How to Choose a Pricing Strategy for Your SaaS Business


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Owning a Saas business is something of a great challenge in this ever evolving digital world. Like all other businesses, SaaS also need some cash to survive and be sustainable. Just like other marketing strategies, the pricing strategy also plays an important role towards the growth of the business.

When it comes to converting consumers, SaaS business is all about learning the consumer’s behaviour towards your product. Certain triggers help influencing the purchasing behaviour of the customer. You need to price your SaaS business such that it does not seem cheap scam or very expensive, pricing is a very tricky part in the SaaS business. Here, in this article, you will find how to get started with extensive research to get the most appropriate pricing for your SaaS business.

Know Your Customer Segments

Whichever the business is, for any kind of marketing, knowing the segments of the customer is must. Similarly, for a SaaS business, the world is your market and customer can be based anywhere in the world. Find out your target audience and manage pricing accordingly. For an instance, if your target audience is in the US and your product is priced in CAD, most of the customers will bounce back from your website.

Also, you need to make sure that the Freemium led approach is not entertained, or you ll end up with the death of your business.

Optimize the Pricing Page Accordingly

Pricing on the basis of versioning is an important context. The pricing page should be able to reflect on how different versions can be the requirement of the consumers. It can be difficult to decide the features depending upon the different versions of the software along with the price discriminated. Onpage pricing is the most important segment as it is the first thing to come across the consumers’ eyes and can be the decision maker for the customer at times and let them take first step. The naming of the packages has greatly evolved with time. It is no more premium or basic, in order to help the customers of certain segments to select the plan based on their need themselves. Optimize the on page pricing according to the segment of your customers, in order to create quick sales growth of your SaaS business.

Align Pricing with Business Model

Your SaaS model is the representation of your business in the market. All the segments fall under the audience of your business model. While planning a pricing strategy, you must think regarding the difference between the various segments of the market, such as the freemium, Low Touch, Inside Sales, Field Sales and how these various approaches require alignment with the price points and sales complexity. Specifically talking about SaaS business, they are tough on cash flows as the cost of marketing always occurs upfront and the revenues generated are into the future. Being a startup, you may lack on the part of strong past, therefore, calculating the lifetime value is difficult at an early stage.

But, once the SaaS business has achieved traction, it can have strong cash flows with lowest costs associated. The only requirement is to get your business to that point, and rest will be assured on the basis of the portfolio of your SaaS business.

Offer Discounts with Strategic Payment Plans

Offer free trial or demo for your business in order to gain the attention of the customers in the market. When your product is strong and you start gaining a sound amount of customer base, it can help you in various ways. Once the visitors get hooked, it is the biggest challenge to find a way to convince the customers to get the plan and work for a long term. When you offer incredible discounts for annual plans, the customers tend to maintain the relations with your business. Discounts can help you with increasing the brand royalty and then leads to the repeat purchase of the business. The cycle will end up with a huge profit along with the sales growth to your SaaS business.

When talking about SaaS business especially, there are four types of pricing chosen by the entrepreneurs. Below, I have mentioned all four. Read out and find the most appropriate one for you!

Clear and Transparent Pricing:

When you are transparent about your pricing and expenses, you can be great at standing out among the crowd.

Pricing Per User:

Pricing per user is something that promotes team based services when you are SaaS.

Feature-based Pricing Model:

This kind of strategy is the most popular strategy used by the SaaS businesses these days.

Pricing Model based on Usage:

This model is mostly preferred by the email marketing industry.

Ultimately, there is no best strategy, all entirely depends on your requirements. You need to figure out which strategy is the appropriate one for you. Being a SaaS business, you can upgrade and change the pricing strategy occasionally, if there is something wrong with the strategy. Also, one must not only focus on customer acquisition or lead generation, but the primary focus must be on the pricing strategy.

Mitul Patel
Mitul Patel, CEO and Founder of RORBits, a leading Custom Software Development Company with expertise in building website application, eCommerce store & native mobile app development. He is helping Non-Profit Organization to manage their donations through DonorKite.


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