An overview of the key considerations when thinking about approaching pricing questions: value, segmentation, pricing methods and stratagies.

1. 1 I Ibbaka&©&2018
Pricing'Enablement'for'
Water'Tech'Companies'
PRICING&PRACTICES&AND&METHODOLOGY&
karen@ibbaka.com
rashaqa@ibbaka.com'
steven@ibbaka.com
October&22,&2018

2. TODAY’S(GOALS
2 I Ibbaka(©(2018
➔ Introduce(key(concepts,(tools(and(methodologies(to(enable(good(pricing
➔ Provide(a(common(language(towards(creating(a(pricing(framework
➔ Understand(key(strategic(decisions(in(pricing
➔ Work(through(key(pricing(issues

3. OUR$PATH$TODAY
3 I Ibbaka$©$2018
1. Why$Pricing$Matters
2. Basic$Approaches$to$Pricing
3. Pricing$Core$Concepts
4. Market$Segmentation
5. Pricing$Design
6. Value$Communication$
7. Key$Takeaways

4. THE$TEAM
4 I Ibbaka$©$2018
Karen&Chiang
Managing$Partner
Steven&Forth
Managing$Partner
Rashaqa&Rahman
Principal$Consultant
Karen$is$responsible$for$Ibbaka's$
strategy$execution$(delivery,$
operations,$and$product).$She$
ensures$that$Ibbaka$clients$derive$
value$from$with$each$engagement.$
Karen’s$domain$expertise$includes:$
goPtoPmarket$strategy—specializing$
in$value$drivers,$market$
segmentation$and$pricing.$She$is$
passionate$about$performance,$the$
team,$and$the$dynamics$needed$to$
achieve$managed$growth.
Steven$leads$Ibbaka’s$strategic$
direction$and$key$relationships.$He$
is$an$expert$in$marketing$strategy$
(segmentation,$targeting,$revenue$
models,$pricing)$human$&$
organizational$performance,$
learning$and$knowledge$
management.$Named$one$of$the$
top$10$pricing$authorities$in$the$
world,$Steven$has$helped$
companies$from$Fortune$500$to$
startPups$drive$returns$and$increase$
profits.
Rashaqa$works$closely$with$Ibbaka$
clients$to$develop$valuePbased$
market$segmentations$and$pricing$
architectures,$that$help$make$
pricing$a$critical$part$of$their$
innovation$and$growth$strategy.$A$
firm$believer$in$continuous$
improvement,$Rashaqa$is$a$part$of$
the$forwardPlooking$team$at$Ibbaka$
dedicated$to$bringing$new$
approaches$to$improve$pricing$
strategy$and$execution$for$our$
clients.$

5. GETTING&TO&KNOW&EACH&OTHER
5 I Ibbaka&©&2018
What&is&your&role?
What&would&you&like&to&get&out&of&today’s&session?

6. SOME%COMMON%PRICING%QUESTIONS
6 I Ibbaka%©%2018
How%should%we%charge?
How%much should%we%charge?
How%should we%price%a%new%product%
entering%a%market?
Are%we%leaving%money%on%the%table?
Are%we%pricing%too%high?
How%do%we%price%in%quick%response%to%
our%customers?
How%do%we%defend%our%pricing?
How%do%we%stop%ad%hoc%discounting?
How%do%we%price data?
Where%does%the%cost%of%raw%materials%
fit%into%pricing?

7. WHY$PRICING$MATTERS

8. WHY$PRICING$MATTERS
8 I Ibbaka$©$2018
Pricing$is$where$it$all$comes$together
How$you$create$
value
Who$you$
sell$to
How$you$
communicate$
value
How$you$
capture$value

9. BASIC&APPROACHES&TO&PRICING

10. PRICING'METHODS
10 I Ibbaka'©'2018
Method Advantages Disadvantages Use0When
Cost'Plus
Well understood
Predictability
Focus'internally
Generally'underprices
Costs not'understood
Client'controls'the'offer and'
how'value'is'received
Market Following
Focus'is'on'competition'and'
willingness'to'pay
Responsive'to market
Passive
Does'not'reflect'value
There'is'no'differentiation
Commodities
Value'Based
Focus'on'client
Most'flexible'(supports'different'
pricing'strategies)
More complex'to'implement
Requires'deep'understanding'of'
customer'business'&'upfront'
investment
Offers'are'differentiated
Dynamic
Very'responsive
Applies'AI'and'Machine'Learning
Complex'to'implement
Can'confuse'market
When'value'changes'rapidly'
Used'to'price'transactions

