What is a Profit StreamTM and why should you care? Profit is the net income resulting from revenue minus expenses. Profit is essential because, without profit, a business is unsustainable. The problem is that while there is lots of guidance on pricing regular goods and services, there is little guidance on designing profitable software-enabled solutions - until now.
Join author and framework designer Jason Tanner and Certified Profit Streams Trainer Marc Danziger as they explore the Profit Stream Canvas and dive into designing profit streams and why it is essential for creating a sustainable (and profitable) business.
Interested in learning more? Join Jason and Marc for their our upcoming Profit Stream Design course, a three-day collaborative learning and working session for business and product leaders that provides the knowledge needed to use the Profit Stream Canvas to deliver sustainability profitable software-enabled solutions.
About Marc Danziger
Marc Danziger is an Enterprise Consultant at Eliassen Group and serves as Sr. Director of Agile Delivery. An experienced technical delivery leader and systems architect, his involvement with SAFe and agile spans over two decades. Marc holds several SAFe, Scrum, and Profit Streams Certifications allowing his expertise to help organizations in several major industries adopt agile practices and support profitable growth.
Transcript
Jason Tanner 00:00
Welcome, everybody to today's webinar, what is the Profit Stream™ with Marc and I? So, like every other webinar, yes, we're recording. And yes, we will share the slides afterward. And we'll follow up as soon as we can. With the recording and the slides, if you do have to leave early, no problem, we've got you covered. Take advantage of the chat, as well and use the q&a. Both Marc and I will be following along there and answering any questions you have as we've gone along. And today's focus, we want to describe Profit Streams™ and why they exist as a system. So unpack that in some systems thinking. And then we'll dive into defining value, and introduce customer benefit analysis and how powerful that can be to identify and define your solution as features. And finally, we'll describe the Profit Stream Pricing Model, and some actionable tips for you to consider. So that's what we've got coming for you. The flow, very similar, we're going to just describe and explore the evolution of Value Streams, to Profit Streams really dive into Profit Streams and how it relates to systems thinking. Then we'll look at quantifying value and the pricing model and what to do and what not to do. So without further ado, let's get going. So, first, core definition of Value Stream are looking at any sequence of activities that an organization undertakes to design produce, deliver and as needed, maintain or extend a product or service to a customer is a good baseline definition that is from SAFe. And the key to Value Streams is that once you have a good decision definition, you can see that they're everywhere. And when we see Value Streams, we can realize that everything from going to the grocery store to buy groceries, buy milk, or to shop for new furniture, upgrading software, in a car or on your phone. Each one of those activities involves some Value Stream, there's some flow of value, from the raw material to put together to furniture to preparing it for shipping to actually shipping it to the store, to the time that you're ready to put it into your car to take home. That whole series of activities is the Value Stream. So we have that in our mind, we can add a little bit more complexity to the picture. Now, I think SAFe does us a good service by separating two different Value Streams. One is the operational Value Stream that describes how customers interact with the enterprise or the provider and identifies those sequences of activities typically drawn the Chevron's. So you can see a lot of Chevron illustrations here for Value Streams. And an operational Value Stream is used to model value. A development Value Stream on the other hand, which is very familiar to all of us Angeles is this series of activities to actually create and build the solution and maintain an extended solution. And the difference here between the operational and development Value Streams is that the development Value Stream is useful to identify the inputs into cost models. And that's where we introduce the extension of Profit Streams as a Value Stream. Profit Streams or Value Streams are used to model profit. So imagine we wanted to buy a new car we wanted to go shopping for a Porsche we can see how these are related as two separate types of Value Streams. On the one hand, we have the operational Value Stream the Value Stream to actually fulfill the order I go to the porsche.com website. I configure my awesome new 911 on the website, that whole Value Stream of configuring and ordering the car and having it shipped to the dealership with the an operational Value Stream is how I'm directly interacting to get the new car if I could only afford one, right? Similarly, I can go online and after I bought the car, order a maintenance appointment, schedule it pick the data works for me. Done Fire whether or not I need a loaner, or I'm going to wait for the car, that whole series of activities will also be an operational Value Stream. If we should focus then to the development Value Stream. If you think, again about our definition is all the activities from product development to design, build and support the product or solution that would be the development