the secrets to saas pricing
TRANSCRIPT
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