11. CASCADING(CHOICES(IN(PRICING
11 I Ibbaka(©(2018
Winning(Aspirations
Where(to(Play
How(to(Win
Capabilities
Systems

12. CASCADING(CHOICES(IN(PRICING
12 I Ibbaka(©(2018
Winning(Aspirations
Where(to(Play
How(to(Win
Capabilities
Systems
What(are(your(pricing(goals?
What(segment(are(you(targeting?
How(are(value(and(pricing(connected?
What(is(your(pricing(model?
How(is(value(communicated?
How(is(pricing(optimized?
How(are(discounts(managed?
What(skills(are(required?
What(data(is(needed?
What(relationships(matter?
Market(segmentation
Price(management(and(optimization
CRM(and(Marketing(Automation

13. You$cannot$optimize$for$everything,$a$good$pricing$strategy$
requires$clear$alignment$on$goals
• Category)growth)(float)all)boats)
• Category)share)(get)a)bigger)share)of)the)pie)
• Revenue)(top)line)growth)
• Gross)profit)(net)profit)is)impacted)by)too)many)other)variables)
• Unit)economics)(Lifetime)Value)of)Customer,)LTV/CAC)ratio)
• Facility)utilization)(where)this)has)a)big)impact)on)costs)
➔ Trying)to)optimize)for)multiple)goals)is)difficult
➔ Optimization)goal)often)changes)over)the)technology)lifecycle)
PRICING)STRATEGIES)K OPTIMIZATION
13 I Ibbaka)©)2018
Alignment)on
pricing)goals
is)critical
Are$you$
aligned?

14. Skimming'(or'Premium)'– charge(the(maximum(price(that(your(pricing(power(allows((often(in(order(to(
invest(heavily(in(continuing(innovation(and(value(creation(for(customers)
Market'Following'– price(relative(to(a(market(leader(or(price(giver
Penetration – price(as(low(as(possible(to(grow(the(overall(market(or(to(increase(category(share
PRICING(STRATEGIES(F THE(THREE(STRATEGIES
14 I Ibbaka(©(2018

15. Pricing'changes'over'the'Moore'technology'lifecycle
PRICING'CONCEPTS'– PRICING'OVER'THE'LIFECYCLE'1
15 I Ibbaka'©'2018

16. Innovators)and)Early)Adopters)Buy)for)Different)Reasons
PRICING)CONCEPTS)– PRICING)OVER)THE)LIFECYCLE)2)(Initial)Phases)
16 I Ibbaka)©)2018
Innovators)tend)not)to)pay)but)influence)Early)Adopters
Early)Adopters)pay)a)premium)for)a)competitive)advantage

17. Value&Driver&Structure&Changes&Between&Bowling&Alley&and&Tornado
PRICING&CONCEPTS&– PRICING&OVER&THE&LIFECYCLE&3&(Early&Majority)
17 I Ibbaka&©&2018
Bowling&Alley&Buyers&Reference&Each&Other
Value&Drivers&Specific&to&Their&Vertical
Tornado&Buyers&Buy&Because&Everyone&is&Buying
Switch&to&Horizontal&Value&Drivers

18. Main%Street%B2B%Buyers%Are%More%Economic%Value%Driven
PRICING%CONCEPTS%– PRICING%OVER%THE%LIFECYCLE%4%(Late%Majority)
18 I Ibbaka%©%2018
On%Main%Street
Solutions%Proliferate
Targeted%at%Tight%Niches
Without%Differentiation%Commodity%Pricing%
Prevails

19. Laggards'Buy'Technology'Bundled'Into'Other'Solutions'They'Already'Have
PRICING'CONCEPTS'– PRICING'OVER'THE'LIFECYCLE'5'(Laggards)
19 I Ibbaka'©'2018
Laggards'Don’t'Buy'Technology'Solutions
They'Buy'Solutions'They'Are'Familiar'With
and'Already'Have

20. PRICING'CORE'CONCEPTS

21. THE$POWER$OF$PRICING$AND$VALUE
21 I Ibbaka$©$2018
Pricing$is$a$powerful$lever$to$improve$revenue,$
profit$or$market$share
➔ However,(without(value(there(is(nothing(to(price

22. PRICING'AND'VALUE
22 I Ibbaka'©'2018
Price'should'reflect'value
➔ Pricing'and'value'are'closely'connected
➔ When'the'value4price'connection'breaks'people'are'unhappy

23. PRICING'AND'VALUE
23 I Ibbaka'©'2018
Fairness((( Is'pricing'proportionate'to'the'value'being'received?
Consistency( Are'the'same'principles'used'for'different'offers?
Transparency( Is'your'pricing'easy'to'understand?'Do'people'understand'how'
much'and'when'they'will'pay?
➔ Pricing'should'support'desired'behaviours
➔ Does'your'pricing'enable'good'water'practices?

