The Secrets to SaaS Pricing

The Secrets to SaaS Pricing

Lars LofgrenProduct Marketer - June 2013

@larslofgren #KISSwebinar

The 3 Models of SaaS Pricing1

How to Pick the Best Price2

8 Pricing Hacks3

How to Test New Pricing4

We’ll cover...

Model 1: Targeting Small Businesses

1

Self-service, no sales team, limited support

Pricing in the $10 - $100/month range

This mean you need to focus on scale and acquiring customers

cheaply.

Similar companies

Model 2: Targeting Enterprise

2

Sales team, contracts, full support

Pricing is $1,000s or $10,000s/month

Very little is automated, your team will be working very closely with

each customer.

Similar companies

Model 3: The Mid-Size Hybrid

3

Automated marketing with a sales team

Pricing is $100’s/month

You’ll need to scale your leads but you’ll have a full sales team to

close them.

Similar companies

Pick the right price range for your vision

2 Bad Methods for Pricing

1. Product cost + X%

You’ll undercharge some customers and overcharge others.

2. What does the customer want to pay?

People have no idea until you ask them for their credit card.

Pricing by Value

Value-Based Pricing

Your customers get value worth $Y and it only costs them $X.

For B2B, focus on money earned or saved

How much extra revenue do they earn?1

How many hours do they save?2

What other costs do they avoid?3

Ask your customers:

Capture more value from each customer.

There’s no such thing as a perfect price.

If you need more guidance, pick a price that’s 10% of the value

delivered.

8 Pricing Hacks

8

Rule 1: Go Annual

You’ll improve cash flow, reduce your churn, and improve your

revenue.

Rule 2: Don’t Add Unnecessary Digits

$1000 looks cheaper than $1,000 or $1000.00

Rule 3: Avoid Discounts Unless Launching

Discounts create destructive customer habits. Do not use them

regularly.

Rule 4: Offer Multiple Prices to Anchor

Rule 5: Use pricing plans to segment customers.

Different customer types get different value from your product.

Capture that value.

Rule 6: Double Your Price

We all tend to UNDERvalue our own services.

Rule 7: Be Careful With Freemium Plans

Very difficult to make it work in B2B markets.

Rule 8: Grandfather Old Customers In

As long as you don’t raise prices for old customers, you won’t get

any complaints.

These are rules, not laws.

How to Test New Pricing - 4 Steps

Step 1: Track subscription plans for all customers

Subscription plans1

Each monthly charge2

Any cancelations3

Access to total revenue, average revenue per user, and churn

4

Step 2: Launch Your New Pricing Page

Step 3: Track your entire funnel

Step 4: Track ARPU and churn

KISSmetrics helps you find the right price

Connects all data to individual people1

A/B tests for your entire funnel2

See which plans are most profitable3

VIP KISSmetrics Demo

kiss.ly/webinar-20

Q&A Time!Lars Lofgren

[email protected]@larslofgren