Speaker 1Welcome to Top Line, the podcast for the best founders, operators, and investors in B2B tech. Every week, AJ Bruno, Asad Zaman, and me, Sam Jacobs, will break down what's important for you to know to be the most well-informed professionals in the market. This episode is brought to you
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Speaker 1Hello, everybody. It's Top Line Spotlight. You know Top Line Spotlight. It is that short mini-segment of the Top Line Podcast, released every Thursday. Each episode features a one-on-one interview between a guest who is an operating executive, an influencer, a thought leader, somebody that knows go-to-market inside and out, and one of our hosts today. It's me and Asad Zaman. I'm Sam Jacobs, the CEO of Pavilion. Asad is the CEO of Sales Talent Agency, and with us today is Marcos Rivera. Marcos is the founder and CEO of Pricing.io. I've known of Marcos for a long time, and I've also known him for a less amount of time than that, but I've known him because he's a pricing expert, and I've seen Marcos give really incredible presentations to rooms of CEOs about the power and the leverage that you have when you think about how to price your product. It's not just Marcos that says that. A lot of the pricing firms underscore that the companies that regularly revisit their pricing tend to grow much more quickly than companies that don't. And that is why Marcos is going to be doing a project for Pavilion, the company, in the next couple of months, because we need that help. Marcos is also the San Diego chapter head for Pavilion, and is just a generally good guy, I think originally from New York City, if I'm not mistaken. Marcos, welcome to Top Line Spotlight.
Speaker 3Sam, thanks for having me, man. It's going to be a lot of fun. I love talking to smart people like you.
Speaker 1Did I miss anything in your bio?
Speaker 3No, you hit all the big points. Big points here, right? I mean, I come from the private equity world, did a lot of pricing for Vista, did it myself as an operator. I was a product manager, actually, is where I learned all my pricing ninja skills, just building value, trying to get people to buy it, people to sell it, and over time, just got really good at it. So that's the little bit deeper lens.
Speaker 1I love it. And pricing, Io, just tell us about your organization, how big it is, what kinds of projects and engagements you do, who your ICP is like. If someone's out there listening and they're this sweet spot customer for you, who is that
Speaker 3person? Yeah, so the short of it is we help B2B SaaS companies charge for their stuff in the best way possible, right? So we go in there, we break down their pricing, their packaging, their go-to-market, even things like their positioning, how do they handle discounting, all the stuff. We look at pricing as like a whole end-to-end system, and we just help them get the best system in place so they can grow, monetize, do what they got to do. And we only work in the tech space, so we don't do pricing for toothpaste or candy bars or anything like that. We only do tech. And it's a lot of fun because these companies are changing very fast, especially nowadays with all this AI stuff going on, and they need to figure out, how do I capture all this new value I just coded over the weekend? How do I figure that out? So it's one of those things that keeps us on our toes, and we love it. The team right now, I started all by myself, just me. And now we're about 20. We'll be 24 here soon.
Speaker 1So we've grown quite a bit. That's amazing. And before Asad jumps in, we were joking before we started recording that Asad loves interrupting people, and Marcos loves interrupting people, and I love interrupting people. So it's a high-wire act to manage that spotlight. But that said, before we jump into the heart of the business problem, I do want to ask this one question, which is, what's the most common misconception? What is misunderstood about pricing? And relatedly, what's one insight that somebody can take away with them after listening to
Speaker 3this show? Yeah, I have more than one. I'll give you one big one, though, that I see all the time, which is, pricing's one and done. I just talked to a CEO last week with lunch, and he said, yeah, I kind of see it as a once every couple years event. Isn't that it? I said, ah, is your product changing once every couple years? I mean, you need to really sit down and make this more continuous. And he looked at me like I was crazy. But towards the end of when we finished our food, he was. Seeing it my way. So you definitely have to.
Speaker 4Marco, is that because if you're changing it regularly, obviously you're increasing the value you can capture, but also you're kind of training your customers that this company's price goes up? I ask because the firm I run, we hadn't changed prices for 12, 13, 14 years. And since then, we've changed prices a lot. And what I'd noticed was initially when we did it, our customers were like, it was so hard for them to come to terms with it. But now it's like second nature.
