13: Product Managers Digging Deep Into Pricing Strategies

In this episode of the How to Succeed in Product Management Podcast, marketing professor Jeff Shulman and The Product Management Center advisory board members Red Russak and Soumeya Benghanem welcome Divya Sreekumar (Amazon Web Services) and Harish Komaragiri (Facebook) to talk about product pricing strategies. A lot goes into determining the price of a product which includes the needs of the customer, product value, and willingness to pay of the target audience. The panel also tackles the different spectrum of responsibilities a PM has and how it can affect the overall business model.    Support for How to Succeed in Product Management is brought to you by Apptentive, which enables product managers to measure shifts in customer emotion and gather actionable feedback across the mobile customer journey. To learn more, go to Apptentive.com/UW.   What to Listen For: 00:00 Intro 01:48 Why PMs need to learn product pricing 04:12 Product pricing strategies and modifying existing pricing 07:03 Strategizing around pricing is both exciting and delicate 10:20 PMs define customer value, corporate defines product value 11:43 The effort put into developing the product should reflect in its pricing 14:36 Getting a hold of the product value and where you’re going as a business 17:01 Figure out the problem being solved and who is it for 19:31 The product is marketed as a revenue enabler 27:11 Pitfalls for new PMs is an overly narrow perspective of growing a product 31:15 Spectrum of responsibilities a PM has 33:32 3 things that affect pricing: needs of customer, value, and willingness to pay 39:14 Advantages of using a cloud versus maintaining a hardware 42:13 Sustainable business follow a cost-based model 45:54 Business model is a bigger concept than just pricing 46:50 Pricing a new product for enterprise customers 50:58 Economic value estimation - what are the customers cost  and value drivers 52:11 Use real customers to product test 53:00 Customers are willing to pay for the most painful problem 58:29 Book recommendation from Soumeya 59:50 Train your brain to understand how the market works 01:02:11 Applying game theory in pricing  01:05:09 Think about the economics you’re driving with your product decisions