The Price of Disruption: Is Your Pricing Idea a Game Changer or a Train Wreck?

Have you ever had a friend with a bad idea? I once had a friend who wanted to build the ‘Uber of babysitting’. Imagine this: with the touch of a button, a total stranger shows up at your house to watch your kids. Clearly, he was not a parent.

He viewed the idea as disruptive. No one else was doing it.

When I heard the pitch, my first thought was: Why hasn’t anyone told him this is a terrible idea? I gently pointed out there were some holes in the plan. To this day, there’s still no company sending unvetted strangers to babysit your kids - and that’s probably for the best.

The same kind of ‘disruptive echo chamber’ thinking shows up inside companies all the time. Pricing is no exception.

Every day, executives evaluate ideas that appear logically sound yet disrupt their industry’s pricing practices. Maybe it will work. Maybe it will be a train wreck. It is hard to know. After all, if it is such a great idea, why isn’t anyone else doing it?

At Monevate, we have this conversation constantly. At a high level, when contemplating a disruptive pricing model, there are two considerations:

1. Will customers love it?
2. Will it actually capture more value for the business?

This tension between acceptability and value capture sits at the heart of an effective pricing strategy. James (Founder of Monevate) puts it really simply in his book Capturing Value: disruption only matters if it makes your pricing more acceptable to customers or better at capturing value. Ideally both.

10 signs that your disruptive pricing idea is worth pursuing

With that in mind, here are 10 signs your disruptive pricing idea is worth pursuing. Some are signs the change will feel more acceptable to customers. Others are signs it will actually help you capture more value in practice.

Signs your disruption will make your pricing more acceptable  

1. You’re addressing an industry pain point

Many customers begrudgingly go along with industry pricing practices that they frankly despise. Any changes that address those pain points have a much higher chance of success.  

However, that does not simply mean a lower price. In B2B SaaS, changes are often structural. For example:

• Making complex pricing simple and easy to measure
• Adopting new price metrics that better align to the value customers receive
• Redesigning your revenue model to make pricing predictable year-over-year

If your idea solves something customers already complain about, you’re off to a strong start.

2. It’s paired with a clear ‘win’

A successful strategy to disrupt pricing is to pair it with a perceived ‘win’ for customers. There are countless ways to give customers a win, such as:

• Improved performance, capabilities, and interfaces
• A higher allowance of usage or users
• Better contract terms at renewal

For example, often clients change their pricing alongside major updates, which typically comes with better interfaces and new features.

3. You have a customer segment that prefers pricing in a new way

It’s common knowledge that your pricing model should align to customer value. But not all customers measure value the same way. The challenge for B2B SaaS businesses is that they serve a diverse range of customer segments, who use their products differently and measure value differently.

We often see this among products that serve both professional service firms (consultants, attorneys, etc.) and end customers (corporations, governments, etc.). Professional services firms may think in hours. Enterprise customers may think in users or outcomes.  

In these types of situations, you may need different pricing models for each segment. And that’s the sort of change customers will surely love!

4. The change is well messaged

A customer-centric pricing strategy can easily be foiled by poor messaging. People tend to resist change. They’re skeptical of it, especially when it comes to pricing. This means they can initially dismiss an unconventional idea without giving you a chance.

The best way to counter that is with:

• A well-trained sales team with a thorough understanding of the pricing strategy
• Messaging that leads with the benefits to customers and proactively addresses their concerns

Signs your disruption will realize more value capture (in practice)

5. You’re the clear market leader

Market leaders have more room to push the envelope, and there are two reasons for that.  

1) Many customers only want ‘the best’. This is particularly true for mission-critical software in developed industries. Think healthcare. Think energy. Think construction.  

2) Customers may not be familiar with competitors. Alternatively, competitors haven’t yet built the credibility for them to consider switching.

In both situations, you are more or less perceived as the only option. Let’s be clear, these customers can still leave you. But they are more likely to give your innovative pricing strategy a fair chance and ultimately come to love it.

6. Your competitors have weak pricing practices

The fact that no one else is doing something doesn’t mean it’s wrong. Entire industries frequently operate with poorly designed pricing simply because they don’t know better or it’s not something they’ve prioritized.  

Similarly, it’s not uncommon for multiple competitors to have the same disruptive idea - and for all of them to hesitate because no one wants to be first.

We once had a client who believed their user-based model wasn’t aligned to customer value and should be left in the past. We interviewed their competitors, and they all agreed. Yet nobody was willing to make the first move.  

That hesitation creates an opportunity for the company willing to act.

7. You don’t deal with hyper-competitive RFPs

Selling new pricing strategies to customers can be hard. You know what makes it harder? Doing it while sitting next to three formidable competitors with pricing strategies the customer already understands.  

If your strategy does not have an incredible value proposition and crisp messaging, customers may find it easier to eliminate the ‘odd one out’.

8. Customers love your team

Disruptive pricing is more likely to succeed when customers like your company. These customers will trust you, listen to you, and have more patience with changes.  

However, there’s a grave difference between customers liking your product and customers liking your team. Some customers like the product because it works and meets their needs. Yet, they despise the team.  

In these situations, customers are ‘putting up’ with the product because they have to. And a poorly received change in pricing could push them to churn without giving you a fair shake.

9. You have long deal cycles

One of the hardest parts of disrupting pricing strategies is explaining them to customers. What’s even harder is explaining them with a limited time. However, this is one of the few areas where longer deal cycles help. Longer deal cycles = more time to educate customers = higher likelihood of success.

10. Your product is sticky

‘Sticky’ products with long implementation timelines, steep learning curves, or deep integrations tend to create inertia - not in a negative sense, but in a way that buys you time.

Similar to the market leader effect, customers are more likely to give your new strategy a chance if switching costs are high.

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If several of these signs are true in your business, your idea may be worth pursuing. If few (or none) are true, that’s a good signal that the idea is likely to create more friction than value. You have the pricing equivalent of Uber for babysitting, which is terrifying.

4 tips to bring it to market

At this point, you should have a sense of whether your idea has legs. And if it does, that’s exciting! But innovation still requires discipline.

If you decide to move forward, here are four tips to consider as you design, validate, and implement the strategy:

1) Be explicit about the benefit. Name what gets more acceptable for customers and what improves value capture for the business.

2) Talk to customers early. Pressure-test ideas with your ICP before committing.

3) Compare against competitors. Ensure you don’t lose deals because your pricing is less attractive than the alternatives.

4) Take your time. Pilot, learn, refine - and expect evolution. What you see on day 1 may not be the same in 6 months. And that is okay.  

Innovative pricing isn’t about being different for the sake of it. It’s about being better at capturing value, without losing customers along the way.

Happy innovating,

Spencer Slaton