24. A"DEEPER"DIVE"INTO"VALUE
24 I Ibbaka"©"2018
What%is%value?
1. Is%for%a%specific%customer%(or%segment)
Does"not"depend"on"costs
Is"not"the"value"of"the"customer"to"the"vendor
2. Is%relative%to%the%alternatives
There"is"always"an"alternative
The"alternative"is"not"necessarily"your"direct"competitor
3. Has%emotional%and%economic%components
Today,"both"B2C"and"B2B"requires"economic"and"emotional"value"drivers
If"either"are"nil"or"even"weak,"pricing"power"evaporates

25. EMOTIONAL)VALUE
25 I Ibbaka)©)2018
Maslow’s(Hierarchy
Provides)a)good)way)to)frame)emotional)value
Basic)functionality)(that)drives)most)economic)
value))is)not)a)powerful)way)to)frame)emotional)
value
The)higher)up)the)hierarchy)you)can)position)your)
offer)the)more)pricing)power)you)will)have
Self(Esteem
Community
Security
Basic(Functionality
Self
Realization
Pricing(Power

26. EMOTIONAL)VALUE
26 I Ibbaka)©)2018
Role%Specific
Emotional)value)tends)to)be)role)specific
You)need)to)map)it)for)each)role)in)your)
stakeholder)map
For)some)roles,)lead)with)emotional)value,)for)
others)lead)with)economic)value)drivers
Self%Esteem
Community
Security
Basic%Functionality
Self
Realization
Pricing%Power

27. ECONOMIC'VALUE
27 I Ibbaka'©'2018
Economic'Value'Estimation'(EVE)
Developed'by'Tom'Nagle
Value'drivers'measure'the'impact'of'your'solution'
on'your'customer’s'P&L'relative'to'an'alternative
Always'consider'your'own'shortcomings'and'
unique'costs'relative'to'the'alternative
Next'Best
Alternative
Positive
Value
Drivers
Negative
Value
Drivers
Differentiation
Value
Normal
Price
Range

28. ECONOMIC'VALUE
28 I Ibbaka'©'201828 I Ibbaka'©'2018
ECONOMIC'VALUE'DRIVER EXAMPLES
Increase revenues Increase market'size
Increase'market'share
Improve'pipeline'metrics
Decrease'operating'expenses Increased'ROI/efficiency
Increased'effectiveness
Decreased'input costs
Decrease'operating'capital Reduced'inventory
Faster'collections/accounts'receivable
Decrease'capital'investment Get'more'productivity'from existing'assets
Defer'capital'investments
Decrease'risk Reduced'disruption/increased'uptime
Reduced'liability
Better'compliance
Increase'options Ability'to'cover'edge'cases
Ability'to'choose'between'multiple'
suppliers
Ability'to'scale'usage'as'required
Next'Best
Alternative
Positive
Value
Drivers
Negative
Value
Drivers
Differentiation
Value
Normal
Price
Range

29. DIFFERENTIATED)VALUE
29 I Ibbaka)©)2018
Customer)Needs
Your)Offer Alternative
Unmet)Needs
Irrelevant
Functionality
Irrelevant
Functionality
Potential)to)Innovate

30. DIFFERENTIATED)VALUE
30 I Ibbaka)©)2018
Customer)Needs
Your)Offer Alternative
Unmet)Needs
Commodity
Your
Differentiation
Competitor
Differentiation
Irrelevant
Functionality
Irrelevant
Functionality
Potential)to)Innovate

31. DIFFERENTIATED)VALUE
31 I Ibbaka)©)2018
Customer)Needs
Your)Offer Alternative
Unmet
Needs
Commodity
Your
Differentiation
Competitor
Differentiation
Irrelevant
Functionality
Irrelevant
Functionality
Price)of)
Alternative
Options
Risk
CapEx
OpCap
OpEx
Revenues
+ Value)Drivers
Shortcomings
Unique)Costs
2 Value)Drivers
Potential)to)Innovate

32. CASE%STUDY

33. WATERTRAX'CASE'STUDY'BACKGROUND'
33 I Ibbaka'©'2018
• Offers'a'software'service'that'helps'government'agencies'(municipalities)'and'utilities,'monitor'and'
manage'their'water'and'wastewater'system'data'
• Using'technologyRdriven'data'collection,'data'management,'and'reporting,'WaterTrax'equips'its'
clients'to'streamline'their'regulatory'practices'and'ensures'compliance'
• Municipalities'get'realRtime'data'and'analysis'of'their'ability'to'meet'quality'water'standards'
• Founded'in'2001,'as'an'application'service'provider'
• WaterTrax'merged'with'Aquatics'Informatics'in'July'2017

