-: Jean-Manuel, welcome.
Let's talk about strategic pricing.
How do you define it and why is it so important?
-: Strategic pricing is,
a way to think beyond prices
and it's so important
because it shapes businesses
and it shapes markets,
in ways people forget when they think about just the number.
So for instance, there was the launch
of Apple Vision Pro just a couple of weeks ago
and the only thing everybody's talking about
in relation to pricing is what's the price
and is it too high, too low?
So they came out with a number of 3,399 or something,
and it finishes in 99
the way every price needs to finish, right?
But the real question about the Vision Pro is,
the pricing structure
and how is Apple going to make money
and how are they going to share it with app developers
and are they going to have exactly
the same way to share it
that they have in the app store
or are they going to subsidize it
in order to get better content?
And how is that going to enable Apple
to succeed in the metaverse space and Web3
in ways that hasn't been possible for Facebook and others?
These are the fundamental questions about strategic pricing
not whether the price is just up too high,
too low, or what it should be.
-: You said it goes beyond prices.
Why does that distinction really matter
to a company to really get that
and to their customers?
-: So for instance, before you even have a price number
you need to choose the unit of a price.
Let me give you an example.
If you want to buy or sell a car,
should you... the first idea is,
well, I'm going to buy per car.
Well, that's the original model,
but you can also buy a car per month,
and that's leasing and financing.
And it's not, it's about,
banks and other actors in their market.
But if you could sell a car by the day
it's a rental car,
it's a completely different business.
And if you could sell a car by the mile,
it's a cab,
and it's a completely different business.
And in the last 15 years,
we had another business model that was invented
selling the car by the ride,
it's of course ride sharing.
And so the pricing unit determines the market
and shapes how people can use
a particular object or service in completely different ways.
Another example is salesforce.com
established itself as not software,
but SaaS because they changed the pricing model
from licensing upfront, where the companies
had to pay everything upfront, and big amounts.
And Salesforce made it really easy
to sign up a few users
and get to pay per user per month.
So that's how strategic pricing is all about
the structure of how you price,
not what the number is.
-: What sort of questions do you need to be asking
when drawing up a strategic pricing strategy?
-: You need to go back to
the fundamentals about how you add value
and how you add value compared
to your competitors for different customer segments.
So it's very fundamental
strategic questions you need to ask yourself.
And when you answer that question,
you discover that
you don't add the same value to every customer segment,
and therefore you can break
the fundamental rule of pricing that says,
if I price up, I'm going to have less customers.
If I price down, I'm going to have more customers
but I'm going to make less money.
If you think about strategic pricing,
you think more, can I do both?
Can I both serve a large number of customers
and make money in a better way?
And so strategic pricing allows you to,
both increase share and increase margins.
Whereas in theory, if you just go to economics classes
it says you have a trade off between the two.
But that's not true.
-: In today's complex environment, challenging as well,
is it more important to have a great strategy in place?
-: Yes.
When the world is completely changing
and customers can get access to
different sources of information,
you need to be very aware
about how all this information
they get when they are trying to get info
about how to make a decision
is going to inform and frame their decisions.
And so right now, for instance,
I was talking to an insurer yesterday who says
everything is done through search engines
that can price compare.
Well, at that point,
if they all compared on one single number,
then that number really matters.
And it's very different from what it used to be
a few years ago where they could advertise
their products and their services and their offers.
So as the environment changes,
yes your pricing strategy should change as well.
-: Jean-Manuel, thank you so much.
-: Thank you very much.