Value Creation And Monetization With Stripe's Tara Seshan

Importance of Monetization for Product Managers

Monetization plays a crucial role in product management, as it ensures the creation of value for customers. Product managers should actively consider monetization strategies for their products, rather than relying solely on alternative revenue sources like ads or subsidies. They should assess the possibility of assigning a price to each new feature or product they develop. Understanding the marginal costs and ensuring that the price justifies the value delivered is also important. By viewing pricing decisions as user-centric and aligning them with the broader product experience, PMs can create fair and compelling value propositions for their well-monetized buyers.

Key considerations for pricing and packaging

Product managers should think holistically about pricing and packaging. By involving multiple stakeholders, such as finance and sales, in the decision-making process, they can avoid compatibility issues and align their pricing strategies with overall business goals. PMs should consider parameters like user segmentation, value derived by customers, and the underlying structure of the pricing scheme. This might include usage-based pricing, flat fees, or metered billing. Additionally, PMs should be open to experimenting with pricing models and iterating over time, while being mindful of not disrupting the user experience.

Charging more and avoiding the 'free' trap

Product managers should have confidence in the value their product delivers and prioritize capturing a fair share of that value. Charging more is often an underutilized strategy, as well as a way to align prices with the value provided. Free is not a compelling value proposition to well-monetized buyers, particularly in B2B markets. PMs should focus on delivering value that justifies the price, rather than feeling uncomfortable about charging customers. They should constantly evaluate whether their product is delivering enough value and consider how to improve it rather than lowering the price.

Navigating pricing testing and avoiding pitfalls

Teams can navigate pricing testing effectively by creating cross-functional efforts that involve product, finance, and sales stakeholders. By treating pricing decisions as integral to the product experience, PMs can leverage system levers such as legacy pricing, promotions, discounts, and bundling. It is essential to consider the market's maturity and the company's growth phase. PMs should be open to testing different scenarios and gathering feedback from current customers to drive valuable insights. They should also be mindful of the impact on existing users and employ strategies like migration plans or legacy pricing to avoid alienating customers.

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Value Creation And Monetization With Stripe's Tara Seshan

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Importance of Monetization for Product Managers

Key considerations for pricing and packaging

Charging more and avoiding the 'free' trap

Navigating pricing testing and avoiding pitfalls

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