Saagar was interviewed by Rory Woodbridge at “The ProductMarketer” to discuss all things Pricing & AI. Part 1 is about thefundamentals - how pricing works as a system, who should own it, and how to getstarted. Part 2 is about what AI is doing to pricing and the practical trendsreshaping how companies charge for things.

What is it about pricing that gets you excited?

It's the 'sunny side' of consulting. We're constantlythinking about growth. That always resonated with me.

It's rare for clients to feel like they're nailing theirpricing and they've got a concrete owner. So it's rewarding as an advisor tohave a topic where you go in and can add value from day one based on patternsand the things you've seen in the past. And increasingly, this world of AImonetisation strategy is becoming one of the key topics we talk about with VCsand on podcasts. Discovering how tangible the outputs of this work can be, andhow quickly it can flow to top-line growth, is exciting to see.

With Northlane, it feels like you're tryingto do things differently. What made you want to do that?

We started Northlane with the goal of wanting to work withthe scale-ups we were a part of. I was at Payhawk, which is a fintech SaaSunicorn, and the type of advice that we would have given them when I was partof a bigger consultancy just wasn't pragmatic or operational enough. Having nowbeen on both sides of the table, we're very much focused on the fact that thisis a hugely important topic, and the frameworks and playbooks from biggerconsultancies that had been doing this for years are good. But when you godown-market and try to work with fast-moving, dynamic, VC-backed firms, theapproach must be slightly different.

So that's what we started out doing - being a moreoperator-minded advisory firm with a focus on pricing and go-to-market. And ofcourse, AI now has provided us with even more tailwinds to drive the businessforward.

You talk about pricing as an operatingsystem with packaging, price model, and price levels as three distinct levers.Most product marketers think about pricing as one thing. Can you break thatdown?

The way we think about it is in three sections. The first isupstream of what we'd typically call pricing strategy. This is your commercialstrategy and go-to-market strategy. Who's our ICP? What are our personas? Whatsegments are we going after? What are the competitive dynamics? What's ourvariable cost? Are we PLG, sales-led, channel-led? Understanding all of thatand getting the strategic guidelines on pricing correct is first and foremost.

Then we break down pricing strategy itself. It starts withpackaging - is it a good, better, best setup? Platform and modules? Use casesfor different verticals or personas? An all-in-one? Those are the packagingdecisions.

Then it's what we call the value metric. That's your unit ofvalue - your "per X". Is it per seat? Per text message? Perinteraction? Per click? You can have multiple of those, and it can get morecomplex the closer you want to get to value.

Then it's the price model. Is it a subscription where thecustomer pays upfront for the period? Or more of a consumption model where theypay in arrears after each action? What we're seeing a lot more is a hybrid -you predictably cover some usage in a subscription and then have apay-as-you-go approach once they reach those limits. And then there's tiering,overages, rollover - all the mechanics around that.

Only then comes the actual price point. That's where youthink about willingness to pay, competitive dynamics, cost floors, margins, andpositioning in the market. Do you want to be a premium player? A cost player?And in the sales-led world, discounting structures, or in PLG, promotionalstrategy.

And then there's a final phase we call the "own"phase - how do you empower the pricing owner to treat this as an evolvingmuscle? That's governance, KPIs, billing and metering systems, quote-to-cash,and sales enablement. Making sure the value prop is connected to what sales aredoing on the front line. So, it's not just about the price point. That's thelast thing you'd usually talk about.

Who typically owns pricing with thecompanies you work with?

It depends on the client. In more customer-minded companies,where they're really trying to build product with the view of what customersneed, we do see product marketing owning pricing quite a lot. Then on the otherside, you might have more of an infrastructure-layer type business where it'sabout understanding the finance elements, and you'll see a RevOps type personwho's more data-oriented trying to be the point person.

Whoever it is, they need to have reach across the business,because pricing is such a cross-functional topic. So we're seeing more of thislanding on the desk of a Chief of Staff type role, because they have their eyesacross the business and, most importantly, the autonomy and engagement fromexecutives to make decisions.

And then in earlier-stage businesses, this is absolutely aCEO topic. On most of our engagements, the CEO is either the project sponsor oreven the project manager, because pricing brings together the strategic visionof what you're selling, the messaging for the market, how you run the businessfrom a margin perspective, how you incentivise sales teams, how you buildproduct that gives ROI. All of them are strategic fundamentals to growth.

How does positioning connect to pricing?

We think about it from two angles. One is price positioning- is this a market where we're trying to be the premium player, or are we happywinning on price? Either is fine. Successful businesses have been built on bothstrategies. Think Apple versus Amazon. It's about having clarity, and oftenthere isn't any.

On the other side, positioning translates into messaging toyour ICP. And especially in early-stage startups, you're just not that clear onwhat the ICP is. You're taking deals where they can be done, learning moreabout the product, and trying to get to a position where you can confidentlysay this is our ICP - not just from a new business perspective, but from alifetime value perspective.

Both feed into pricing strategy. Without them, doingpackaging and pricing is quite difficult. You don't know who you're buildingthe packages for, what their willingness to pay is, or whether you want to becharging 50% above the nearest competitor or 50% below.

If a product marketer has just been told"you own pricing now" - what should they do in the first 30 days?

The biggest challenge is getting alignment across theorganisation. We always start our engagements with stakeholder interviewsacross all the people that are important to the topic. That serves twopurposes: get broader context you might have missed and get buy-in from thefolks that are important to the problem.

I would then say make sure there is some sort of customerresearch involved. But make that research targeted. In the go-to-market worldthere is sometimes a habit of doing research for the sake of research and itdoesn't go anywhere. Have a hypothesis of the pricing change that you'rewilling to test directly and get the data on that to help you tell the story.

Then think about data analysis - win/loss ratios, reasonsfor churn, and how pricing correlates with that. But realistically, pricingstrategy is art and science. And the thing that comes above all of that is theability to tell the story and get decisions made. Pricing is the hardest topicto get alignment on, especially when there are different agendas coming fromdifferent parts of the business. But it is one of the biggest growth leversthat can drive a business forward, and it's often overlooked because of howhard it is to make those decisions and get that alignment.

My advice would be to mix art and science, use data when youcan, but focus on the fact that you've got to get buy-in from stakeholders to makedecisions.