10 Experts share their SaaS Pricing Strategies
Many companies usually choose to price randomly or by just having a look at their competitors. But what pricing should approach is with all the same thoughtfulness and systematic thinking that we take into consideration for product strategy, business model, and other elements of our business.
This are actual SaaS pricing strategies that should be used. You also need to take your desired target audience, the economics of your current working distribution channel, and all the other things that can come up with a thoughtful hypothesis.
Pricing needs to be thought about using a customer-focused framework, and it is one of the main SaaS pricing strategies. Many major growth hacking agency sit in a room and use simple guessing techniques by checking to come to their actual pricing, which inevitably leads you to a significant amount of money that is being left on the table.
Utilizing such type of customer data will normally prevent you from selling all those wrong products with absolutely wrong pricing, leaving you with an enormous amount of cash on the table.
Understand who you’re selling to and what, in return, do they need to accomplish as in their required outcome using SaaS pricing strategies and also as to how they will need to accomplish their appropriate experience and what value they will be getting when they have achieved their desired outcome.
This will help you by really getting to know your customers like that so that you can also start figuring out the core “value metric” your pricing should be architected around.
Try to run a test every few months to see what works and what doesn’t because it’s important in the SaaS pricing strategies. But before you start running tests, keep in mind that:
1) A pricing strategy should not always be about changing your price. It can sometimes include adding or even removing a freemium offer or any of such things.
2) Before you perform any kind of testing, you will need to track and even understand your baseline metrics.
When you decide on your SaaS pricing strategies, don’t base it directly on your competitors’ price: try basing it on the value you are providing towards your client in the proper terms of added revenue or reduced costs also including the cost of time.
Show them the profit scale that they are going to make by using your product, and this will allow you to use the concept of price anchoring, which will make it easier for them to see your price as a source of investment rather than cost.
Experimenting is good. Change the SaaS pricing strategies often if you want, and also, if needed, until you can get the signup, engagement, and the proper retention metrics that you have defined above. When experimenting, it is good to do it with your existing customers.
Make sure whether you properly understand that SaaS pricing strategies are a way of exercising marketing. It’s all about deciding as to where your developed products or services will sit on the value spectrum. It is important to be clear about the values that you might be delivered to your customers and then aligning with your pricing.
If you have good customers who are comfortable spending money on your Software, then there will be a certain percentage of the population willing to spend even more to have their problem solved completely or even more easily.
Whether it is for an even higher SaaS pricing strategy tier, add-on services, it is always crucial to have the success of any such SaaS business in which you can have a way for your customers to spend more money with you
Constant Quantification of your buyer personas is an integral part of a great SaaS pricing strategy. Mostly, these SaaS companies will know that they’re supposed to use buyer personas to narrow down their customer acquisition focus.
The worst thing you can do to your SaaS pricing strategies is set-and-forget about your pricing. You have to need and treat it as a constant work in progress technique for it to work successfully.
Your pricing strategy will never be perfect because of your competitors’ presence, the business environment, and your constant customers’ requirements changes.