B2B SaaS and AI-Native Pricing Frameworks - with Marcos Rivera, Founder and CEO Pricing I/O

**Ray Rike** (0:00)
Hello, I'm Ray Wright, Founder and CEO of Benchmarkit, and your host of the Metrics It Measure Up podcast. We talked to a wide variety of the top B2B SaaS and Cloud thought leaders, CEOs, executives, investors, and people just like you to discuss the metrics and benchmarks they use to make metrics informed and benchmark validated decisions. Now on to today's show.
Welcome to today's episode of the Metrics at Measure Up podcast. Today, I am joined by Marcos Rivera, the founder and CEO of Pricing IO. We'll be covering four primary topics with Marcos today. First, the nine ingredients for a winning SaaS pricing strategy. Second, the nine psychology concepts for SaaS pricing. Third, some of the key differences between SaaS pricing and AI pricing. And fourth, the value of pricing framework. So with that, Marcos, could you please take a moment to give a brief overview of your journey to becoming my guest here on the Metrics at Measure Up podcast.

**Marcos Rivera** (1:18)
Ray, absolutely. And thanks a lot for having me on the show. So my big confession is actually, I'm not much of a consultant, even though I have a consulting firm, I'm more of an operator. And so I've been building, growing software my entire career since the late 90s, all the way until now. And so taking those things that you learn as you launch a software and it flops and you try to price something and it doesn't sell and all the way to trying to meet user needs and get something to scale and grow. All those lessons kind of form my point of view and opinion. And the one area that I just could not let go of was monetization, pricing and packaging, figuring out like, how do you exchange value with people? It's a very intriguing thing for me. So I did a lot of that for the companies I worked for. And then I joined Vista Equity Partners as their head of pricing and packaging, did it for the entire firm, all the way through from small companies to big companies, wrote the playbooks, started pricing IO right after that. And it was just me by myself. And now we're about 25 people growing and love what we do, helping tech companies figure out how to price their stuff.

**Ray Rike** (2:32)
Well, from one fellow operator to another, I'm very excited about this conversation. And well, Vista Equity, what a great opportunity to see so many different kind of, I would say, leading SaaS companies to help them with their pricing strategy. But I'm going to take a little bit different approach today. I was reading a lot of your recent LinkedIn post, and I'm like, this will be a fabulous kind of journey map to today's conversation. So the first one that I read, and I love the fact that you're using these kind of infographics to kind of make some dense information more visual and easier to understand. But the first one you wrote was included a topic on the nine ingredients for a winning SaaS pricing strategy. Would you mind just kind of touching upon all nine of those? And what are the two or three that you think just are so important indoor? You're seeing SaaS companies maybe not quite getting right.

**Marcos Rivera** (3:27)
Now, terrific question and thanks for that high praise. Listen, I think people are just visual in nature. I think trying to put something in a nice, simple graphic, in simple ways really helps make a topic like pricing and packaging a lot more approachable, which is one of the big reasons why I do it. So let me do this. I'll step through the nine ingredients here briefly, and I'll give you kind of my take on the big ones. You can't do all nine at the same time, but you can do a few of the big ones here.
And these were inspired by some of the symptoms that I saw where people, it was really holding them back on how to figure out or approach their pricing. So number one is about solving a real problem. And this is a very critical thing that most folks really don't spend the time to think through. Very briefly, it's about understanding exactly the jobs to be done that you're helping with your software solution and getting very specific around how you make that happen. So it's not just what does my product do, but what's the benefit and not even there. What's the benefit of the benefit? Like take it all the way and you can even use like the Japanese five whys. Like there's lots of ways to get to the end, but you really have to get very specific. Number two is about a pricing point of view. And what I mean by that is sure there are a lot of copycats out there, but presumably if your software is, they're relivering some value in a unique way, and you want to try to capture that in the pricing and packaging, whether it's a model that's a lot simpler, maybe you give away something that others charge for because it's part of your ethos and is what you believe in, then you should take that approach and be proud of standing out from the other competitors that are pricing against you. Number three, a clear market positioning. This one is a big one for me because I think that when you're trying to grow and serve your customer base, you'll find that you'll serve different types of customers and then you'll start losing a little bit of your identity if you're not very clear on who you are and again if you're not sure what problem you're solving. So you end up becoming everything to everyone and it gets really hard to see your positioning. People need to understand, are you premium? Are you the cheap version? What do I need you for? So they can compartmentalize you, compare you and decide if they need to buy you. So clear positioning is a big one. Number four, consistent price messaging. This is a little bit of a cousin of the other two, but the idea is that if you're inconsistent, if you're saying we are the most luxurious, best brand and then you're discounting 75% off, like these are the things that are inconsistent in the messaging. And so you want to make sure how you present your product, the messaging you use, that the way you price, the way you discount, the way you promote, all consistent around. You don't want to confuse your customers is the main thing. Number five, data-driven pricing insights. So this is where it gets a little tricky now, because not every company has access to a lot of data. And if you do, sometimes your data is not that great. So how do you do this? You have to do it one small step at a time. You won't have perfect data out of the gate. And so you start with a small thing like, let's analyze my wins or my losses, or let's just kind of pull a query and see how many people are actually using the software. I mean, you can start with very basic things, even to the point where you can just sit down with five customers and talk to them about their experience, even as grassroots as that. But you gotta get some data and understand what's happening. Your guesswork will kill your growth, ultimately. The next one, number six, which is pricing that builds trust. So really in the game here that we're playing, it's not just selling software. We're actually trying to establish trust with our customers. And they want to trust that your software is going to do what it's supposed to do or what you claim it will do. Because right now, software is a promise of value. It's not value in and of itself. So you have to build trust. And so that means transparency, being very clear, no hidden fees, people don't like to be tricked, and have surprise bills at the end of it. Super transparent there. Number seven, case studies and ROI proof. Another area a lot of entrepreneurs fall down on is they don't actually go back and document and show the proof of the product, the proof of the value. And this is a big one here because I think showing proof to others, and you'll see some, from a psychology effect, you can see the value and demonstrate how your product actually helped. Number eight, social proof and testimonials. A little bit of a different version of this, which is if other companies that are maybe similar to your buyer is using your product, that creates a bit of safety and familiarity to use the product, and you'll get the advantages of social proof kind of propping the value of your product and building trust. And then last, number nine, ongoing price optimization. So think about pricing as this evolving, living, breathing thing, right? If you think your product is evolving, living and breathing, so is the pricing. And so one and done does not get it done. You have to continue to improve it over time. And so set a cadence. Do it every six months, every year, every two years, whatever that makes sense for you. Perfectly, if you don't know, if you're not sure, every year, just to kind of start somewhere. And then keep on feeding the model with everything you learn and make it better, right? So those are my big nine. If I had to give you, Ray, like the top handful that I would say really like double down on right now is solving a real problem. Number one, it's you actually have to sit down on a Saturday with a couple of coffee or a glass of wine and figure that out, like write it down with pen and paper. I would also say the next one I like is number three, clear positioning. Again, it's avoiding confusion. Number six, building trust, that transparency. Is there anything in your model that surprises your customers? If there is, freaking get rid of it or change it.