Value Stream. So the series of activities to design and build the power train to assemble into the finished vehicle development Value Stream. Likewise, if we wanted to offer financing for the car, all of the design and build of the financial system for Porsches financial services to enable customers require loans, all the software developers working on that platform will be part of the development Value Stream. So there are definitely some benefits to Value Streams in that they allow us to visualize the activities and also to uncover how we are going to invest in those Value Streams. But the software Profit Streams are connected in a way to actually figure out how are we actually going to monetize all all of this activity. That's what I want to describe next. So we can think about Profit Streams, again, is the evolution or if you prefer the extension of Value Streams, and the Profit Streams is the Value Stream designed to create a sustainable business. And this sequence of activities are also about designing, producing, delivering is needing the product or service to a customer. This is all about also making sure that we have a sustainable business. So if you've got the concept, the product, we know that we can develop it, we can deliver it and fulfill the needs of customers, we need to make sure we have something to sustainable through a profitable solution. The thing about Profit Streams is that number one, to help to quantify the economic value solutions that are created, we actually do the modeling for the return on investment of the solution. But also we can illustrate the return on investment for customers when they acquired a solution. They also determine the series of choices that we make about the pricing and licensing and packaging for the solution. And finally, we ensure that the revenue generated from the solutions exceed the costs are required to serve customers, not just once but multiple times throughout the lifecycle of the customer relationship, which is also part of the Profit Streams for we actually establish the relationship sustainability with the customer through continuing to fill fulfill their expectations are establishing the licensing agreement and relationship with the customer is fair and balanced in a way that is compatible with the solution. So one thing to recognize is that the software business model is absolutely a system, the system includes the customer, the solution, how we are going to exchange value, with the customer for acquiring the solution, all the pricing decisions and licensing agreements that we create, for our customers to use the solution, as well as the return on investment for both the customer and the business. And two way to think about the system is with the concept of systems thinking. The emergence of the entire business model is evolutionary and iterative. Which means we're gonna go through a series of interrelated choices multiple times as we are constructing the business model. And this reveals several trade offs in our decision making and the choices that we're making. As the solution matures over the course of its lifecycle. We'll also identify opportunities for making new choices to continue to ensure profitability, and sustainability. So let me walk through an example of how systems thinking is applied when we're designing Profit Streams. So we've identified a customer, and we can identify the customer is a node and a relationship through the system. And the path is definitely dynamic. So one path might be as we identify the customer and identify the solution that we want to license as software on an annual basis. lie that has implications that choice is going to drive. The next note of how are we going to think about the license agreement and the terms that we're going to capture for that annual plan. Once we do that, we need to ensure that we have the technical architecture to enforce the terms So if I purchase the solution and start the agreement on March 15, of 2024, I need to ensure that on March 15, to 2025, that some action is taken within the system to either renew that relationship, or provide the customer the opportunity to make a choice about what to do next, which also implies that I'm going to have to ensure that I have some compliance consideration built into the model, which may influence things like data retention, if the customer credit card expires in 2025, what happens is there's some type of grace period where I'm going to retain their data until they want to provide a new credit card for their solution to extend a relationship. Or do I need to ensure in my license agreement, I say, after three months, we are going to delete data, or your data's portable, all of that needs to be captured in the license agreement and how we handle compliance within the technical architecture. Which then ensures that we have a complete and comprehensive solution. So all of these series of decisions and choices is all part of Profit Stream modeling. And this really starts with quantifying value. So Marc, I'll turn it over to you to talk about value,
Marc Danziger 11:28