Speaker 3It's conditioning at the end of the day, right? And think about people who wait for discounts and don't buy until the discount season comes around, right? You condition your buyers. They figure it out. Once you start changing things, they're like, oh, okay, this guy's changing every year. And then they get used to it. They kind of get a little ticked off at first, but then afterwards they adjust.
Speaker 1Is there best practices in terms of communication around that? Because one part of me wants. Like, I want to optimize. Of course. And that's why we're going to be working together. But we also haven't touched pricing in three years. And at the same time, I'm sensitive to your last point, which is there's. You know, you shouldn't. Well, this is a. Disagree with me here. You shouldn't have to make your customers experts on how to buy your product. You shouldn't make it so confusing that they don't understand. And also, there's this complexity of the more often you change prices, the more SKUs you're going to have. Then there's going to be some kind of technical debt that you're going to accumulate. Unless you're changing all SKUs all the time, but. And I'm sure there's a system that you've built to manage this, but it does seem like customer comms are really, really important in terms of how you manage, particularly if a company goes, like in Asit's case, from never having changed to, hey, we're going to have some new packages every year that you can consider.
Speaker 3Yeah. I think the changing in pricing, I want to break down the word change a little bit, right? Because you can do something massively and change your packages and bundles and all sorts of stuff. Or you could just nudge a couple prices. Up, include a feature, and be done, right? So I think that revisiting your pricing is probably the better way to describe it. And it really matters on two things. If you think about how fast you sell and how fast you're changing as your product or services. If you're never, ever changing, that really doesn't change the value equation in the minds of the customer. And so you don't really have to go crazy, maybe just some inflationary adjustments and be done. But if you're adding tons of value, which a lot of these software companies are, then you really have to step back and say, how's the experience changing for the customer? And when I say experience, I mean more than just features. I'm talking about how you onboard, how you support, all these other things. Because in reality, you're not pricing the product, you're pricing the experience. And if that's changing around, then you have to capture that.
Speaker 4Pricing can also be a feature, right? So if you think about counter-positioning, a great way to counter-position is actually pricing in the market. That was Salesforce and Siebel. There was a pricing difference that they heavily leaned into. And what you find sometimes is that companies just have their pricing and they just show that and they're like, it's gone up this much and not up this much. But if you can explain to them what your philosophical view on pricing is, why is it this way? I've noticed, so we do that now. And on top of our pricing, we have a point of view on pricing. And that has been huge for us.
Speaker 1I love that. That's like a Bob Cialdini influence, which is if you just say because, people that want to cut in front of your line. And people that cut in front of your line say, I want to cut in front of your line because. And sometimes all you have to say is because I'm really in a hurry and I don't feel like waiting. It was counterintuitive. One question, Marcos, and then again, I mean, I think we have enough to just talk about whatever we want, but we do want to dive into one particular problem. But one question I have is part of what I'm hearing you say is for companies that have, especially we're coming out of 2023, right? We're talking about companies with, sometimes they perceive themselves to have GRR issues, meaning gross revenue retention. Like they've got churn problems or they think, you know, or it's, they want churn to be better. And there's a very obvious thought process of, well, let's not, let's not futz with it until churn is better. We really haven't earned the right necessarily to futz with pricing because clearly our customers aren't super happy as things are. And then there's another, so just walk with me here. So then the, thing that happens from there is that you as an organization decide you get used to not charging for new stuff that you build, right? You build new stuff and you just say, well, we should just put it, we should just include it. We should just include it because we're doing anything we can to get gross revenue retention. And I think you'll tell me if I'm wrong, but my hypothesis is that that's probably a flawed thought process. And additionally, that you should be in the habit of as you roll out major new features and new experiences for your customers, you should be thinking as part of that, how will we charge differently for this major new experience, as opposed to everything should just be included. So love your reaction to that idea.
