot. So, it makes sense that you pay a little bit more than everybody else and most people go. Yeah, I guess that's a good point. Maybe. I can think about how I could use a little less, but I don't object to the principal about, I'll be paying a little bit
more. So, it's just it's worth thinking about slightly stealthy tactics like that where you can effectively price discriminate between your, your customers. Because that tactic there would actually, the average selling price will definitely increase. But the It doesn't have to be associated with a significant headline with price, rise, which is something that might trigger, you know, reconsideration of observing people want to use your product. Sure? Okay, makes perfect sense.
Wagner of Pierre. I really do appreciate your time with us today. That's all the questions I had for you for this particular discussion. Did you have any, you know, questions or concerns for PPS or myself? No husband.
Okay, I don't have any concerns. I like talking to pricing experts, like I said, like I'm not a pricing expert myself, I just happened to work with lots of people who are and and I see all the creative, one of the things that they're planning and M, we hope to make it easy to implement those and make them happen. Sure, absolutely. Do you or or your company have any kind of resources available for listeners? That may be interested to learn more about you know, you were or Open.
Yes. If you if you go to our blog, so m.com M built with the 3. Meter.com /blog there are a bunch of resources there around it sort of observed Behavior. You know we're looking at pricing strategies and the impact of those pricing strategies and we're sort of shining a light on what seems to be working and what isn't working like this is us looking at the at the outcome rather than predicting. And what might happen.
Like I said when I pricing experts but there's a bunch of stuff in there and also included with that is a bunch of stuff about the operational challenges of implementing usage-based pricing, which people should be aware of for. It's not it's not easy but it is doable. If you know where you're headed, okay, good good m.com that's M3, t er.com. Here's a readily available blog section for those may be interested in learning more about Griffin Perry or Has company.
Hey I want to thank you again, mr. Perry for your time and for our viewers listeners tuning in today, one. Thank you all so much for your time as well. Until next time, we will see you again on the professional price inside podcast. Have a good one.