Pricing your AI product: Lessons from 400+ companies and 50 unicorns | Madhavan Ramanujam

The good founders need to be able to dominate both market share and wallet share. It is not a choice. You need to get better at both. It feels like every company wants to be an AI company these days. How is AI pricing different? The winners in AI will need to master monetization from day one. If you're bringing a lot of value to the table and you started training your customers to expect twenty dollars a month, then you Anchored yourself on a raw price point, you're in trouble. 20% of what you build drives 80% of the willingness to pay. But the irony is that that 20% is the easiest thing to build often. What would you say is the biggest lesson you want founders to take away? If you think about market share and wallet share, let's think about it as a two by two. The quadrant that you really want to be in is the outcome based. Pricing model. The top right quadrant where you have great autonomy and great attribution. About five percent of companies are probably in a true outcome based pricing model. If you want to win in AI, figure out a way to get to that quadrant. Do you feel like the popular IDE startups are gonna be in trouble down the road? Some of them, yes, without Naming names. Today my guest is Madavan Ramanujon. Madavan is the smartest person I know on pricing and monetization strategy.

As managing partner at Simon Kutcher, he's worked with over two hundred and fifty companies, including thirty unicorns, to help them figure out how to price, package, and grow their products. He's also the author of the book on pricing called Monetizing Innovation. And now he's back with a new book, a sequel, called Scaling Innovation, which teaches you how to architect your business for long term profitable growth. And also how to avoid the common traps that teams fall into that keep them from building real, durable, sustainable businesses. Bill Gurley wrote the forward. I had a chance to read an early copy. I absolutely loved it. It's a book that every founder needs to read. And in this episode, Modavan shares many of the biggest lessons from the book.

Including how pricing strategy is very different for AI companies. Why you need to get your pricing model right from the start in today's market? A very simple two by two to help you pick your pricing model. How to gain pricing power, a ton of tactical advice for negotiating more effectively. The most common traps founders fall into, and so much more. If you order five copies of the book, Modavan is offering a chance to win a free conversation with them, a sign copy of the book.

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