Kota Siva Sarma – How to Use Pricing Models to Minimize Discounting

Why you have to check out today’s podcast:  Learn when to use pricing metrics and pricing models  Learn how and which pricing model to use to fit your customers’ needs and to  align towards their cost and revenue goals  Learn about how he closed a $200-million dollar deal without having to reduce its price despite the customer’s feedback of such price being triple as the one offered by another vendor     Kota Sarma is a Certified Pricing Professional and passionate Pricing Leader with over 25 years of experience in Pricing of Products, Software and Services, Subscription Pricing, Advanced Pricing Models, Commercial Analysis & Analytics, Business Planning & Modelling in Telecommunications, Polymers, Natural Gas industries.    In today’s episode, Kota shares with us his expertise in pricing especially in terms of using pricing metrics and pricing models which best suit customers’ needs.  Also, learn about how not to reduce your pricing by switching pricing models and setting up price structures that meet customers' cost and revenue goals.    “In some situations, I've seen, the business model itself is a totally new model and customer is not sure of the success. What happens? Customers will try to get the best price from you, which means the lowest price from you. Instead of dropping your price, you can change your total price model, a price structure and see that it needs a kind of risk-sharing model. You can propose your risk-sharing model where you grow with the customer.”   - Kota Sarma    Topics Covered:    02:02 - How did he start his career in Pricing    03:34 - How is a gas transportation sector priced as compared to an ordinary commodity    04:09 - Should you be doing a lot of cost-plus pricing in a regulated commodity    05:12 - Who sets the price in a gas transportation sector    05:45 - Is the cost of raw materials included in the pricing for polymers    07:13 - What are the pricing differentiators for polymers    07:44 - Conjoint analysis and customer value index    08:44 - The different pricing models he uses and how it works    14:01 - Of price metrics and price models    15:00 - Structuring your price based on customer need     19:26 - How to manage to offer different customers with different price models    21:02 - The immense value of a salesperson who does value conversation    24:12 - Pricing advice that will give impact to one’s business    Key Takeaways:    “Anything is possible but if you cannot measure it, then there is no use in using that price metric. It has to be measurable, number one and it should align with a customer revenue model. That is important.” - Kota Sarma    “If their revenue model is per user, I cannot have per usage. I cannot charge them per usage it has to be aligned with their revenue model.” - Kota Sarma    “Price levels are obviously different depending on the value, the scope and configuration, the time. There are so many terms and conditions and in a way each transaction is unique.” - Kota Sarma    “Don't let your salespeople approve your pricing. They should be aware of their proposals, they should propose a price and somebody else has to approve.” - Kota Sarma    Links and Resources Mentioned:   Gallup, Inc    Connect with Kota Sarma   LinkedIn     Connect with Mark Stiving    Email: [email protected]    LinkedIn    Twitter