Software as a service pricing strategy - Perceived value, SaaS pricing, Value metric.
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This document discusses the importance of a dynamic pricing strategy for SaaS products, emphasizing continuous evaluation based on customer value and product evolution. It advises against static pricing and suggests various methods for setting and validating prices, including customer feedback and understanding user needs. Key insights include the significance of defining value metrics and the potential for upselling to maximize revenue.
Software as a service pricing strategy - Perceived value, SaaS pricing, Value metric.
- 1. SaaS pricing Software as a Service Pricing Strategy Notes made by Artur Trzop
- 2. What’s ?
- 3. What is your value proposition? Someone will pay you because you deliver value proposition
- 4. Pricing strategy is something you should do continuously ● If you set price once and then do nothing - this is wrong! ● You product gets better and your pricing should evolve with the product. ● You customers get more value you should charge accordingly
- 5. Pricing page is the most important page on your site If users are confused and cannot figure out what plan applies to them then they will leave
- 6. Perceived Value Look at price from customer perspective, how much she is willing to pay? ● Ask customer to pay. If she pay then you can treat this as validated price that can work. ● If she says she would pay but she does not then you need to iterate with different customer or different pricing. ● Customer commitment matters.
- 7. Talk to people to understand what’s the most important thing for them ● Why they use product ● What is the most important value they get
- 8. Who is your user and who pays you ● User: For instance the kids use app ● Who pays: parent pays for the game app
- 9. How to set price?
- 10. Add profit margin on top of your costs to set price ● You limit yourself based on costs
- 11. Should I compare my product pricing with other competitor solutions ● You should avoid that because you don’t have full picture of your competitor costs structure ● You want to distinguish your product from competitors in the first place ● Otherwise you would not do the product ● You are different and you should charge differently
- 12. How to pick the price? ● Guess price and validate if someone pays or not ● Guess again and validate it ● Start with a bit high price in your opinion. Validate if anyone wants to pay. If yes, try with bigger price. If not then try with smaller price.
- 13. How to start?
- 14. What we want to optimise for? ● Earnings ● Learning
- 15. You could start with learning ● Give early adopters the product for free to try ● This give us knowledge how people use it and we get feedback
- 16. How to validate early adopters? Ask people if they would like to support your product and switch to paid plan
- 17. What if people don’t want to pay? ● You doesn’t solve the real pain problem for them ● Or they are not the right early adopters with real pain problem ● Look for people with pain or pivot your assumptions
- 18. How to pivot? How to find the right problem to solve? Talk to people, the problems emerge
- 19. What’s next?
- 20. What people care about in your product? ● Learn how people use app to figure out what they most care about ● What is the key feature they use that helps them
- 21. Value Metric the metric depending on which you set your prices
- 22. Example value metrics ● User seats (slack, trello, dropbox business) ● Emails sent (Mandrill, Sendgrid) ● Repo number (Github)
- 23. What’s perfect Value Metric? ● should align with your customers’ needs ● grow with them ● be easy to wrap one’s mind around
- 24. With bigger plan users get more value ● When people needs grow they fit into bigger plan ● Charge accordingly
- 25. Source of revenue ● New acquisitions (new paying users) ● Upselling (sell more to already paying customers)
- 26. What to avoid? (it depends)
- 27. A/B testing pricing ● doesn’t work unless you have huge amount of customers ● there is risk with unhappy clients figuring out that they pay more ● try guess price and validate it instead of A/B testing
- 28. Don’t promise unlimited plan ● At some point big customers may arrive and you should charge them based on value they get.
- 29. Books
- 30. Don’t just roll the dice describes software pricing strategy and psychology of pricing http://download.red-gate.com/ebooks/DJRTD_eBook.pdf
- 31. Price Intelligently SaaS Pricing Strategy http://www.priceintelligently.com
- 32. Short intro articles Ten Proven Pricing Models (slides) https://www.caycon.com/blog/2011/02/ten-top-product-pricing-models-for-startups/ SaaS Pricing and Value Metrics - Lessons from the Top Seeds https://www.chargebee.com/blog/saas-pricing-and-value-metrics/
- 33. The most important message Pricing is something you work on all the time!