"People think too much about how much to charge and not enough about how to charge — the model matters more than the price"
Evidence from the Archive
Simon-Kucher
First Round Capital summarized the approach as 'price before product, period'
Michelin tires — switched from per-tire to pay-per-mile pricing model, unlocking a price-sensitive trucking market that would never have accepted a 20% premium
Author of Monetizing Innovation (the most widely-read book on pricing strategy) and Senior Partner at Simon-Kucher with experience across 400+ companies and 50 unicorns — when Lenny asked Twitter who the smartest person on pricing is, Ramanujam was by far the most mentioned. Their core argument: Figure out pricing BEFORE building — willingness to pay should inform what you build.
The evidence is specific: Porsche's Cayenne SUV — every feature was battle-tested with customers before a blueprint was drawn; big cup holders stayed, manual transmission was cut; became Porsche's most profitable product (50%+ of profit). Furthermore, michelin tires — switched from per-tire to pay-per-mile pricing model, unlocking a price-sensitive trucking market that would never have accepted a 20% premium. A two-sided marketplace that took 40 product ideas to the CEO, tested WTP, and found customers would only pay for 14 of them — saved months of building unwanted features.
In Madhavan Ramanujam's own words: "People thinks too much about how much to charge and not enough about how to actually charge the pricing model." (On the importance of early pricing decisions.)
Simon-Kucher
HubSpot as a hybrid model combining subscription base with usage overage
Michelin shifted from per-tire to per-mile pricing, unlocking a commodity market by matching the monetization model to how truckers derive value
Senior Partner at Simon-Kucher who has led pricing strategy engagements with over 400 companies and 50 unicorns, and author of 'Monetizing Innovation' -- the most widely cited pricing playbook in Silicon Valley. Their core argument: How you charge is way more important than how much you charge -- the pricing model must match how customers derive value, not what is in vogue.
The evidence is specific: Michelin shifted from per-tire to per-mile pricing, unlocking a commodity market by matching the monetization model to how truckers derive value. Furthermore, segment switched from API-based pricing to monthly tracked users, aligning the metric with how customers think about value. LifeLock as an example where episodic usage but ongoing value makes subscription the correct model.
In Madhavan Ramanujam's own words: "We usually say how you charge is way more important than how much you charge." (His core thesis on the most common pricing mistake companies make.)