Ulrik Lehrskov-Schmidt has spent the last decade helping B2B companies of all sizes realize more value from their pricing and packaging and finding the right balance between monetization and customer value. The post below explores a few of the takeaways from our conversation, in particular how mastering pricing and packaging means getting very good at negotiation, both internally and externally.

Key Takeaways:

• Feature-based analysis is a popular approach, but may be more academic than practical in B2B contexts.

• In complex product landscapes, relying solely on quantitative methods can lead to flawed insights.

• Intuition and diverse data sources are critical in resolving internal dissonance about product value and pricing.

• Pricing should be a series of ongoing negotiations with your customers, not a one-time event.

The limitations of feature-based analysis

Traditional methods like Conjoint and MaxDiff are often employed to determine which product features are most valued by customers, guiding pricing and product development strategies. These methods excel in settings where products are well-known and easily comparable, such as in the consumer packaged goods industry. For example, when analyzing preferences for different types of Coca-Cola, these methods can accurately capture consumer preferences because the features (e.g., sugar content, can size) are well-understood by the general public.

In B2B contexts, features are often less understood and not easily comparable. The methodology fails to provide meaningful insights when applied to products that lack wide recognition or are inherently complex. 

“If I ask you would you rather want the reporting dashboard or the compliance alerts, who the hell knows what any of those things are?” 

Unfamiliar or complex product features can undermine the utility of such analyses, and these methodologies can become largely academic when applied to B2B SaaS products. 

The allure of these methods is relatively widespread because of their scientific appearance and the substantial fees consulting firms can charge for them. They create an illusion of precision, which can be appealing to executives looking for data-driven decisions. Yet, this facade can be misleading.

“The methodology actually breaks down when you’re trying to apply it to something that isn’t super well-known,” 

These approaches often fail to capture the nuanced realities of customer preferences, leading to decisions that might not align with actual market needs.

The role of intuition and an integrated point of view internally

Given the limitations of traditional pricing and packaging analyses, Ulrik favors integrating various forms of evidence and intuition in the pricing decision process. In many organizations, there are constant conflicting signals about product value and pricing:

• Sales teams might claim that customers are resistant to price increases.

• Product teams may believe that the product offers enough value to justify higher prices. 

• CEOs might express concerns about competitive pressures or market positioning.

“If you have some sort of dissonance…it’s the logical conclusion that you need to do some sort of integration.” 

To converge different audiences across an organization, examine not only the quantitative data (yes, including formal analyses) but also qualitative insights, win-loss data, and broader market trends. By combining these perspectives, a more “functional truth” can be established—one that minimizes internal conflict and aligns more closely with market realities.

Ulrik shared an example from his own consulting experience: a U.S.-based company with $100 million in ARR and 400 enterprise clients faced this challenge. The sales team argued against raising prices, citing significant customer resistance, while a new chairman believed prices could potentially be doubled. The investigation revealed a nuanced resolution: the lower 50% of their customer base had reached price sensitivity and had plenty of alternatives to choose from, whereas the top 20% of their customer base relied much more heavily on the product, had fewer alternatives so had much more elasticity.

Pricing as an ongoing negotiation with your customers

Pricing is of course a strategic conversation internally, but we often forget it’s also deeply personal to your customers. Those that view pricing as a continuous process rather than a one-time event often set themselves up for higher retention and much better expansion opportunities. 

In B2B SaaS, the relationship with a customer is ongoing, marked by multiple touchpoints — renewals, upsells, and expansions. Each of these interactions should be seen as an opportunity to renegotiate terms that benefit both parties. To do so, companies should treat those touch points as integrative negotiation. 

“You have a recurring relationship. So actually, you should see it as a long series of negotiations and not one negotiation” 

Rather than focusing solely on winning the current negotiation (e.g., maximizing the price in a single contract), the goal should be to create a framework that facilitates future positive negotiations. This involves understanding the long-term goals of both parties and finding ways to increase the overall value of the relationship over time.

For example, a SaaS provider might communicate to a client their intent to gradually increase the price as the value delivered grows. By setting this expectation upfront and framing it as a mutual goal, both parties can work towards a more valuable partnership. 

“We want a situation, both of us, where you would want to pay $100K for the solution” 

Taking this approach creates alignment and shared goals over time. This long-term perspective ensures that pricing discussions are aligned with broader business objectives and that the relationship remains positive and productive.

Conclusion

One thing we can learn from Ulrik and which echoes conversations we’ve had with other operators in the past is that pricing is a continuous process. It’s very easy to overcomplicate that process with fancy analyses, and it’s easy to forget pricing is a negotiation that spans natural, internal tensions and external relationships.

Operators can take a few things away from this conversation:

• Unless you’ve got a clearly understood category and feature set (e.g. in commoditized markets), avoid fancy analyses

• Recognize the levers that influence internal stakeholders and combine any quantitative data you have with qualitative insight that forms a “functional truth” about pricing decisions

• Finally, play an infinite & collaborative game with your customers – find a way to make expansion a shared goal that results in gain for both parties