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