I got it. One of the things that got me very excited about Profit Streams, when I first read about it is that as a, as an agile practitioner, I had been focused very much on sort of talking about value delivery. And the problem, of course, is that every organization you go to, you try and get them to have some formal way of talking about what value is, and it becomes a furball, kind of pretty quickly. And the language that almost every organization uses to talk about value is very simply accounting. It's dollars and cents, it's money. And what Profit Streams offers is a framework and a model or offers me and Jason wrote it. So I'm gonna be careful about what words I put in his mouth. What it offers me as somebody who's involved in it is a language that I can use to talk to people about the operations of a business in a language, which is the accepted scoring mechanism for what they do. Because the way all operational businesses keep score is dollars and cents. And so let's talk for a little bit about how we, and right I'm going to use the word infer value, and a quantitative way to be able to talk about it and making decisions around what we do. So next slide. So value is pretty straightforward. It's What benefit do I get minus What did it cost me to do? Now, ideally, values always positive, right? Because when values negative people tend to be kind of unhappy and unexcited, about whatever game we're asking them to play. But the issue, of course, is that value means a lot of different things to a lot of different people. And I'll use as a classic sort of case study on clothes, I am the worst person in the world to look at as any kind of fashion plate. And having company branded logos and things like that, for me to wear makes my life much much simpler, sort of like door animals for professionals. And, but I know people who spend a lot of money on clothes, I have a friend who has a business, and he sells $400 sort of bespoke jeans to people. Now for me, the idea of spending $400 For bespoke pair of jeans is basically incomprehensible, right? I don't get it. But he sells a lot of these jeans enough that he has a real business. So it's clear that the people who buy those jeans have a have a value statement that they get from them. That's inaccessible to me. And one of the tools that that this model brings with it is a way of embracing different personas and talking about the value they receive. So that we're not always talking from our unique and personal perspective, because the people who support his business, which is a real thriving business, certainly see the world differently than I do. So I have to understand how they get value. So let's go to the next slide. And what Profit Streams proposes is that we have basically a small canvas, which in which we imagine a hypothetical customer persona and we try and figure out what what is the benefit that a customer gets From a specific thing they bought. And some of those benefits are going to be tangible, quantifiable and economic. And some of them are going to be intangible, unquantifiable, and basically emotional. Some of them will go to things that I get that increase, and some of them will go to things that I avoid and things that decrease. I had a very, very smart client who was the treasurer of a multibillion dollar, kind of equipment leasing company. And when I went to him with proposals for work to do, he simplified it for me to do a very simple thing. He said, there's four reasons, I'll talk to you about doing something, it increases revenue, it decreases cost, it decreases risk, or increases compliance. And if you can't make an argument for why you want to do something in one of those four languages, just don't bring it to me, don't talk to me about it. And so what we want to be able to do is look at what benefits these $400 chains provide to somebody who's got the means to buy them, and be able to define the tangible and intangible benefits that go with it. And then what I want to be able to say is, how do I decide how big or how little those benefits are. And, again, borrowing a page from agile, what we can do is we can size and approximations and we can size relatively? It's very difficult to quantify the value of risk avoidance. Right? It's very difficult to say like, what would you pay not to have this bad thing happen. But what you can do is you can say a couple of things, you can say one, what would you pay to insure against this risk? And I typically do a game with with people where what we're talking about is risk management. And I'll ask them the question, here's the constellation of risk we're looking at. And if I was Lloyd's of London, and you were going to come to me and buy a policy to avoid this risk, what would you pay for it. And that begins to force them into thinking about what it is in terms of an economic transaction. Similarly, I can look at the intangible benefit of having a perfectly fitting pair of jeans made from exquisite Japanese denim, and hat lovingly handcrafted by Italian tailors. And I can say, okay, is the happiness you get from owning these genes, greater than or less than the happiness you get from X, Y, or Z. And these are things that have known cost. And so I can begin to bracket in some economic value for something that's intangible and go from there. Someone asked a question in q&a A moment ago about how do you quantify value for nonprofit? I did this once, about 15 years ago, I did work for Homeless Services Agency in West Los Angeles. And I tried to keep them from being shut down by their neighbors, and help them get funding from the police. And one thing that I worked to was the question of, Okay, what does it cost us to interact with a homeless person on the street in a regular basis. And the two biggest costs we bear are law enforcement, and medical hospitalization, along with lifestyle and quality of life around? And so I said, Okay, well, let's make believe that it cost X dollars to hospitalized a person, right, and that the average homeless person