34. WATERTRAX'CASE'STUDY'PRICING'ATTRIBUTES
34 I Ibbaka'©'2018
1. Reflect'value'D Value'takes'into'account'budget'capacity
2. SubscriptionDbased'D Enables'scaling'of'revenue,'based'on'the'size'and'growth
3. Viewed'as'affordable'by'their'buyers'D Fairness'is'a'lens'for'affordability

35. WATERTRAX'CASE'STUDY'ECONOMIC'VALUE'DRIVERS'– 1'of'3
35 I Ibbaka'©'2018
Decrease'Operating'Expense
• Saving'time'is'the'key'economic'driver'for'their'customers'
• Time'saved'by'technicians'leads'to'improved'operational'efficiency
• Also'provided'customers'with'an'ROI'based'on'the'amount'of'time'saved'by'its'technicians'
through'task'automation,'which'would'free'up'resources'for'other'tasks

36. WATERTRAX'CASE'STUDY'ECONOMIC'VALUE'DRIVERS'– 2'of'3
36 I Ibbaka'©'2018
Decrease'Capital'Investment
• Better'planning'and'allocation'of'expenditures
• Data'and'analysis'enabled'customers'to'better'predict'and'avoid'or'take'action'more'quickly'on'
water'quality'issues
• This'enabled'municipalities'to'better'plan'and'allocate'budgets'and'capital'expenditures,'
potentially'also'reducing'their'overall'operational'expenditures
• The'budgets'for'WaterTrax'buyers'typically'comes'out'of'OPEX.''

37. WATERTRAX'CASE'STUDY'ECONOMIC'VALUE'DRIVERS'– 3'of'3
37 I Ibbaka'©'2018
Decrease'Risk'
• By'mitigating'costly'outcomes'of'poor'water'quality
• “It'is'hard'to'put'a'figure'on'the'value'of'reducing'risk”'
• Insufficient'water'quality'can'impact'the'health'of'the'entire'ecosystem,'not'just'human'health
• There'can'be'dramatic'environmental'and'social'impact'costs;'for'example,'the'Walkerton'crisis
• resulted'in'2300'people'falling'ill'
• 6'fatalities
• an'economic'impact'assessed'at'over'$64.5M.

38. WATERTRAX'CASE'STUDY'EMOTIONAL'VALUE'DRIVERS
38 I Ibbaka'©'2018
Basic&Functionality
• People'expect'to'have'clean'water
Community
• Public'service'provides'and'is'part'of'the'community
Security&
• Establishing'peace'of'mind
• Tragedies'like'Walkerton'can'be'better'avoided'
• “I'will'sleep'at'night'knowing'that'the'data'is'not'impacted'as'a'result'of'human'error”
Self&Realization
• Municipalities'and'water'technician'take'pride'and'ownership'in'knowing'that'they'are'keeping'their'
communities'safe
• Better'transparency'and'data'management'enables'municipalities'to'use'structured'information'to'better'
inform'the'public'that'they'serve

39. UNDERSTANDING+STAKEHOLDER+VALUE++
EXERCISE'1

40. EXERCISE'– UNDERSTANDING'STAKEHOLDER'VALUE
40 I Ibbaka'©'2018
Roles
Emotional,Value,
Drivers
1
2
3
Economic,Value,
Driver
1
2
3
Citizen,
Outcomes
1
2
3
Brainstorm,ideas
1. Pick'a'Product,Line
2. Brainstorm'the'Stakeholders
3. Brainstorm'the'Emotional,Value,Drivers
4. Brainstorm'the'Economic,Value,Drivers
5. Brainstorm,Citizen,Outcomes;'identify'if'they'are'
emotional'or'economic
6. Map,Stakeholders,to,Value,Drivers

41. EXERCISE'– UNDERSTANDING'STAKEHOLDER'VALUE
41 I Ibbaka'©'201841 I Ibbaka'©'2018
ECONOMIC'VALUE'DRIVER EXAMPLES
Increase revenues • Increase market'size
• Increase'market'share
• Improve'pipeline'metrics
Decrease'operating'expenses • Increased'ROI/efficiency
• Increased'effectiveness
• Decreased'input costs
• Ease'of'integration'with'other'systems
Decrease'operating'capital • Reduced'Inventory
• Faster'collections/accounts'receivable
Decrease'capital'investment • Increased'capital/equipment'longevity,'decreased'obsolescence
• Get'more'productivity'from existing'assets
Decrease'risk • Increased data'security
• Reduced'disruption/increased'uptime
• Reduced'liability
• Better'compliance
Increase'options • Ability'to'cover'edge'cases
• Ability'to'choose'between'multiple'suppliers
• Ability'to'scale'usage'as'required
• Ability'to'have'customized'solutions

