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

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. — Find the full transcript here: https://www.lennysnewsletter.com/p/the-art-and-science-of-pricing-madhavan — Thank you to our wonderful sponsors for supporting this podcast: • 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 — 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 — Where to find Lenny: • Newsletter: https://www.lennysnewsletter.com • Twitter: https://twitter.com/lennysan • LinkedIn: https://www.linkedin.com/in/lennyrachitsky/ — Referenced: • Monetizing Innovation: https://www.amazon.com/Monetizing-Innovation-Companies-Design-Product/dp/1119240867 • It’s Price Before Product. Period: https://review.firstround.com/its-price-before-product-period • Rahul Vohra on NFX podcast: https://www.youtube.com/watch?v=JCiMqVC6Dok • Leaders, Killers, and Fillers framework: https://kevinacohn.medium.com/leaders-fillers-and-killers-creating-bundles-that-work-7f4c7329cf53 • Predictably Irrational: https://www.amazon.com/Predictably-Irrational-Revised-Expanded-Decisions/dp/0061353248 • Preorder Unlocking Growth: https://www.amazon.com/Maximize-Profits-Prices-Products-Services/dp/1119633060 • Confessions of the Pricing Man: https://www.amazon.com/Confessions-Pricing-Man-Affects-Everything/dp/B08TZPRKVY • Simon-Kucher books: https://www.simon-kucher.com/en-us/resources/books • Mastering SaaS pricing (Kyle Poyar): https://www.saas-knowledge-base.com/docs/mastering-saas-pricing-from-mvp-to-ipo • 6 Must-Reads on Pricing a Product: https://review.firstround.com/our-6-must-reads-on-pricing-a-product — In this episode, we cover: (00:00) Madhavan’s background (06:29) How Madhavan got into pricing and monetization (08:02 ) Why he wrote Monetizing Innovation (09:43) Why pricing is a cross-functional discipline, but ultimately a function of product (11:27) What “willingness to pay” is, and why founders need to have conversations about it early and often (15:23) How Porsche built their SUV around customer feedback and willingness to pay (18:46) How testing helped a marketplace company avoid building something customers…