without care is hospitalized two to three times a year, and across wide dollars, to interact with, with the judicial system to arrest them, and to, you know, deal with whatever comes after that a year. And the average person is, is arrested or interacts with law enforcement z times a year. If our program can be demonstrated to reduce hospitalizations, and reduce arrests by so much. And we can do that by serving the people, we're in the program against the average of people who are in that community who aren't in the program, then you can basically say that our program is worth umpteen dollars a person, because we've lowered the number of hospitalizations by one a year, and we've lowered the number of police interactions by three year for people who are serving in the program. And that puts aside the intangible moral value of I'm supporting somebody, I'm taking care of people, I'm doing the right thing by people, I'm ideally improving the quality of life of people around them because they're acting in less disruptive and horrible and challenging ways. So what I can start talking about as both the tangible and intangible benefit and value that a nonprofit delivers. I did work for I was on a board of an opera company for a period of time. And what we talked about was, what is the marketing value to the city that we're in of having an opera company? What is the value of the music education because we have an educational component that the kids get? And we could begin to quantify some of those things. And then we started talking about what's the actual value of the productions we put on, because people pay money to come see them. And this is what they're willing to pay. And layering those three elements of value together began to sort of justify the existence of the nonprofit. And Dimitri, I'm interested in whether the kinds of things I'm pointing to begin to answer the question that you that you raised, if you want to drop something into q&a, or chat, I'd love to hear it. And so the notion is that I can have multiple persona, each of whom has multiple benefits. So which is why we do many of these customer benefit analysis cards. And what I start doing is they start building a constellation of value around the feature set of the pros product that we're going to deliver in the world. And how do I quantify value in a business and professional setting? Well, if I can make your delivery drivers 20% more efficient, they can deliver 20% More stuff, for the same cost. If I can make your turnaround for loading and unloading, more logistically efficient, you can do more turnarounds a day, and or you can lower your delivery time. And in doing that, you can basically create competitive advantage in your own marketplace as somebody who buys. So these are the kinds of things you start talking about, that begin to lead us to have some ability to quantify. Next slide. So you want to talk about tangible benefits. So if I buy an Eevee truck, you buy one of the new Tesla semis. Fueling is much cheaper, because diesel right now is $6 a gallon in California. And I can my charging costs for running it will be this amount, I will get tax and credits and rebates, I will be allowed to serve certain markets that I would not otherwise be allowed to serve, because they don't let heavy diesel trucks and, and so with those three things, I can begin to build basically an ROI calculator for my customer, which demonstrates a couple of things. One is it ideally demonstrates a positive return. And it shows that you make money because you bought the truck. It demonstrates that I understand your market. And as somebody who wants to sell something, demonstrating that empathy and understanding is a big, big sales opportunity. But all of these are things that I can reasonably estimate and calculate next slide. Then we've got the intangible benefits, the beauty of wearing a perfectly custom tailor pair of jeans. Why? Why would somebody do that? Well, because it makes them feel good. It makes them feel like they stand out. If they're, they're more comfortable, they're potentially more durable, which is a tangible benefit. And it gives them a cool factor that they wouldn't have otherwise, by having it. And so what you see is this constellation of multiple benefits, tangible and intangible that you can put around people. And then what I want to be able to do is start using typical agile estimating techniques, which are is it more or less than this is bigger or smaller than that, and what I know what these things cost or what their value that. So now I can begin to attribute $1 value back even the most intangible benefit. So hopefully that makes some sense to people. Because the thing you got to keep in mind is this is also a system that happens in real time, which is, on one hand, there's interactions between the various benefits, right, I can have a benefit, where the the changes I would make in the system that reduce maintenance cost might decrease driver safety. Increasing driver safety might increase on time delivery, because I don't have accidents and delays because of it. And so there's a balancing act that you have to do. But beyond that there's an optimization that you want to do, because it's I'm quantifying benefits that begins to give me a razor to let me decide what's actually going to be in the product, and helps me define the space my products ultimately going to occupy. And to do that I need to be able to do pricing. And I'll kick it back over to Jason to be able to talk about the mechanics of doing pricing in this world.
