Please introduce yourself and explain how you came to work as a specialist in pricing strategies and how he fits into the picture.

I studied Computer Science and Business Administration to become a software developer. During my studies, I realised that my fellow students developed their programs more efficiently, so I decided to work on the commercial side of digital products. By coincidence, I wrote my master’s thesis on a pricing topic, and I learned what a fascinating topic this was: pricing is the profit lever #1. Warren Buffett once said that no single decision is as essential as a pricing decision. I wanted to learn more about this field, and I am still exploring new facets after almost 20 years in pricing.

Pricing is a complex balance between value and perception. How do you approach pricing media content or services to maximise revenue while maintaining customer satisfaction?

Yes, pricing is always a two-sided sword: if you increase prices, you make more money in 99% of all cases. However, you most certainly also lose a few customers. Frankly, price optimization does not have the goal of boosting customer satisfaction. However, many examples exist where a price model change improved profits and customer satisfaction. Telcos once introduced bundles and flat rates (instead of per-minute tariffs). Most consumers paid more than before but were also happier as the “taximeter” per call minute “disappeared” in their minds.

Price innovation can be a game-changer for media (and other) companies. Could you share an example of a unique pricing strategy with an enormous, positive impact?

I see Adobe’s 2012 price model change from a license model, priced per year and product, to a subscription model, priced per month for the entire suite, as the pivotal moment in pricing over the last 12 years. Almost all software companies followed suit over time, inspiring all (including media) companies to strive for more recurring revenues.

Digital transformation has significantly altered consumer expectations and consumption habits, while AI will have a further transformative impact. I have two questions here:

a. How should media companies adapt pricing strategies to stay competitive and profitable in this evolving landscape?

An AI is only effective for pricing purposes if the data behind it is solid. As it is, many publishers struggle collecting and structuring unbiased data on which you can base your pricing. The two prominent use cases for an AI in pricing are (1) the collection of competitive pricing (e.g., via website scraping) and (2) dynamic price setting based on available real-time data.

b. Print income remains critical in many traditional publishers’ overall revenue mix. When it comes to print pricing, how do you look at the main levers—circulation and advertising?

You have to milk the cow as long as it provides milk. In the long run, printed magazines and newspapers will be dead. Will it take ten, twenty or 30 more years? We don’t know. I would no longer invest in massive new customer acquisition strategies (through pricing) but optimise my pricing for existing customers (foremost subscribers). Long-term subscribers are usually price-insensitive; thus, it’s not unusual for publishers to increase prices by 10-15% every year. The loss of subscribers is generally marginal, likewise the impact on advertisement revenues.

You will speak at Revenue Europe in Berlin. Off-stage, what are some of the conversations you’d be keen to have with fellow attendees?

I would love to see some business (not only pricing) innovations in the media and AdTech sphere. However, I should take care of not instantly thinking about how to monetize them optimally 😉

Meet Sebastian and your peers tasked with monetizing media at our Revenue Europe summit in Berlin on October 1, 2024. Find more information and sign up here.