Speaker 3Yeah, I have a couple of reactions to that. The first one is if you're seeing a lot of churn that that tells me there's a misalignment somewhere. And it could be, by the way, may not even be a pricing problem, could be an onboarding issue where they're not getting the value. And they're spending too much time trying to figure this thing out. And like, you know what, I'm out, I don't want to deal with this. And that could be another issue. So usually, when you have a pricing problem, dig a few layers deeper, you might have another problem behind that one. But nonetheless, if you have a lot of churn, you're going to have a misalignment somewhere. And that could be your right customers, they're leaving, freak out the founders freak out the companies, and they want to give them as much as they can. Here's the dirty little secret, though, okay, is that they really don't want more value, your customers really want the right value. And so by piling in more and more and more, you might be thinking, Hey, look, I'm giving you all this stuff, right? This isn't as good. But now think about it from their lens. It's like, look, I really just want this one thing. And you're giving me all this other stuff. Now, I'm paying full price, and I'm only using one 10th of everything you're giving me. I don't know if this is for me, right? Let me go somewhere else where they can meet my problem head on directly, give me what I need. And this is where I think they, they fall into this trap, and they give, give, give. Now people are still churning. Some of the ones that stay, frankly, are just some of them are zombies, or some of them are just waiting for the better deal to jump to. And so I think fixing the right core crux of the problem, which is aligning to the value they really want, is the real play, not piling in more and more features. I think that's a trap a lot of founders fall into.
Speaker 4Do you think that some of this also has to do with sometimes underpricing things that if you underpriced something, the way somebody perceives it is different compared to if you price at a premium level, and then even the way that they onboard themselves, the way that they try to get value out of it is different compared to if they thought this is a flippant purchase, we'll get to
Speaker 3it. So people do associate quality with the price. Yeah. They see something that's really cheap, they're like, ah, is this thing really legit? Or versus too expensive? Wow, that must be good. That generally, if you think about Veblen goods and things like that, it's a little nerdy term.
Speaker 4Clothes. Like if you walk in, this is luxury clothes, $20 shirt, you're like, no, it's not, right?
Speaker 3Exactly. And humans are always making these associations. It makes it easier to think, right, at the end of the day. But here's the thing that you got to be a little bit careful with, right, which is going out the door, nine out of 10 of these founders are undercharging. And that is not necessarily a bad thing at that stage. Because you're trying to figure out, is this the right value? Am I even selling to the right person? All those things are still kind of question marks. Even your customers don't know if this is the right value. They're still trying to figure things out. So undercharging in the beginning, it's actually pretty common, and it's okay. It's once you start realizing that you have some kind of, you know, product market fit, or you're starting to realize, hey, I'm actually, we got something here. And you're starting to grow and get more customers. Here's where they go wrong, is they keep plowing more stuff, similar to what Sam just says, they keep plowing more stuff in, they don't relook at the model, they don't readjust the experience, because now they're, they're, they're, they're double downing on certain areas, they're building in certain use cases, they're ignoring others. And now stuff's changing, but the model is still the same. And so you start to see it, but it doesn't rear its ugly head until later until you start seeing, you know, growth plateau, or people aren't upgrading or expanding, then you're like, Oh, wait a minute, what's going on here. And so I really, when you in this high speed environment where you're changing, and you're training to take advantage of the traction, you need to go back and make sure the model keeps up pace, you have to make sure it doesn't fall behind.
Speaker 4That's so interesting. Okay, this has been great. But let's click into your business now. So yeah. So we are here to talk about a problem that you've solved in your business in the last 12 months, that was a hairy, intense and important problem to solve. Tell us what comes to mind when you hear that question? so the there's no shortage of problems
Speaker 3i've had to solve in the last couple years right i need to make sure i picked uh one that i think is relevant to the audience here and the big one that i that i want to talk about is my big problem in getting the the right talent in a company that is a you know niche offering in a niche industry i'm like double niched right um and so what i what i found is that finding people who understand the pricing and the value problem and software and tech and can come in and also want to work in a fast-moving you know founder-led environment freaking hard man freaking hard and i made some missteps on hiring and who should be on the team i'm just being vulnerable right i did not know how the hell to figure this thing out and then finally i said you know what i'm going to sit my butt down i'm going to grab a glass of wine i'm going to figure this out so here's here's what happened so i was trying to scale up my business scale i'm founder-led so founder more like founder doing everything and then you have to start building out the components to scale you need people to do that right so i well let me just bring in somebody who knows pricing and all is well that failed miserably people had different philosophies that came with bad habits they were more cost plus pricing versus really the nuances and value-based pricing and they didn't understand the software like sas mechanics and the business model so then i figured out that it isn't pricing talent i'm looking for it's actually the ability to recognize value communicate and connect that to strategy i need someone who can connect the dots and that was a big sort of revelation for me but it didn't stop did you get
