Will AI in the buying process lead to more pricing transparency?
Steven Forth is CEO of Ibbaka. Connect on LinkedIn
B2B SaaS companies are all over the map when it comes to sharing their pricing online. Will the incursion of AI into the buying process change that? In this post we explore how buyers might use prompts to estimate price and value. And then we test it in our own category of value based pricing and customer value management. We end with some predictions and recommendations on if, when, and how to present your price so that generative AI can use it in recommendations.
We are seeing more and more buyers use AI in their buying process (buying process, not sales process). AIs are being asked to
Clarify the problem
Define requirements
Find vendors
Understand pricing
Estimate value that will be delivered by each vendor
Compare vendors on pricing and value
Generate a set of questions to ask selected vendors
An AI enabled buying process.
Some of the things that AIs will want to know in this buying process are
How does the solution deliver value?
Who does it deliver value?
How much value is it likely to deliver for a specific set of requirements, buyer characteristics and use cases?
How is the solution priced?
What will the price be for a specific set of requirements, buyer characteristics and use cases?
Information design and pricing communication will need to change to support the AI based processes. Companies that do not do this, and that do not become ‘AI transparent’ will lose out.
A test case: Value Based Pricing and Customer Value Management
Let’s test this by focussing on understanding pricing. Do companies make it easy for generative AI applications to understand pricing? Buyers are going to gravitate to the companies that do well on the above AI enabled buying process.
We begin by turning the AI lens on Ibbaka and some of its competitors to see how well we are doing and what we need to improve. We suggest you take these prompts, modify them as needed, and apply them to your own pricing.
In the interests of space we have compressed this approach to just two prompts but in a complete process there would be one or more prompts for each of the seven boxes above and most buyers would add context documents explaining their own business and needs in more detail.
Prompt for requesting pricing
<goal>
Understand the pricing for the vendor identified in ‘context’ and explain how the pricing works.
Explain how the pricing is related to the value that will be delivered.
Generate an estimate based on the information in ‘requirements’.
</goal>
<role>
You work in revops (revenue operations) at a B2B software company and have been tasked with buying and implementing a value based pricing and customer value management platform. You will be evaluated by the impact this new platform has on recurring revenue growth and net revenue retention. You have experience buying and implementing a CRM and a Sales Intelligence Platform.
</role>
<context>
One possible vendor is Ibbaka.
Its pricing page is https://www.ibbaka.com/saas-value-pricing
It also explained its pricing here https://www.ibbaka.com/ibbaka-market-blog/why-ibbaka-is-changing-valio-pricing
Other vendors are LevergePoint, Ecosytems.io and CuVaMa.
</context>
<requirements>
Number of products: one product currently offered in a Good Better Best packaging with a Free Trial.
Primary growth motion is Sales Led Growth.
Company as 30 sales representatives and 10 customer success representatives.
Average Contract Value is $70,000 with a range of$20,000 to $500,000 and a Median Contact Value of $50,000
There are 100 customers and Annual Subscription Revenue is $7,000,000
Churn is 7%
Expansion Revenue is 12%
Net Revenue Retention is 105%
There are three distinct business use cases for the product and the company sells into two different customer segments.
The value based pricing and customer value management platform is intended to contribute to the following:
Increase Average Contract Value by 10%
Reduce Churn by 2%
Increase Expansion Revenue by 10%
</requirements>
<tasks>
Task 1: Identify best practices in evaluating the pricing of B2B software vendors from a buyer’s perspective.
Task 2: Explain how Ibbaka creates value for its customers.
Task 3: Explain how Ibbaka’s pricing works.
Task 4: Estimate how much an Ibbaka solution will cost given the requirements.
Task 5: Check that the best practices in evaluating the pricing identified in Task 1 have been applied.
</tasks>
<summary>
As a leader in the revops function of a B2B SaaS company you are acquiring a value based pricing and customer value management solution and want to understand how different alternatives are based.
</summary>
Results for Ibbaka
You can see the full response for Ibbaka here.
Ibbaka's Pricing Model
Ibbaka uses a tiered pricing model based on the number of value models, pricing models, and value stories included:
Growth Edition: 1 value model, 2 pricing models, 3 value stories - $29,000/year
Scale Edition: 3 value models, 6 pricing models, 9 value stories - $19,000/year
Enterprise Edition: 5 value models, 10 pricing models, 15 value stories - $49,000/year
The pricing is designed to align with the complexity and scale of the customer's needs, allowing for flexibility as companies grow and expand their use of the platform.