42. EXERCISE'– UNDERSTANDING'STAKEHOLDER'VALUE– WRAP'UP
42 I Ibbaka'©'2018
Brainstorm*ideas
1. Pick'a'Product*Line
2. Brainstorm'the'Stakeholders
3. Brainstorm'the'Emotional*Value*Drivers
4. Brainstorm'the'Economic*Value*Drivers
5. Brainstorm*Citizen*Outcomes;'identify'if'they'are'
emotional'or'economic
6. Match*Stakeholders*to*Value*Drivers
What*did*we*learn?
1. How'well'do'we'know'the'stakeholders'and'how'they'
interact?
2. Where'are'the'emotional'value'drivers'clustered'(what'
level'in'the'Maslow'hierarchy)?
3. Are'the'emotional'value'drivers'different'for'different'
stakeholders?
4. Were'the'economic'value'drivers'clustered?
5. Are'the'economic'value'drivers'different'for'different'
stakeholders?
6. Where'are'the'citizen'outcomes'clustered?
7. Are'they'mostly'emotional'or'economic?

43. MARKET'SEGMENTATION

44. MARKET'SEGMENTATION
44 I Ibbaka'©'2018
Segmentation*is*needed*to*
Understand how'similar'groups'of'customers
• Get'value
• Will'respond'to'value'messages
Package*offers
• Different'segments'will'often'need'different'offers
Design*pricing
• Understand'the'value'metric'and'connect'to'pricing'metric
• Decide'if'different'tiers'are'needed

45. MARKET'SEGMENTATION
45 I Ibbaka'©'2018
Groups'with'similar'demographics'can'actually'be'very'different'in
• Beliefs
• Values
• Behaviours
• Economic2Incentives
Belief21 Belief22
Value'1 Value'2 Value'3 Value'4
Esteem
Community
Security
Revenue
Costs
Investment
Risk
$

46. MARKET'SEGMENTATION
46 I Ibbaka'©'2018
Groups'with'similar'demographics'can'actually'be'very'different
Lives&in&a&castle
Wealthy
In&stable&marriage
69&Years&Old
Lives&in&a&castle
Wealthy
In&stable&marriage
69&Years&Old

47. MARKET'SEGMENTATION
47 I Ibbaka'©'2018
Groups'with'similar'demographics'can'actually'be'very'different

48. KNOW%YOUR%DIFFERENTIATION%
EXERCISE'2

49. EXERCISE'– KNOWING'YOUR'DIFFERENTIATION
49 I Ibbaka'©'2018
Without'differentiated'value,'there'is'nothing'to'price.'A'deep'understanding'of'your'customer'
segments'is'the'foundation'to'valueRbased'pricing.'In'this'exercise,'we'will'explore'your'value'
proposition'and'market'positioning.
Instructions:
•'Identify'your'customer'needs
•'Identify'2'to'3'alternatives'to'your'offer'and'list'their'value'propositions
•'List'the'value'proposition'for'you'offer(s)
•'Complete'the'Venn'Diagram

50. EXERCISE'– KNOWING'YOUR'DIFFERENTIATION
50 I Ibbaka'©'2018
Instructions:
•'Identify'your'customer'needs
•'Identify'2'to'3'alternatives'to'your'offer'and'list'their'value'
propositions
•'List'the'value'proposition'for'you'offer(s)
•'Complete'the'Venn'Diagram
• Is'your'offer'differentiated?
• How'would'you'establish'value'relative'to'the'competitor?'
• How'does'your'differentiation'map'to'what'you'customers'
value?
• What'do'you'need'to'learn'about'your'prospective'
customers?
• Is'your'offer'at'risk'of'getting'commoditized?
• Is'there'an'opportunity'to'sell'any'other'valueYadded'
services?'Would'it'satisfy'the'client?
• What'objections'might'you'expect'and'how'will'you'deal'
with'them?
➔ WITHOUT0DIFFERENTIATED0VALUE0THERE0IS0NOTHING0TO0PRICE

51. PRICING'DESIGN

52. VALUE&METRIC&AND&PRICING&METRIC
52 I Ibbaka&©&2018
Pricing'Metric
The&Unit&in&Which&You&Price
(Litres&of&Paint)
Value'Metric
The&Unit&by&Which&You&Provide&Value
(Square&Meters&Covered)

53. INTELLIGENT'FILTERS
53 I Ibbaka'©'2018
The'Internet'of'Things'(IoT)'is'opening'new'pricing'models
Combine'filters'and'valves'then'add'sensors
Apply'machine'learning'to'the'data
Price'on'purity'of'volume'that'passes'through

54. VALUE&METRIC&AND&PRICING&METRIC
54 I Ibbaka&©&2018
➔ There&are&generally&multiple&value&metrics&for&any&product&or&service&(economic&
and&emotional)
➔ Pricing&metrics&generally&(but&not&always)&use&economic&value&metrics
➔ The&best&pricing&metrics&track&value&metrics