Speaker 4that revelation because you had like an ab test essentially playing out in the business maybe not in
Speaker 3real time yeah yeah in real time i'm like oh so yeah you know pricing but you can't quite solve the problem right you can't solve the problem that was the big one for me so i i said all right let me change the profile of who i'm looking for and this is a big one for me so i said all right let me change the profile of who i'm looking for and this is where this is where the hardware comes in that most people will skip is i actually sat down rewrote the job description then i took it a step further and wrote what the success looked like and then i said how are you going to be measured which is really hard because you're just solving pricing problems i wrote all this stuff down in the google docs just wrote it all out and i said all right now i'm super clear on who i want how am i going to test for this in the interview process and so i set up i wrote a case study i took an old client totally anonymized everything and created a case study i'm like solve this show me or at least walk me through your thought process on how to solve
Speaker 4it tell us a bit more about this case study because i think people under appreciate how much time and energy they should spend formulating the case study um what how deep did you go what how did you get it right
Speaker 3oh man i even sent them a fake data set like i went the whole way right so i i went the whole way with a a client that i know what happened i know the context i know how we solved it and then i anonymized a bunch of stuff and laid a couple booby traps in there by putting you know some some scenarios yeah and i said go ahead and solve this and the real key here i was looking for is their thought process and when once i realized myself like this is what i'm really hiring for the thought process that's when i changed my whole approach to the interview to everything even now after the interview and if they solved it and they were able to of course meet all my other checks with you know culture and everything like that i had created a 30 day 60 day 90 day like you're going to watch these videos you're going to do this i made more fake mock uh pricing problems and i said solve these
Speaker 4i love this because i think in our ecosystem we have confused onboarding with orientation and so we think we've made a person understand how to log into whatever system they have to log into and we're done right they've watched one or two videos spent a week onboarding is the path to productivity it's the things you need to do to get to like a ramped up state and what you've done is instead of asking the person for their 30 60 90 you're like let me map this out for you i love that i love what you just said
Speaker 1about onboarding as a path to productivity that was a great little turn of phrase i said there we go
Speaker 3yeah right that went down damn that was good but that was it it was really becoming a lot more structured and intentional with how i hired what i want what i want them to do showing me that they can prove to prove to me that they can solve the problem before then to go into their shadowing and other phases before they're ready to start tackling the real stuff uh with the client and that that whole process i started with sitting down with a glass of wine but um it took months it's how did you get
Speaker 4the right people into your process
Speaker 3so um this is an area that i'm still working through but the right people into my process meaning from the get-go in the top of the funnel yeah is um it's slow because i asked for a lot of from the top like i would get three four hundred applicants i'll end up making you know two or three in the finals and offering one like it's a really i don't uh like if if you're if you're not um if i can't see evidence of your progression and of your work then i don't waste my time so you're starting
Speaker 4with this broad top of the funnel and you've got this really nice process that gets you to be able to truly forensically test people to see if there's fit i i really think that people under the age of 20 and older should be able to do this and i think that's a really good way to do it and i'm really happy to be able to do it and i think that's a really good way to do it and i think and you're developing crafts people and you can either pull them from the market and deal with the issues that you dealt with and just essentially become the average of the market or if you're trying to do something special you want to be the cobbler that builds a special shoe you have to develop people out but then how do you test if they can actually become the person you need them to become it's really hard and you seem to have gotten it right what was the material difference in your business off from your earlier state to once you implemented this and hired people through this yeah i think by the
