Below is a summary of our interview with Ayon Bhattacharyya. You can listen to the full interview using the embedded media player below or in your favorite podcast app (e.g., Apple Podcast, Spotify and Amazon Music).
Our guest on this episode of Pricing Heroes is Ayon Bhattacharyya, the Founder & CEO of Biz Growth Spurt, a consultancy helping B2B SaaS and tech companies drive profitable growth through product marketing and price optimization by taking a value-based, data-driven approach. Ayon has more than 15 years of experience leading pricing and commercial strategy across various industries with dozens of global brands, including British Airways, News Corporation, Equifax and Telefonica O2.
In this episode, Ayon shares his experience working with brands to boost their pricing power and communicate value more effectively. He offers actionable strategies for navigating B2B pricing complexities, from understanding customer segments to utilizing data-driven methods for optimal pricing.
From Commercial Finance to Pricing Expertise
Ayon’s journey into pricing began in commercial finance and business partnering roles, where he obtained a CIMA qualification. His career took a pivotal turn in 2008 when he landed a revenue management role at British Airways, managing pricing for UK to North Atlantic routes. Ayon’s analytical skills, commercial acumen, and strategic capabilities drew him to pricing, leading him to various leadership roles across industries. He tells how his early roles in commercial finance laid a strong foundation for understanding the intricate details of revenue management and strategic pricing.
"Pricing ticked all the boxes for me," Ayon shares. "It aligns with analytical skills, commercial strategy, consumer psychology, and behavioral economics." This holistic view of pricing as a blend of various business disciplines made it an appealing career path for Ayon, who enjoys the challenge of integrating these elements to optimize business outcomes.
Industry-Specific and Industry-Agnostic Principles
Ayon highlights that while the principles of pricing are relatively similar across most industries, banking stands out due to its regulated, risk-based nature. Key principles like understanding customer value, identifying unique selling points, and measuring willingness to pay are industry-agnostic. However, B2B SaaS pricing is more nuanced, focusing on customer lifetime value and creating upgrade pathways. For example, in SaaS, pricing models need to account for long-term customer retention and the potential for upselling additional features or services over time.
"In B2B, you have more opportunity to understand how the customer benefits from your product," Ayon explains. "Value is generally more quantifiable in B2B, making ROI calculations crucial." He illustrates this point with examples from his work with B2B clients, where detailed ROI analyses helped justify premium pricing strategies and secure long-term customer loyalty.
The Art and Science of B2B Pricing
The B2B approach blends art and science. Ayon emphasizes the importance of value perception and the salesperson's role in building direct relationships with customers to influence this perception. This contrasts with B2C, where value perception is built through marketing and brand awareness. In B2B, the salesperson can tailor the pitch to address the specific pain points and needs of individual clients, making the value proposition more compelling.
"In B2B, the salesperson can personalize the value proposition based on the customer's unique needs," Ayon notes. "This direct influence is a key aspect of the art in B2B pricing." He shares stories of successful B2B engagements where personalized sales approaches significantly boosted client satisfaction and willingness to pay premium prices.
Customer Lifetime Value and Monetization
Ayon stresses the importance of demonstrating ROI to retain customers. He advises against relying on long-term contracts and instead focusing on proving value continuously. Offering options like flexible monthly plans and discounted annual plans can help balance customer needs and business cash flow. He cites a case where a client successfully transitioned from a rigid annual pricing model to a more flexible one, resulting in higher customer retention and satisfaction.
"You want customers to stay because they see value, not because they are locked in by contracts," Ayon says. "Proving ROI and offering choices can foster loyalty." He emphasizes the role of customer feedback and continuous improvement in ensuring that the perceived value remains high throughout the customer lifecycle.
Common Misconceptions and Effective Communication
Ayon addresses the misconception that businesses lose customers due to high prices. Instead, it's often a failure to communicate the product's value effectively. He emphasizes a structured approach to monetization, avoiding guesswork and competitor matching. He provides an example of a company that successfully increased prices by first enhancing and clearly communicating the additional value provided to customers.
"Customers care about the value you generate, not your costs," Ayon explains. "A structured approach to pricing can bridge the gap between perceived value and price." He highlights the importance of value-based pricing strategies that align closely with customer needs and expectations.
The BizGrowthSpurts Pricing Power Model
Ayon introduces the BizGrowthSpurts Pricing Power Model, which identifies four levels of pricing power: cost chaser, market pricer, value conqueror, and price optimizer. The most profitable companies become value conquerors and price optimizers, focusing on customer value and data-driven strategies. He explains how companies at the higher levels of pricing power use sophisticated analytics and customer insights to fine-tune their pricing strategies continuously.
"Pricing power enables you to charge what your product is worth," Ayon says. "It's about putting customer value at the center and continuously optimizing prices." He shares success stories from companies that transitioned from market pricing to value optimization, resulting in significant revenue and profit growth.
Practical Steps to Enhance Pricing Power
For businesses looking to enhance their pricing power, Ayon recommends understanding the value proposition, differentiating products, and conducting market research. These steps help identify customer needs, segment the market, and set prices based on value. He details a step-by-step approach that includes customer interviews, competitive analysis, and pricing experiments to validate assumptions.
"Start with understanding customer segments and value perception," Ayon advises. "Implement tiered pricing models and adopt a value-based approach to monetization." He emphasizes the importance of iterative testing and refinement to ensure pricing strategies remain aligned with market dynamics and customer expectations.
Recent Pricing Topics and Industry Challenges
Ayon discusses recent pricing news, such as the trending topics related to McDonald's and Red Lobster, highlighting the importance of aligning price increases with perceived value and the risks of all-you-can-eat deals, in the case of Red Lobster. He talks about the need for strategic use of discounts and clear communication of value. For instance, he suggested that McDonald's could have used the controversy around perceived price increases as an opportunity to highlight the superior quality and value of their products.
"Price perception is crucial," Ayon notes. "Align messaging with improvements in value and use promotions strategically." He explains how companies can avoid common pitfalls by ensuring that their pricing strategies are backed by robust data and customer insights.
Recommended Resources
Ayon recommends several resources for those interested in pricing:
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Books: Monetizing Innovation by Madhavan Ramanujan, Price to Scale by Ajit Guman, and The Strategy and Tactics of Pricing by Thomas Nagel and George Muller
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Podcasts: Street Pricing by Marcos Rivera and Impact Pricing by Mark Stiving
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YouTube: Ulrik Lehrskov-Schmidt's content and Ayon's own content