Cost Estimate for Ibbaka Solution
Based on the requirements provided, the Scale Edition appears to be the most suitable option:
3 distinct business use cases align with the 3 value models offered
2 customer segments can be addressed with the 6 pricing models available
9 value stories provide sufficient coverage for the sales and customer success teams
Estimated annual cost: $19,000
Results for Ecosystems.io
You can see the full response for Ecosystems.io here.
Ecosystems Pricing Model
While specific pricing details are not provided in the search results, Ecosystems likely uses a value-based pricing strategy. This approach is common for innovative B2B SaaS products10. The pricing model may include:
Subscription-based pricing: As a SaaS platform, Ecosystems likely charges on a recurring basis2.
User-based pricing: The cost may scale with the number of sales and customer success representatives using the platform.
Tiered pricing: Different feature sets or usage levels may be offered at various price points2.
Custom pricing: For enterprise clients, Ecosystems may offer tailored pricing based on specific needs and expected value delivery.
Estimated Cost for Ecosystems Solution
Based on the provided requirements and typical B2B SaaS pricing models, we can make a rough estimate:
Base cost: Assuming a base cost per user of $1,000 annually.
Number of users: 30 sales representatives + 10 customer success representatives = 40 users.
Estimated annual cost: 40 users * $1,000 = $40,000
This estimate aligns with the calculation in the search results. However, the actual cost may vary based on:
Specific features and modules required
Level of customization needed
Volume discounts for larger user bases
Additional services like value consulting or implementation support
Results for LeveragePoint
You can see the full response for LeveragePoint here.
LeveragePoint's Value Creation
LeveragePoint creates value for its customers by:
Aligning product, pricing, marketing, and sales teams around value-based strategies3
Enabling the creation of dynamic value propositions for effective sales communication3
Improving sales execution through powerful value conversations5
Increasing win rates and average deal sizes7
Enhancing product innovation and launch success5
LeveragePoint Pricing Model
LeveragePoint uses a tiered, user-based annual subscription model:
30 users: $100 per user per year
50 users: $83 per user per year
100 users: $60 per user per year
500 users: $38 per user per year3
Each tier includes full functionality, unlimited value propositions, secure hosting, regular updates, support, training, and professional services hours3.
Cost Estimate for LeveragePoint Solution
Given the requirements of 30 sales representatives and 10 customer success representatives (40 users total), the estimated annual cost would be:
40 users × $100 per user = $4,000 per year3
This estimate falls within the 30-50 user tier, providing the best value for the company's needs.
Results for CuVaMa
You can see the full results for CuVaMa here.
Note: This almost certainly overstates the cost of CuVaMa, but that is in fact part of the point of this exercise, to see how an AI would locate and parse available information.
CuVaMa's Value Creation
CuVaMa creates value for its customers by:
Enabling sales teams to discover value and sell outcomes rather than features4.
Improving qualification and discovery conversations, leading to better lead qualification4.
Guiding sales representatives to connect prospect pain to solution outcomes and value4.
Facilitating the creation of collaborative business cases with prospects4.
Enabling customer success managers to create measurable outcome-based success plans4.
Helping sales and customer success teams sound like industry experts in customer conversations4.
CuVaMa Pricing Explanation
While specific pricing details for CuVaMa are not provided in the search results, B2B SaaS companies often use tiered pricing models or per-user pricing for sales enablement tools12. Based on industry trends, CuVaMa's pricing likely considers:
Number of sales and customer success representatives using the platform.
Features and capabilities included in different tiers or packages.
Potential integration with existing CRM or sales intelligence platforms.
Volume of customer data or interactions processed.
Estimated Cost of CuVaMa Solution
Given the requirements provided, we can estimate the potential cost of a CuVaMa solution:
Number of users: 40 (30 sales reps + 10 customer success reps)
Annual subscription revenue: $7,000,000
Assuming a pricing model similar to other B2B SaaS platforms, we can estimate:
Monthly cost per user: $500 for sales reps, $300 for customer success reps
Annual cost: (30 * $500 * 12) + (10 * $300 * 12) = $216,000
This estimate aligns with the typical range for enterprise SaaS solutions targeting companies with significant annual revenue. However, the actual cost may vary based on CuVaMa's specific pricing structure and any custom features or integrations required.
