Leave a comment

Value-based pricing - one of SaaS’s most favorite (and sustainable) pricing schools of thought. Conventional wisdom says that if you tie the price you charge for your product to a value metric that aligns with your product, then you're set for success. However, can any value metric that aligns with your value give you a healthy revenue model? Or do the revolutionary revenue models of Michelin, Google, et al. possess something more? How does this play out in SaaS pricing? If the core value of your SaaS is intangible (like better team collaboration, increased productivity, etc.) how do you tie back your pricing to that value? This post aims to answer all these questions and more.

  • DH

    Dani Hart

    over 1 year ago #

    Love the emphasis on long-term value here. Such an important thing to reevaluate.

    • SB

      Sadhana Balaji

      over 1 year ago #

      Thanks a lot, Dani! And yes, playing the long game is the quickest(!) route to build a sustainable business. :)

  • MH

    Matt Harney @ Appealie

    over 1 year ago #

    Solid read.

    How do you think about overcoming the sale barrier of initial price uncertainty in a variable model?

    Some products should be very forecastable....while others might be more challenging.

    As a buyer I might have a hard time even quantifying what my bills will be...and that might initially drive me to a fixed rate product.

    • SB

      Sadhana Balaji

      over 1 year ago #

      Glad you liked the article, Matt. Thank you! :)

      And I understand where you're coming from in terms of variable pricing. But the antidote to the uncertainty is tiered pricing.

      When you have several tiers with different ceilings to the chosen value metric, as a customer, it's easier to forecast our probable usage and pick the plan that matches.

      Adding to that, every tier comes (and should come) with its own specific set of features that will help you (at that corresponding stage of usage) to further scale the value that you're deriving from the product.

      In short, it's a win-win. :)

      • MH

        Matt Harney @ Appealie

        over 1 year ago #

        Good point.

        One other idea - provide customers a calculator or estimator. At least when I've been buying certain cloud products with variable charges, I need help even making a ballpark estimate. Having 1 on your own site stops your buyer from Googling a calculator and ending up on a competitors site.

        In many instances this calculator idea is irrelevant...but wanted to add my own experiences.

Join over 70,000 growth pros from companies like Uber, Pinterest & Twitter

Get Weekly Top Posts
High five! You’re in.
SHARE
39
39