Lenny's Podcast: Product | Growth | Career

The art and science of pricing | Madhavan Ramanujam (Monetizing Innovation, Simon-Kucher)

Dec 8, 2022

Madhavan Ramanujam, a senior partner at Simon-Kucher, specializes in pricing strategies for top tech firms like Uber and LinkedIn and is the author of "Monetizing Innovation." He discusses the crucial role of early pricing conversations in product development and how understanding customer willingness to pay can drive success. Madhavan also delves into dynamic pricing strategies, the psychology behind pricing, and how market segmentation can tailor offerings. He shares insights on adapting pricing during downturns, reinforcing that effective pricing can unlock significant value.

01:38:32

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Madhavan Ramanujam

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Quick takeaways

Understanding customer segmentation is crucial for pricing strategy and involves tailoring products and packaging for each segment.

Effective segmentation requires companies to act differently towards each segment, developing unique product marketing messages and sales strategies.

Early-stage founders should consider segmentation from the start to guide product development and prioritize segments that align best with the initial offering.

Companies like Apple and Porsche demonstrate the benefits of effective segmentation by targeting different customer segments and maximizing profitability.

Deep dives

The Importance of Segmentation in Pricing

Segmentation is a crucial aspect of pricing strategy. It involves understanding the needs, values, and willingness to pay of different customer segments. Instead of trying to position one product to multiple segments, companies should focus on productizing and packaging their offerings differently for each segment. This allows for targeted marketing, tailored value messaging, and the ability to act differently towards each segment. By understanding and catering to customer segments, companies can maximize their chances of success and effectively meet the diverse needs of their customers.

Eliciting Willingness to Pay

02:02

Three Types of Pricing Strategies

01:01

Productize to Segments

02:05

How to Price Products in Inflationary Times

00:57

Intro

4min

Navigating Pricing Strategies in Innovation

11min

Early Pricing Conversations for Product Success

24min

Revisiting Pricing Strategies and Market Segmentation

8min

Targeting Market Segments for Successful Product Launches

2min

Dynamic Pricing Strategies and Segmentation

24min

Communicating Value: Features vs. Benefits

4min

The Psychology of Pricing

12min

Strategic Pricing in a Downturn: Alternatives and Integrity

4min

10.

Unlocking Growth Strategies

6min

Madhavan Ramanujam is a senior partner at Simon-Kucher, where he works with tier-one tech companies like Uber, Asana, and LinkedIn to help them develop their pricing and monetization strategies. He’s also the author of the most widely read book on pricing strategy, Monetizing Innovation. In today’s podcast, we talk about all the elements that go into your pricing strategy. Madhavan gives real-life examples of having conversations about “willingness to pay,” how segmentation should impact your pricing, and when to start thinking about pricing. He also shares tips on how behavioral pricing impacts your thinking, how to restructure your pricing during a downturn, and much more.

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Find the full transcript here: https://www.lennysnewsletter.com/p/the-art-and-science-of-pricing-madhavan

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Thank you to our wonderful sponsors for making this episode possible:

• Lemon.io—a marketplace of vetted software developers. Get your match within 48h: https://lemon.io/lenny

• Mixpanel—product analytics that everyone can trust, use, and afford: https://mixpanel.com/startups

• Miro—a collaborative visual platform where your best work comes to life: https://miro.com/lenny

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Where to find Madhavan Ramanujam:

• Twitter: https://twitter.com/madhavansf

• LinkedIn: https://www.linkedin.com/in/madhavan-ramanujam-1533063/

• Website: https://www.simon-kucher.com/en-us/leadership