Jason Tanner 24:15
Thanks, Marc. And I think he made some really key points about the calculation of value based on the benefits because this allows for pragmatic pricing, there's some real economic value in the reduction in fuel costs, the rebates from the government for the Evie purchase and so on, then we need to think about well, given all of those tangible benefits, how can we come up with a price that is fair and reasonable and attractive to the customer? So the way to do that is with the Profit Stream pricing model. We still use the same theme of systems thinking to identify all of the different aspects that create value, which will then drive the pricing model to maximize profit over time. That's the real focus of this model. So it starts with strategy. And this defines how we're going to compete in the market. And I'll go through the strategies in a moment. That leads to the price structure, Marc mentioned different market segments, we should think about the price structure, relative to which market segments that we want to pursue, because we want to offer differentiated pricing by market segment to offer the right set of benefits and features to those customers in the solution that they're buying at different price points. And so identifying the structure will allow us to do that before we ever even start thinking about the price level, which is in the specifics. This is where we identify the actual price number. For all of those different segments. Based on the value exchange model, I mentioned an annual license that would be an example of a time based data exchange model. Another value exchange model might be by transaction, which would be like Stripe every time that a transaction occurs, there's a charge based on the price that we've chosen. And then the policies which are critical to protecting profitability by ensuring that we have clear processes and procedures to protect the integrity of the price, and not to diminish the profitability based on excessive discounting in the sales process. So here are some key things to consider about what to do and what not to do. So the first mistake that is often made when thinking about pricing and strategy is cost plus, it's an attractive way to go, how much will it cost for me to develop the solution? And how much margin do I want to generate? That's my price. The problem with this is that it doesn't take into consideration the different segments, because some customers will really appreciate a great deal, they're actually willing to pay more for the product. But also it may eliminate customers who can't afford the price that you've set based on cost plus pricing. And you will lose those sales. Instead, if I could differentiate and set two different price levels, where the customer wants to pay more and the customer wants to pay less, I can actually retain both sets of customers and increase the profitability. The second biggest mistake, which is starting to shift a bit is market share driven pricing. The notion that I'm going to just go and capture as many customers as I can, I'll worry about profitability later, is falling out of favor. And while there is there are pricing strategies based on penetrating a market, they are very thoughtful in how they pursue that objective. I'll talk about that in a moment. And the other mistake that a lot of people make is asking how much customers are willing to pay. Now while we do want to investigate the willingness to pay, we want to use more sophisticated methods and simply saying, how much would you pay for this product or solution. And product managers that go down this path, they think they are doing the right thing often get frustrated because their market research conflicts with the lack of success in the marketplace. So here are the 10 pricing strategies, or software enabled solutions. And I've highlighted the two most important strategies if possible, if you actually have a premium product that premium pricing is best, you're going to have the maximum profitability because you're offering a premium product is priced higher than any competitive alternatives. And you're going to acquire the highest level of profitability. The second most attractive option is value based pricing where you can actually articulate and describe the value of the solution that is aligned to the price level, as you said, is acceptable to the customer, because they recognize that they are going to get that value and they're willing to pay at that price level. No penetration is the first on the list. No penetration is different than market share pricing. Market share pricing is just I'm going to price as low as possible. acquire as many customers as possible, not really think about the future. A penetration strategy is very deliberate. It is a limited, offering at a lower price level and competitive alternatives with a plan to raise prices in the future. or, and I'm explicit about that when I choose a penetration strategy. Perhaps for the first three months, I'm going