In "The END of Ivory Tower SaaS Pricing Consultants," a video published by Monetizely, a pricing consultant criticizes the traditional approach to pricing consulting in the SaaS industry. The speaker, who has a product marketing background and has authored a book on pricing, delivers a candid assessment of how conventional pricing consultants often fail to deliver real value to fast-moving software companies.
The Fundamental Disconnect in Pricing Consulting
The core issue with traditional pricing consultants, according to the speaker, is their lack of practical experience in product management and marketing.
"Pricing consultants, for the most part, from top tier consulting firms have not managed products, have not launched products, have not sold products. Pricing consultants have this weird knack of being ivory tower pricing consultants."
This disconnect creates a problematic approach where consultants rely heavily on statistical methods without understanding the product's context or the company's go-to-market dynamics. The speaker explains that many consultants come armed with sophisticated analytical tools but miss the bigger picture:
"They come in with these statistical tools, conjoint analysis, Van Westendorp, but they don't understand the product. They don't understand that launches happen every other month."
Why Statistical Models Alone Don't Work
SaaS products are constantly evolving. Positioning changes regularly, new features are launched, and products are continuously repackaged and repositioned. This dynamic environment makes traditional pricing methodologies obsolete almost as soon as they're implemented.
The speaker highlights that statistical models focus primarily on features rather than brand perception and positioning, which are often the real drivers of pricing power:
"As your brand power increases, the pricing power increases more than the features described. But none of these statistical methods have anything to do with the brand. They're mostly about, 'hey, this is my feature and you tell me the willingness to pay.'"
The Real Consequences of Outdated Pricing Approaches
Using traditional pricing consultants creates two significant problems for SaaS companies:
- Time inefficiency: Traditional pricing projects can take months when companies need to be agile.
- Revenue loss: When pricing doesn't account for positioning and perceived value, companies leave substantial money on the table.
"People don't buy features, they buy benefits and outcomes and the value that they perceive. And if that is not going to be clear, then there's always going to be money left on the table."
The irony, as pointed out in the video, is that even with these flawed approaches, revenue often increases when companies implement new pricing strategies. This suggests that the potential for improvement is so vast that even suboptimal strategies represent an improvement—which means optimal strategies could deliver far greater results.
The Agile Pricing Alternative
The modern SaaS environment demands a more agile approach to pricing. When code is shipped weekly and products evolve rapidly, pricing strategy must keep pace:
"In a world where product happens in an agile way, code is shipped every week, you cannot come and say, 'I have a waterfall approach to pricing…and we are going to do this large six-month project. It's going to cost half a million dollars…'"
The speaker insists that the traditional model of lengthy, expensive pricing projects is becoming indefensible, especially as AI tools can now perform many analytical tasks in minutes rather than months:
"AI can do a lot of this analysis in minutes. AI can do a lot of competitive research in minutes. The only thing that AI cannot do is be a human being at the other end and do research and ask willingness to pay questions."
Who Should Own Pricing Strategy?
According to the speaker, pricing belongs with the people who understand the product, its positioning, and its customers:
"Product marketers should be doing pricing, marketing should be doing pricing, and pricing consultants should offer a more agile way of doing this."
This recommendation aligns with broader trends in SaaS, where cross-functional collaboration and rapid iteration have replaced siloed, sequential processes in many areas of business.
The Future of Pricing Consulting
The speaker predicts significant changes in the pricing profession, driven by AI and the need for more agile methodologies:
"Something's going to change in the pricing profession very soon, given everything that's happening with AI. So it's time to get ahead of it."
The video concludes with a mention of Monetizely's alternative approach—"pricing function as a service"—which offers a more agile methodology and even includes a product roadmap to support ongoing pricing optimization.
For SaaS executives, the message is clear: traditional pricing approaches may be costing you time and money. As software development and product marketing become increasingly agile, your pricing strategy and methodologies must evolve to match that pace or risk leaving significant revenue on the table.