Speaker 3development cross was a really great way to look at it damn this guy's smart and sam i think we're all pretty smart so how's it changed um and so one of the key things as i've noticed is the ramp up period so not the uh you know the old adage of higher slow and fire fast it's actually one of those things that are really true but easier said than done right and i think that i found that reality very hard as i was developing this process but the good news was that i was able to um really increase my my cycle time in hiring the right way meaning getting strong evidence that this person is going to be able to contribute to the team and when you hire someone with high conviction it feels good like you almost get excited like little butterflies oh i can't wait for this person to put
Speaker 1that person on the field
Speaker 3oh man i just i want him to start tomorrow and then but what happened was um i still had a couple misfires but this percentage was a lot smaller it almost cut into like a third so if i had 10 people you know three misfires they went down to one i mean my point here is that the the people who came they stuck now the misfires that i'm talking about just again maybe revealing too much here but one just um you know got a better offer you know his wife moved and he's i want to go somewhere else and you know some things you just can't control right at the end of the day um you can't bat a hundred with
Speaker 4hiring like impossible you
Speaker 3can't bat a hundred and and i've realized that um you know there's a part of me that wanted to but then realized ah you really can't man this is just people right at the end of the day um and the ramp up period went down tremendously so what i meant was first hires before my process which took like six seven months to ramp up and that was cut in half with uh the new process because of all the diligence and the things that we made them do that time in the beginning was more productive i have
Speaker 4heard this same story from so many people where they say we stopped obsessing about relevant experience thinking that extreme relevant experience correlates with a fast ramp and we started focusing on these other things and found that they ramped faster it happens all the time it even happens in the world of sdrs companies that want to hire sdrs with experience they do that it doesn't work then they start hiring high potential people and they find that the time to difference is like marginal in the, in that case. And this is a person straight out of university versus a person with a year's worth of STR experience. So I love that. Yeah. Amen. That's exactly right. You've heard this problem and the solution. Give us your reflections. This has been a really interesting session.
Speaker 1My reflections are that it's time to go, but before we do, uh, we want to, we have two more questions for you, Marcos. The first is, you know, um, you know, Richard Dawkins talks about how like, uh, ideas are the same thing as genes. You know, there's an evolution to ideas and they spread throughout the world. Memes are that idea. Language is an idea that in some ways has the same characteristics of life. But my point is there's ideas that you'd like to share with us. There's books that you've read recently. There's mentors that you've had. There's great investors that you find yourself following and following their advice. There's podcasts that you're listening to. So what's one great idea around, you know, what's a great book you've read recently. What's a great influencer that's really inspiring you. Let's pay it forward.
Speaker 3Man. Um, I'll give you two, I'll give you two. So, uh, a book that I read recently, buy back your time by Dan Martell. I've known Dan for a long time. And, uh, I was living what he was putting in the book because I felt like I never had enough time to do anything. He, he broke it down and he was able to at least give really good practical tools in there. So anybody can pick it up and the following Monday, like read the damn thing. It's a fast read following Monday.
Speaker 1We like fast reads for our book tally by the end of the year. I read a lot of books. Okay. Second one, buy back your time, Dan Martell, buy back your time.
Speaker 3And then there's something that, um, I kind of always knew, but it never, it never quite like crystallized for me, which is I'm not really in, in the pricing game. I'm not even really in the consulting game and not even in the people game. I'm in the trust game. I'm in the trust game and everything I do, everything my team does, everything about our, our entire service ethos has to be about how do we build trust? And, uh, I never thought of it that way, but doing that. Now helps kind of change a little bit of my priorities.
Speaker 1I love that. And there's a book, a great book by Stephen Covey called the speed of trust, uh, which you may want to check out. Uh, if folks are listening and they want, they want help on their pricing, they want to learn more about pricing. Maybe they want to join the San Diego chapter of pavilion. What is the best way to reach out to you, Marcos?
Speaker 3Uh, I'm easy to find, you know, uh, find me in LinkedIn is where we're hang out a lot. Um, and, uh, but you could always, you know, hit me up at pricing out.com. I see everything that comes in. And so reach out. I got questions. I'm happy to help.
Speaker 1Awesome. And I think, I don't know, are you speaking at CRO summit and GTM, but hopefully you'll be, we'll be featuring you at some upcoming pavilion events. So I'm excited to see you in person. Yeah. And I'll be there. I'll be stepping up at GTM. All right. Awesome. Thanks everybody for listening. Thanks. I'll see everybody else. Have a great Thursday. Bye. Have a great Sunday. If you like what you heard today, subscribe. So you never miss an episode, leave a five-star review and share it with your friends. Don't forget to join our top line Slack channel to connect with us and discuss the topics we cover with other listeners. Click the link in the show notes. Lastly, if you're interested in joining pavilion, you can learn more about [email protected]/membership. Thanks again for listening. 
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