to penetrate the market at a low price. And then after three months, deliberately raise my price and shift my strategy to potentially competitive strategy. Stable pricing is probably more applicable to b2c, or business to consumer type offerings, where I'm trying to offer a stable price over time, when there's variability. Best example of that would be offering a stable pricing plan for utilities like heating. So the Northeast, the electric companies might offer stable pricing as an offering to customers who can't afford to pay wildly different electric bills throughout the year, particularly in the winter. So instead, they make an offer of a stable price over the course of the year. So lower income families can afford to pay their heating bills, even when it's really high usage in the colder months. Dynamic Pricing best example would be like airlines, where you would have a different price for different offerings. So high low is well more b2c type of price choice price strategy choice, where I'm going to progressively lower the price, or deliberately go from high price. I initially launched, for example, a video game six months slower, I mean, six months later may lower the price. Very attractive and popular B to C strategy. Economy is simply a stripped down version of a solution, which is a viable strategy for b2b solutions as well want to have it almost like a no frills solution offering at a very attractive low price. Skimming is more likely a b2c price strategy. However, it may also apply in some cases to b2b strategies where this is a much more progressive, responsive and adaptable strategy where I'm lowering the price a little bit over time for my offering, as competitors catch up and continue to compete with me a different with different solution packages. And I want to be able to maintain competitive pricing, while maintaining profitability. Don't say much loss leader and b2b loss leader might be I have an offering in my product portfolio as a way to acquire customers who want to purchase other solutions within the portfolio. So really want to focus on premium and value when I've got a new solution to consider for a pricing strategy. So one action to take and consider after this webinar is to stop uncontrolled discounts. And this chart illustrates that the buying cycle actually increases with higher discounts. And one driver of this may be that the buying cycle gets extended through a lot of back and forth negotiation when discounts are possible and suspected by buyers, happens a lot with procurement where they're going to extend the buying cycle keep demanding more and more discounts. And just not a good idea to not have controls in place for discounting. The other downside to excessive discounting is that it was it results in poor performance and discharges struck me really, for the impact of how much discounting can affect the profitability of the solution. See, see the top 10% of salespeople. Their close rate is 26%. But their average discount is only 4% which is dramatically different than the bottom 10% their close rate is nearly half as effective 42% lower, and yet their average discount is four times higher, or 16% or more. So clearly discounting is not a good idea for maintaining sustainability and profitability. So what to do is implement fences and policies. Now offense is a policy is designed to prohibit customers who are in one segment from getting a better deal by jumping into another segment. So an example of a fence would be a discount for veterans, which is great If I can identify myself as a veteran supplier densification, fit fence, identify identify myself as a veteran, I can qualify for discount and non veterans who can't identify as veteran would not be able to get over the fence. There are very fixed criteria that are typically for lower prices for people who are in certain fences. Another example of a fence might be a time based fence, all of the sudden Cyber Monday offerings, time based fences if you take advantage of the offering, during a particular time period, you qualify. The third type of fence would be geographic. And those are tricky, particularly for global corporations that have offices in multiple countries we want to prevent a company is headquartered in the US, for example, from getting pricing for Latin America, for example, where maybe a lower price point. So we established a geographic fence to ensure that the headquarters is the location of reference for the purchase. So first is implement fences to protect the profitability. Now price policies are rules and conditions for sales that govern how discounts are offered. So the goal of the policies is to ensure consistent customer behavior through transparent communications by all of the salespeople, and we want to align the price paid to differences in the cost of serving value received. Okay, what does that mean? An example of a price policy might be authorizing salespeople to be able to offer up to 10% discounts. Without any authorization