55. VALUE&METRIC&AND&PRICING&METRIC
55 I Ibbaka&©&2018
➔ There&are&generally&multiple&value&metrics&for&
any&product&or&service&(economic&and&emotional)
➔ Pricing&metrics&generally&(but&not&always)&use&
economic&value&metrics
➔ The&best&pricing&metrics&track&value&metrics
Makes&it&Easy&to&Buy
Tracks&Value
Discriminates&Segments
Makes&it&Easy&to&Buy
Enforceable
Simple
Pricing&Metric

56. PRICING'DESIGN'– PRICING'ARCHITECTURE
56 I Ibbaka'©'2018
How$many$tiers?
Role$of$each$tier?
• Do'the'top'and'bottom'tiers'create'the'right'
value'frame?
• Is'there'an'upsell'assumption?
• What'is'the'expected'volume'distribution'across'
tiers
• What'is'the'expected'revenue'distribution'
across'tiers
Bundle$for$each$tier?
Fencing'(how'will'you'guide'buyers'to'the'tier'that'is'
best'for'them?)

57. PRICING'DESIGN'– PRICING'ARCHITECTURE
57 I Ibbaka'©'2018
Hubspot'(marketing'automation)
Hubspot includes'a'transactional'component'in'its'pricing.
(the'number'of'contacts'in'the'system).
It'also'includes'a'one'–time'onboarding'fee.
Combining'subscriptions'and'transactional'pricing'can'be'a'
powerful'way'to'design'pricing
• Predictability'plus'scaling
• Closer'connection'to'value

58. VALUE&COMMUNICATION

59. • For$price$acceptance,$value$must$be$communicated$effectively
• Understand$the$customer’s$buying$process
• Consider$each$touch$point$where$the$buyer$builds$awareness,$understanding$and$consideration$of$
value$and$make$sure$that$value$comes$before$price$in$the$revenue$generation$process
• Design$communication$so$that$price$is$always$put$in$the$context$of$value
VALUE$COMMUNICATION
59 I Ibbaka$©$2018

60. CUSTOMER)BUYING)PROCESS
60 I Ibbaka)©)2018
Model&the&Decision&Making&Unit&for&each&Buying&Process
• Business)Buyer
• Technical)Buyer
• Economic)Buyer
• Procurement
• End)User

61. UNDERSTANDING+CUSTOMER+INTERACTIONS
61 I Ibbaka+©+2018
Look$at$interactions
• Between+customer+stakeholders
Look$at$exchanges$of
• Information
• Lines+of+influence
Technical
gate
keeper
Procurement
Business
buyer
End+user
Influence
High
Medium
Low
Information$flow

62. UNDERSTANDING+CUSTOMER+INTERACTIONS
62 I Ibbaka+©+2018
Technical
gate
keeper
Procurement
Business
buyer
End+user
Information*flow

63. UNDERSTANDING+CUSTOMER+INTERACTIONS
63 I Ibbaka+©+2018
Technical
gate
keeper
Procurement
Business
buyer
End+user
Influence
High
Medium
Low

64. UNDERSTANDING+CUSTOMER+INTERACTIONS
64 I Ibbaka+©+2018
Technical
gate
keeper
Procurement
Business
buyer
End+user
Influence
High
Medium
Low
Information.flow

65. MAP$VALUE$TO$ROLES
65 I Ibbaka$©$2018
➔ Do$all$roles$get$some$form$of$value$with$the$critical$buyer$role$(usually$business$or$economic,$
sometimes$technical,$occasionally$the$end$user)$getting$compelling$value?
➔ Cover$the$full$range$of$roles$(if$there$are$buying$decision$making$unit$roles$with$no$positive$emotional$
and$economic$value$drivers$this$is$a$risk)
➔ Map$value$drivers$to$roles
➔ Design$communication$so$that$price$is$always$put$in$the$context$of$value

66. KEY$TAKEAWAYS

67. ➔ Understand)how$you$provide$differentiated$value$to$a$customer$segment
➔ Segment)your$market$based$on$how$different$groups$of$customers$get$value
➔ Connect)value$metrics$and$pricing$metrics
➔ Design)pricing$based$on$value$to$stakeholders$
➔ Communicate)value$before$discussing$pricing
SUMMARY
67 I Ibbaka$©$2018

68. THREE%THINGS%TO%DO%TOMORROW
68 I Ibbaka%©%2018
1. Checkout%www.Ibbaka.com/self/
assessment
2. Where%are%you%in%your%goDtoDmarket/pricing%
journey?
3. What%do%you%need%to%do%to%achieve%your%
pricing%goals?%

