Beginning in 2020, Kyle Poyar from OpenView Ventures and Steven Forth from Ibbaka have been making predictions about how pricing will transform in the coming year. Our predictions for 2023 came out on January 12. Here is a summary of how our predictions have evolved over 4 years.

Pricing and sales volume part 1, a general framework for understanding how and why price changes with volume and how to design pricing that responds to this. The design of pricing to volume relationships is a big part of pricing model design. Part 2 will look at the mechanics of different ways to align unit price with sales volume.

SaaS price inflation began to surface as a meme in late 2022. Early in 2023 it seems to be taking hold as many SaaS companies move to raise prices in response to inflation. This has provoked pushback from some buyers. Is SaaS price inflation a real thing? If so, what does this mean for pricing in 2023?

Over the past few years a set of best practices has evolved in the design of pricing projects. These best practices have emerged from more general approaches to the design of adaptive, data-centric systems and the specific needs of pricing, packaging, revenue generation and monetization. Here are the six steps any major project should have.

Many are debating the implications of inflation for price increases. In this podcast on Mark Stiving’s popular Impact Pricing Podcast Channel Mark and Steven debate how we should respond to inflation and what it means for pricing.

2023 will be an interesting year in the pricing and customer value space. The first half of the year will be dominated by inflation, higher interest rates and the threat of a recession. The second half of the year will depend on how deep the recession is and how we all respond. Ibbaka provides a software platform and services that enable price optimization.

In B2B SaaS, pricing and packaging are developed together. The package architecture determines the pricing model design. Two common approaches to packaging are (i) platform with extensions and (ii) independent modules. Both evolve through application of the severn modular operators. Pricing needs to evolve with the packaging.

If software is eating the world (Mark Andreessen) than Artificial Intelligence is eating software. AI has come of age and over the past few years we have seen a blossoming of real world applications. There is still a lot of confusion about how to price and monetize this innovation. Ibbaka proposes a general framework for pricing AI.

B2B pricing work usually focuses on the economic value, but that is only part of the story. Few B2B sales take place without an emotional commitment from the buyer. Emotion, how buyers and users feel about a solution, are also central to the customer journey and impact subscription renewal. Understanding emotional value drivers is part of B2B pricing.

Many B2B SaaS companies have multiple types of users,

Chat GPT from Open AI has been getting a lot of attention recently. It is a window into the future of how AI and how we will work with AIs. Ibbaka asked Chat GPT about pricing and product-led growth. See what an AI has to say.

The value cycle defines how organizations create, communicate, deliver, document and capture value. It is generally used by companies to align different business functions around how they create value for customers. The value cycle turns around a deep understanding of how value is created for customers.

Lifetime Value of a Customer (LTV / CLV) is the total worth of a customer's business over the whole period of their relationship. It costs less to keep existing customers than to acquire new ones, so increasing the value of existing customers is a great way to propel growth.

EVE, or Economic Value Estimation, quantifies the monetary value created by an offering for a particular customer versus their next best alternative. Since value is at the center of pricing strategy, modeling economic value estimation becomes critical in value-based pricing.

Many companies are under pressure to take pricing actions in 2023. Investors want higher prices. Customers want relief from a recession. Inflation is causing some people to raise prices while customers are becoming more cost conscious. Before taking any pricing action, take a look at how you are performing on discounting.

A value model is a system of equations built from value drivers that estimates how much value a solution will provide to a customer or set of customers (market segment).

Many B2B SaaS companies are planning aggressive price increases in 2023. They are doing this because they see inflation as a good to slip in a price increase while their customers will accept one. This is naive. B2B SaaS companies need to be focussed on how they are creating value and how this is changing for their customers. There are opportunities to raise prices, but they need to be targeted and not broad brush.

Are you planning a price increase for 2023? Before you execute on a price increase you need to segment your customers. The segmentation is based on Value to Customer (V2C) and a measure of the value of the customer to the company like ARR or LTV (life time value of the customer). You want to move customers into the segment where they are getting a lot of value and providing a lot of value.

Market dynamics can change in a recession and different customers will respond in different ways. Understand how market dynamics could change and then resegment your customers to craft pricing and price communication strategies. You will also want to model scenarios for different competitive responses.

Net Revenue Retention (NRR) or Net Dollar Retention (NDR) will be a key way that B2B SaaS companies demonstrate their value to investors in 2023. Pricing will play a critical role in how companies improve NRR and NDR. As you price to improve NDR in 2023, plan for how this will position you in 2024.