if the discount is requested by the customer. The customer asked for a 50% discount the need to then consult with their management to approve or disapprove disapprove the discount. Or we could design a policy where if a customer requests more than 10% discount, there's some type of trade off. So for example, if I typically offer training as part of my solution, when a customer makes a purchase, if they ask for a particular discount, I could accept a discount, but remove the training from the offering. That's one way to ensure that whenever we give something we get something back in return. So policies and fences are immediate steps that companies can take to really protect their profitability their solutions. Want to add one more series of ideas, which is to consider three rules. The first is better before cheaper, instead of competing on price compete on value have Marc talked a lot about customer benefit analysis. And really identifying how customers perceive value, when we want to keep adding value. And particularly in this times that we're in now, where there's economic challenges, it's even more important now not to cut price. In fact, it may even consider raising price and continue to add more value, make the solution better keep it articulating a valuable the solution is for your customer based on the benefits that they're trying to achieve. Second is focus on revenue before cost. Again, don't drive profits by cutting costs. keep finding ways to earn higher prices or higher volume, how can I extend my relationship with the customer, grow the account, add more value and keep driving the revenue without cutting too many costs? And the third rule is there are no other rules. All of the choices and decisions can be viewed through these two lenses. Am I actually making decisions making my my solution better? And am I actually making a decision that's going to drive revenue, increase retention, decrease churn all of the activities that would continue to grow the number of customers that are driving revenue. And you can see the source here. This is from a great book by the two authors that you see there. The final common is if you're thinking about freemium, no freemium ever, freemium is not a good idea. We don't ever recommend it. We do support short, free, free trial terms. But a freemium offering can be very dangerous you could find yourself supporting many free customers for years so want to avoid that. So Marc the scene Other questions in the q&a?
Marc Danziger 40:10
There didn't work outside and I muted no questions in the q&a. But I want to toss a comment in which is this advice when you first read it feels very narrow and specific. And you're like, but how does this apply to me? Like, what do I do with this? And I'll tell you as an agile practitioner, that I have in in two executive workshops that I've led in the last, like month and a half. I have sprinkled language and concepts from this into my conversations around around agile, it's given me a new a new vocabulary. And that I can tell you with absolute certainty, that speaking to executive level, stakeholders, through these lenses with this lens with this language, absolutely changes their receptiveness to talk about foundational, the kind of foundational stuff, we talked about natural and that bringing this perspective to bear is insanely differentiating, in terms of getting them to understand the business why of what we're trying to get them to do.
Jason Tanner 41:24
Yeah, for sure, definitely changes the context of the conversation very quickly.
Marc Danziger 41:28
Yeah. So questions from anybody, there's got to be some questions over this, put them in the chat or in the official q&a. No questions. We explained it that well. So suggestion, where do people go with this? Like? How would somebody who is interested, take this step further and learn more about it? And feed you a softball?
Jason Tanner 42:13
Great question. So let me get the screen sharing back. Question Now I think
Marc Danziger 42:30
there's one question which was, which I covered a little bit. Oh, hang on, there's one open question. Forgive me that it's a compliment. Thank you, Maxine. Thank you very much.
Jason Tanner 42:40
So what to do next, we are going to be co teaching our Profit Stream designs workshop in January. So encourage you to consider registering for that. And we can put the link in the chat as well. If you want to discuss more definitely contact us for an assessment. We'd certainly love to work together if you're having churn problems. If you're having retention issues, acquisition problems. In a lot of cases, we've been able to assist companies with changing your pricing and packaging to better align with customer value to improve business outcomes. Of course by the book of the FCO
Marc Danziger 43:25
weird curve, flashing cursor giant cursor thing on the screen. I don't think we're seeing anything legible.Jason Tanner 43:31
How about now? Still, weird green cursor? That's strange, when I do.