69. NEXT%STEPS
69 I Ibbaka%©%2018
Schedule%a%one;on;one%consultation%with%the%Ibbaka%team.
steven@ibbaka.com
karen@ibbaka.com
rashaqa@ibbaka.com

70. 70
Pricing)consultancy)and)technology)company)
built)by)experienced)entrepreneurs
We)understand)innovation)because)we)live)it
Our)passion)is)improving)product)launch)and)in)
market)success)through)better)strategic)pricing)
and)execution
Understand)the)larger)picture)of)segmentation,)
targeting,)value)modeling,)value)propositions)
and)pricing)architecture
Twitter LinkedInWebsite
Steven1Forth
Managing)Partner
steven@ibbaka.com
+1)604)763)7397
Karen1Chiang
Managing)Partner
karen@ibbaka.com
+1)778)628)4085
Rashaqa1Rahman
Principal)Consultant
rashaqa@ibbaka.com

71. APPENDIX

72. WHY$PRICING$MATTERS
72 I Ibbaka$©$2018
Market$Segmentation$demonstrates$your$understanding$your$
market$opportunity
• Patterns$of$needs,$attitudes,$behaviors$
• To$identify$customers$who$value$your$differentiation$and$the$value$they$
will$receive
• Underpins$calculation$of$market$size
Customer$Targeting$shows$you’ve$identified$your$most$
attractive$segment
• Prioritizes$your$marketing$investment$(financial$and$effort)
• Understand$your$customer’s$buying$process

73. WHY$PRICING$MATTERS
73 I Ibbaka$©$2018
Customer$Traction$“quantitative$evidence$of$market$demand"
• Validation$that$value$is$being$created
Price$Optimization
! Pricing$is$the$lever$to$win$higher$profits,$revenue$or$market$share
! Connecting$to$your$buyers$emotional$and$economic needs
! The$correct$pricing$metrics$helps$you$
o to$monitor$price$acceptance
o guide$behavior$across$pricing$tiers,$and$
o be$better$prepared$for$competitive$positioning

74. WHY$PRICING$MATTERS
74 I Ibbaka$©$2018
Unique$and$Differentiated$Value$Proposition
• Determines$your$ability$to$realize$your$potential$earnings
• Is$always$relative$to$the$next$best$competitive$alternative.$Investors$want$to$
know$that$you$have$done$your$competitive$analysis$
Market$Sizing
• Provides$an$indication$of$potential$earnings
• Does$your$Total$Addressable$Market$(TAM),$Serviceable$Addressable$Market$
(SAM),$Serviceable$Obtainable$Market$(SOM)$justify$your$valuation$

75. THE$IBBAKA$APPROACH$- PROCESS
75 I Ibbaka$©$2018
Understand)Value
• Research$and$validate$emotional$and$economic$value$drivers$for$all$market$participants$
Segment)the)Market)and)Target)Customers
• Find$segments$that$get$value$in$the$same$value$and$buy$in$the$same$way
• Target$segments$that$get$the$most$value$with$reasonable$CAC$(Customer$Acquisition$Cost)
Design)a)Pricing)Model
• Identify$all$of$the$value$metrics$(the)measures)of)how)users)get)value)
• Use$these$to$design$the$pricing$metric$(how)users)are)charged)$and$the$pricing$architecture
Set)and)Monitor)Prices)and)Performance
• Set$prices$to$optimize$for$company$goals$(market$share,$revenue,$profit,$cashflow)
• Establish$a$monitoring$system$to$ensure$continuous$improvement
Ibbaka$is$the$leader$in$the$application$of$value-based$pricing$to$innovation

76. THE$IBBAKA$APPROACH$- MARKET$SEGMENTATION
76 I Ibbaka$©$2018
• Ibbaka%develops%market%segmentations%based%on%emotional%and%economic%value%drivers,%buying%
processes%and%other%differentiation%axes%that%emerge%bottom%up%from%the%data
• Data%used%includes%the%following%(we%integrate%multiple%data%sources%and%types%of%data)
• Interview$data
• Survey$data$(we$develop$custom$designed$surveys$to$uncover$value$drivers)
• Social$media$data
• Usage$data$(including$measures$of$engagement$and$predictive$engagement)
• CRM$(customer$relationship$management)$data
• Invoicing$data
• Analysis
• Ibbaka’s$proprietary$segmentation$and$clustering$software$is$used$to$find$the$patterns$in$the$data
• NLP$(natural$language$processing)$and$sentiment$analysis$is$used$to$handle$text$data$and$integrate$it$with$
quantitative$data
• Data$is$cut$and$balanced$multiple$ways$to$find%the%segmentation%frame%that%brings%differentiation%into%focus

