1. SaaS companies, don’t take pricing seriously
Compared to SaaS products and sales, pricing seems like a pretty straightforward affair.
Isn't it just giving SaaS a monetary amount? How difficult is this. There are even some SaaS companies that can set the price with just a snap of the product and market personnel.
If you really think so, I'm afraid your SaaS will hit a wall as soon as it hits the market; the problem is that you don't yet know it's the price.
How important is pricing for SaaS with a subscription revenue model?
Let’s just say that price is both the number one factor in attracting customers to subscribe; it can also be the number one reason customers leave you .
Because in the face of a new species like SaaS, the only information potential customers can get is price. Therefore, the price is also considered to represent the service efficiency and service quality of SaaS .
If the price is too low, customers will think that your SaaS is ineffective and the service quality will not be very high. But if the price is too high, SaaS will follow in the footsteps of software pricing. Even if the customer thinks that they have spent a lot of money, they do not know how much the software they bought will help the business.
It's better not to buy it than to risk so much cost.
That is to say, if the pricing is not right, it will affect customer acquisition in a small degree; and growth will be hindered in a serious way. So, the issue of SaaS pricing cannot be overemphasized.
In fact, the truth of the importance of SaaS pricing is not incomprehensible. The question is, how should SaaS be priced as a service, not software?
2. What is the difficulty of SaaS pricing?
In the product-centric era, product pricing is simple and straightforward. For example, pricing a SKU is its cost plus the expected profit margin, and the pricing is done. This is known as cost-based pricing.
After entering the era of service economy, the original product pricing method is no longer applicable to services . This means that, for SaaS, the way the product is priced is not working.
Because SaaS is not a product, but a service; and pricing a service is much more complicated than pricing a product . why?
First of all, for SaaS services, because of the lack of a reference price , there is no basis for pricing.
The so-called reference price is the price point of a product or service in memory. For example, the reference prices of smartphones with various configurations, the price range is relatively certain.
Because SaaS is a new service category, there is telemarketing list no consensus reference price so far. This is the basic reason why SaaS pricing is difficult.
Second, the pricing of a service is not a price for an item, but a price for the result of a service .
Now comes the problem, a result may correspond to different value sizes . For example, customer acquisition tools can be used to obtain sales leads. For some businesses that are highly dependent on traffic, such as selling office supplies, customer acquisition tools are of great value. However, for businesses that do not rely on traffic, such as bidding projects, the value of customer acquisition tools is not so great.
That is, customers assign different values to the same result. This is the main reason for the uncertainty in pricing.
Finally, the more specialized the services provided by SaaS, the more difficult it is to price them .
That said, not all SaaS is the same price. Pricing complexity and price levels depend on the level of specialization of the service. For example, the price of OA is usually lower than that of CRM, and the pricing is easier.
Because each SaaS has a different degree of specialization, such as CRM, there are also big differences in specialization. Specialization differences make SaaS pricing more difficult.