Marc Danziger 43:40
So Dmitry asked the nonprofit and government question on, they don't operate with the profit motive. Although more and more government agencies are in fact being asked to sort of demonstrate net profit or net positive revenue, as cities and state governments come under economic pressure. I'm very involved in my city as a citizen. And there's absolutely pressure on all the city agencies to sort of define, like how they are recovering their cost as best possible. But I think that the the key issue here is particularly for nonprofits, the ability to generate ongoing funding, which is what's necessary for your sort of survival is driven very much on your ability to show both donors and the people who actually are willing to pay and consume what you do like my, my opera customers, that there's value in what's being done. And so sitting down and having clarity about what value is being delivered to who, and being able to show that with transparency is a massive differentiator, in grant giving and in your ability to go out and fundraise. So for nonprofits, it's absolutely the case in many government agencies, they're really isolated from this. And one wishes that they thought about it. And you know, in a, in an ideal world, there wouldn't be profit driven, but there would be profit aware, ie Am I generating more value than I'm consuming. But in some government agencies in an increasing level, we're seeing pressure from their elected speaker in turn under pressure, economically and fiscally, to demonstrate the clear value that's being delivered by an agency and or to have that agency move as close as it can to being self sufficient revenue neutral. And he had to be treated at an effect has come close to answering your question. But it's I believe it's somebody who's been fairly deep in both government and nonprofits, that it's absolutely the case that this is a valuable construct for them.
Jason Tanner 45:54
Yeah, I would agree we have a Profit Stream partner in Europe, who is also working with the Montreal public transport transportation system and applying these concepts as they modernize the entire network for subways, buses, and so on. And the challenge they have is they're making a major investment, they need to have one ensure that there's a return on an investment that is at least breakeven for the system. So they're using the exact same modeling for all of the features, for example, for mobile mobile payment, what are the benefits? What are the costs for offering that solution? Clearly, the people that want to use the public transit want that feature, they want easier payments, and mobile identification with their tickets embedded into their phones. And they're actually working through all of those costs as a considered a new fair prices, without exceeding what customers are willing to pay for the rides. All of the same thinking applies even for that government situation. They don't anticipate that they would necessarily be generating a profit from the system. But they absolutely need to ensure that there's a payoff on the investment in this entire systems thinking approach allows them to take everything into consideration in a way that's economically viable.
Marc Danziger 47:31
So we have another question about transparent pricing. On in which the statement is that one, some software providers have visible pricing and others have contacted sales rep. On their sort of an editorial that says, I avoid anything that doesn't allow me to learn about the pricing without a sales rep. What do you think Jason, about sort of price transparency?
Jason Tanner 47:55
Say for definitely, certainly, for business, a business transactions, you see a whole lot more of that than you do with b2c. I'm suspicious every time I see it, as well. And I think the one struggle that a lot of companies have is one, they have very complex price configurations for solutions, where they are driven to have that approach of contact a rep, because it's so hard to figure out the price of our product that you'll have to speak to a rep. Now, for some types of special custom purchases, it makes sense. And I actually do agree that more transparent pricing is more effective. And if particularly if you actually have a clear, premium or value based strategy, where you're willing to expose that pricing to competitors, and actually address it head on. So like, Bob, I agree that it's is much more effective to move the sale forward when people actually have an idea of what the price is because then they can start building their own mental model of how much it will cost. And the reality is for a lot of these b2b purchases, people can go find the price anyways. Now, it may or may not be precise, but it's going to be somewhat accurate, based on doing some basic research of what other people have paid for the same solution. So I'm in favor of more transparency.
Marc Danziger 49:44
More questions? Thoughts and responses. I'm interested in what people think of this framework. If it's the first time you've been exposed to it Rick bounce complaints. Dad jokes. I'm fishing for interaction here, folks.
Jason Tanner 50:13
Marc, thanks so much for your time to do this. And thank you for everyone who attended. certainly enjoy talking about Profit Streams and you've got our email addresses there. If you'd like to connect with us further.
Marc Danziger 50:26
Thanks so much, everybody.