77. MORE%ABOUT%IBBAKA
77 I Ibbaka%©%2018
Ibbaka%is%a%consulting%and%technology%development%company%focused%on%helping%companies%bring&
innovations&to&market&and%to%help%them%to%scale.
We%do%this%by%bringing%new%approaches%to%market&segmentation,&customer&targeting&and&pricing&design
to%our%clients,%and%supporting%them%with%data&science.
Our%team%is%an%unusual%blend%of%business%leaders,%service%designers,%software%developer%and%data%
management.%See%our%diverse%team%on%the%Ibbaka%website.
The%team%has%extensive%experience%in%market%segmentation%and%pricing%at%companies%of%all%scales,%from%
Fortune%50%to%preOrevenue%startOups.
We%present%frequently%at%marketing,%product%management%and%professional%pricing%events.%Follow%our%
blog%at%https://www.ibbaka.com/blog/

78. IBBAKA%STANDARD%PROCESS
78 I Ibbaka%©%2018
1. Understand%pricing%goals%and%confirm%alignment
2. Develop%value%driver%candidates%(economic%and%emotional)
3. Survey%market%to%test,%develop,%expand%value%drivers
4. Interview%market%participants%to%test%and%deepen%insights
5. Combine%survey,%interview,%CRM%and%other%data%to%segment%market%(using%our%proprietary%data%analysis%platform)%
– this%can%include%analysis%of%current%clients%to%develop%migration%strategies
6. Select%target%segments%
7. Identify%value%metrics%and%use%to%generate%pricing%metrics
8. Design%pricing%model
9. Design%data%collection%to%measure%performance%of%pricing%model
10. Model%pricing%model%impact%on%key%financial%metrics%(including%unit%economics)
11. Develop%segment%specific%value%propositions
12. Develop%customer%migration%strategy%and%plan
13. Provide%valueXbased%sales%training

79. CUSTOMER)IMPACT)- BUSINESS)IMPACT)FOR)SAAS)SOLUTION
79 I Ibbaka)©)2018
Initial'Project'– For'Product'Manager
• Pricing)model)and)execution)for)entry-level)offer.)Successful)completion)led)to)follow)on)projects.
Project'Two'– For'VP'Product
• Analyze)market)dynamics)in)core)market.)Discovered)high)risk)of)commoditization)and)price)erosion.)
• Value-based)pricing)model)for)core)offer.
• Led)to)a)third)project.
Project'Three'– For'VP'Product
• Market)scoping)for)innovative)business)solution)– market)segmentation,)value)driver)discovery,)
customer)targeting,)buyer)profile.)Used)to)drive)positioning)statement)and)product)requirements.
Project'Four'– For'VP'Sales'&'Marketing
• Value-based)sales)process)and)training)to)execute)on)new)value-based)pricing)model.
Project'Five'– For'VP'Product
• Assessment)of)OEM)opportunities)for)core)technology

80. ADDITIONAL(EXAMPLE(PROJECTS(1(OF(2
80 I Ibbaka(©(2018
• Evaluate(viability(of(SaaS(business(from(an(investment(perspective(for(an(earlyAstage(investment(fund(
(have(evaluated(more(than(50(businesses)
• Coach(SaaS(and(IIoT(business(on(goAtoAmarket(strategy,(planning(and(execution((more(than(20(
companies(in(B2B(and(multisided(marketplace(spaces)
• Transition(from(Licensed(Pricing(to(Subscription(Model(for(leading(vendor(of(software(to(the(film(
industry(– included(revised(pricing(and(modeling(of(impact(on(bookings,(cash(collection(and(revenue(
recognition(– company(was(later(acquired
• Value(Metric(and(Pricing(Metric(for(Precision(Agriculture(Company((IIoT)(– developed(economic(value(
model(and(connected(this(to(pricing(model(and(strategy

81. ADDITIONAL(EXAMPLE(PROJECTS(2(OF(2
81 I Ibbaka(©(2018
• Market'Segmentation'and'Customer'Targeting'for(blended(safety(management(and(learning(management(system
• Product'Strategy'and'Market'Opportunity'Estimation'for(vendor(of(Digital(Asset(Management(platform(– value(
driver(identification,(market(segmentation,(customer(targeting,(pricing(of(addMon(functionality
• Market'Segmentation'and'Pricing'Architecture'Design'for(a(twoMsided(platform(business(in(the(travel(sector
• Training'on'value>based'pricing'for(a(major(medical(equipment(vendor
• Pricing'audit for(a(major(medical(equipment(vendor(to(determine(pricing(contradictions(and(enterprise(pricing(
opportunities(for(a(major(medical(equipment(vendor(
• Impact'of'pricing'on'behavior'– major(study(for(a(government(organization(on(how(pricing(impacts(decisions(made(
by(asset(owners(and(certified(professionals,(and(how(that(impacts(safety