As an executive, I’ve participated in extensive discussions about pricing models at companies such as ZoomInfo, Apollo and RB2B. After 15 years I’ve come to the conclusion there are only TWO pricing models that can help you win: Model 1: Pricing Leader: Can you foresee having so much market power in your product category that you become the pricing leader ? All the other vendors use your prices as a reference benchmark. When you change your prices, you influence the entire market. Market power like this is a dream for any company as it allows them to make a lot of money from a handful of high margin deals. Generally premium, enterprise products that cost the most but have a significant moat fall into this category. Model 2: Pricing Disruptor Are you a fast, agile, more modern startup that can deliver similar value at $99/mo where your competitors are charging $30K/year? It is possible to make a lot of money by selling at low margins but to a lot of people. Do you have the ability to create a reasonable brand while disrupting the price and cannibalizing competitor revenues? Pricing disruptors do not need a moat to grow. However, low end pricing advantages are often short-lived and cause a race to the bottom - as somebody new can come in and deliver the same solution for $49/mo. --- There’s also a combination where you build a brand by being a pricing disruptor but find a way to switch to premium products once you have an established brand. I’ve never seen an example of a hybrid approach executed well, but it should work and at RB2B we will certainly take a stab at this : Model 3: First Pricing Disruptor → Then Pricing Leader: One can start as a pricing disruptor and grow into a pricing leader delivering premium solutions on the back of a strong brand. If I were starting a company in 2025, I would disrupt the space with low prices, deliver high quality products, build a strong community, quickly develop a brand and capture instant attention. I would then leverage the brand heat to develop and distribute "additional" products to the same buyer. However, the next set of products can be priced at premium while retaining low prices for the original products. While difficult to execute, it can be total market coup and possibly an efficient way to grow. ––– You need to be intentional about your pricing strategy. Doesn’t matter if you are doing $1M ARR or $20M ARR. If you are not leading or disrupting the prices then you are simply following somebody; stuck in the middle and at the mercy of market forces to grow. Followers struggle for survival and don’t control their own destiny. You need to break free and lead from either end. Find a way to unstuck yourself and take charge of your pricing. Dominate or Resist. In 2025, you have to decide - are you going to be a pricing leader, disruptor or a follower? At RB2B, at the very least, we are going to be a pricing disruptor.
Pricing and value proposition discussions come up almost every day in my conversations with product marketing and founders. I am still surprised when there is not only no way to try a product for free, but also when companies don't even list their pricing on the website. To get a price, we need to fill out a form and talk to sales reps (several times!). It's 2024—why is this still happening? 🤔
No matter what pricing model you apply, It needs to match the customer perceived value. A pricing that is not centered around customer value will not last long. But anyway, how often do companies change pricing these days. 😆
Agree! I'd be curious to see a followup post on your thoughts about strategy around length of contract (monthly, annually, etc) and payment terms (monthly, annually, etc). Also, PLG vs Sales-Led and if there is a sweet spot for a hybrid approach, e.g. PLG but for companies with $5m in rev+ Sales-Led.
Your insights on the dichotomy between being a Pricing Leader vs. a Pricing Disruptor resonate. It’s fascinating to think about how companies can leverage their market position to either set benchmarks or undercut competitors effectively. The hybrid approach you mentioned—transitioning from disruptor to leader—offers an intriguing path for growth, albeit with its challenges. The idea of establishing a strong community and brand presence before shifting to premium offerings is a strategy worth exploring, especially for startups aiming for sustainable success.
Really insightful pricing perspective and representative of the pricing models. In principle these models can apply to many different industries. I’ve used the pricing disruption and leader in several physical products that we manufactured and sold.
Santosh Sharan Adam Robinson interested to learn more about your plans for pricing disruption. Maybe we can help!
There's tons of talk about how AI is making software easier to build right now, and how pricing will come down as a result. Not sure where I land on the "all software can be replicated now" train – but we will undoubtedly see companies try different things very soon.
After years of experience, it's clear that the key to long-term success in pricing is being intentional about your strategy. Whether you aim to be a pricing leader, disruptor, or follow a hybrid approach, you need to control your pricing model to shape your future. It's all about either dominating the market or challenging the status quo with disruptive pricing. Santosh Sharan
Consider the wisdom of Amazon's Jeff Bezos: "Your margin is my opportunity." Embrace the mindset of relentless customer focus and innovation, not just pricing. Long-term success lies in understanding unmet needs and delivering unexpected value beyond just being cheaper or pricier.
Co-founder @LGM / La Growth Machine
5dPricing disruption is a hard play now that most investors are looking for profitability first. Long gone are times you could greatly subsidize your growth. IMHO, you could do that only in two cases: 1) In a market where the incumbents are making outrageous margins. But it’s an extremely rare market inefficiency: margins attract competitors… 2) with strong innovation. Which can be product-based (ex. Instantly with Inbox Rotation) or GTM-based (ex. RB2B with Founder/Media based growth)