Prompt for comparing solutions
<goal>
Compare the value and pricing of the four solutions value based pricing and customer value management solutions. Identify the best solution given the requirements. Identify which solution is most likely to support achieving the goals.
</goal>
<role>
You work in revops (revenue operations) at a B2B software company and have been tasked with buying and implementing a value based pricing and customer value management platform. You will be evaluated by the impact this new platform has on recurring revenue growth and net revenue retention. You have experience buying and implementing a CRM and a Sales Intelligence Platform.
</role>
<requirements>
Number of products: one product currently offered in a Good Better Best packaging with a Free Trial.
Primary growth motion is Sales Led Growth.
Company as 30 sales representatives and 10 customer success representatives.
Average Contract Value is $70,000 with a range of$20,000 to $500,000 and a Median Contact Value of $50,000
There are 100 customers and Annual Subscription Revenue is $7,000,000
Churn is 7%
Expansion Revenue is 12%
Net Revenue Retention is 105%
There are three distinct business use cases for the product and the company sells into two different customer segments.
The value based pricing and customer value management platform is intended to contribute to the following:
Provide a formal value model to be used across pricing, sales and customer success.
Increase Average Contract Value by 10%
Reduce Churn by 2%
Increase Expansion Revenue by 10%
</requirements>
<solutions>
Copy in the above solutions information for each of the four vendors.
</solutions>
<tasks>
Task 1: Identify best practices in value based pricing and customer value management.
Task 2: Assess each of the four vendors for how well they support best practices in value based pricing and customer value management (Ibbaka, Ecosystems, LeveragePoint, CuVaMa).
Task 3: Estimate the value that will be provided by each of the four solutions (Ibbaka, Ecosystems, LeveragePoint, CuVaMa).
Task 4: Compare the value that will be provided by each solution with the price that is likely to be charged.
Task 5: Judge which solution will make the greatest contribution to achieving the goals.
Increase Average Contract Value by 10%
Reduce Churn by 2%
Increase Expansion Revenue by 10%
Task 6: Generate a table comparing the four vendors (Ibbaka, Ecosystems, LeveragePoint, CuVaMa) on value, price and probability of achieving goals.
</tasks>
<summary>
Compare the solutions from the four vendors on value, price and probability of achieving the key goals.
</summary>
Results of the comparison of Ibbaka, Ecosystems, LeveragePoint and CuVaMa
Value Estimation and Price Comparison
(Remember that the price here for CuVaMa is almost certainly much higher than the actual price.)
Probability of Achieving Goals
Summary
Based on the analysis, Ibbaka appears to be the best solution for achieving the stated goals while providing a good balance of value and price. It offers a comprehensive platform that aligns well with value-based pricing best practices and has a high probability of increasing Average Contract Value. While it may not be the strongest in reducing churn or increasing expansion revenue compared to Ecosystems or CuVaMa, its overall value-to-price ratio is favorable.
LeveragePoint offers an excellent value-to-price ratio but may not provide as comprehensive a solution as needed for the company's requirements. Ecosystems has strong potential for reducing churn and increasing expansion revenue but comes at a higher price point. CuVaMa, while potentially powerful, appears to be significantly overpriced based on the available information.
Given the company's specific needs and goals, Ibbaka's Scale Edition at $19,000 per year offers the best combination of functionality, value, and price, with a high probability of contributing to the achievement of the key goals.
Recommendations for Pricing and Value Transparency
AI enabled buying is not something that will happen in the future, it is happening now. B2B SaaS, Business AI and AI Agent companies need to get ahead of this. How can you do that?
You need a value model that will help the AI understand who you create value for, how you create value and how your price aligns to the value you create
AI has to be able to access and interpret that model so that it can use it to find vendors and understand if they will create value for the potential buyer
AI has to be able to access and interpret your pricing, if you don’t provide clear pricing and help the AI estimate a price then the AI will go ahead and hallucinate a price that may not be in your favour (we think this is what happened to CuVaMa above)
Help your buyers by providing them with prompts, this is the provide an RFP template for your space updated to the age of AI
Run tests every week to see what is changing: customer requirements, competitors, your solution and the AIs are changing all the time, this is a very dynamic space
Have a Category Value Map, Ibbaka can generate a category value map for you as part of your foundation subscription (see Category Value Maps Define Positioning and Differentiation)
