76: Dan Balcauski: Adventures in the world of SaaS pricing

In our latest episode, we're thrilled to feature Dan Balcauski, Founder of Product Tranquility, as we navigate the world of SaaS pricing models.
About Dan Balcauski Started his career in product management at National Instruments, based in Austin, Texas. Ascended to the role of Product Strategy Principal at SolarWinds, a SaaS company serving DevOps and IT professionals. Made a significant shift to B2C, leading product at LawnStarter Lawn Care. Boasted a successful freelance career as a product manager, earning a place in the top 3% of PM professionals worldwide on Toptal. Imparts his industry knowledge as a program leader at Northwestern University, where he teaches product strategy.
In 2019, Balcauski launched Product Tranquility, a venture dedicated to assisting B2B SaaS CEOs in defining pricing and packaging for their products.
A Personal AdventureWhat sets Balcauski apart is his remarkable spirit of adventure. Before starting Product Tranquility, he embarked on a personal voyage as an independent travel consultant, planning and undertaking a global expedition through 21 countries. This extraordinary journey demonstrated his fervor for continuous learning, during which he acquired new skills ranging from digital marketing and Spanish proficiency to kiteboarding and Argentine Tango.
Join us as we dive deep into the insights and stories Balcauski brings to the table.
Value-Based Pricing
In our engaging chat, Dan Balcauski brought up some crucial insights regarding the struggles businesses often face while setting up pricing in the SaaS industry. There's often a lack of structure, leading to heated debates rather than an organized approach. To combat this, Balcauski introduces the 'Services' model.

Key Challenges in Pricing:
An unclear target customer profile: Companies often struggle to understand exactly who they are serving. Poor understanding of how they create customer value: Businesses might be unclear on the unique value they deliver to their customers. Unclear product differentiation: Companies often grapple with distinguishing their products from others in the market. Underappreciation for the depth of decisions in pricing and packaging: Many overlook the vast array of factors impacting pricing, focusing only on surface-level elements.

The 'Services' Model:
The 'Services' model stands for Segments, Value, Competition, and Strategy, and was designed to address these challenges.
Segments: Understand the specific context and constraints of your customer segments, as they dictate what they value most. Value: Recognize how each segment perceives value and rank orders value drivers, influencing how they value your product. Competition: Be aware of the competitive alternatives each segment has available. What would they use if your product didn't exist? Strategy: This comes in the Michael Porter sense of the word. Strategy involves trade-offs; you can't be everything to everyone. Decide who you're going to target, how you position yourselves in their minds, and how you'll balance the different elements of SaaS packaging. This includes price metrics, price models, offer configurations, etc.
The combination of these four components informs the price level you set, helping your business achieve its objectives. The 'Services' model ensures a more thoughtful, strategic approach to pricing, moving away from arbitrary decisions.

What is value based pricing? 
Dan Balcauski clarified the concept of value-based pricing and distinguished it from other terms like value metrics and price metrics.

Value-Based Pricing
Value-b