competitor-based pricing Cost-plus pricingĬost-plus pricing is pretty simple. Different SaaS Pricing Models - value-based vs. You will most probably choose the wrong price point, poorly communicate the value of your product (because of the wrong value metric), and miss out on promising buyer personas because of wrong packaging and pricing tiers. Without a proper SaaS pricing strategy, you miss out on a lot of revenue growth potential and risk high churn rates. increasing the revenue per customer (CLV).Īnd increasing the customer lifetime value (CLV) is a combination of keeping the customer longer (reducing churn) and increasing pricing (revenue per customer).įor each of them (but especially for the CLV) pricing is crucial. reducing the loss of existing customers (churn), andģ. Simply said, this means you can impact your SaaS growth by:Ģ. SaaS Growth = Acquisition Rate x Average Customer Lifetime Value Joel York defines the growth of a SaaS company as the following: Your SaaS pricing is a key part of your SaaS growth strategy and directly impacts the growth of your business. sales-led growth), and therefore ultimately a core part of your SaaS growth strategy. This means that your pricing is directly related to your ideal customer profile ICP (who do you target), your positioning in the market, your sales strategy (product-led vs. How you present the value to (segments of) the market (your packaging),Īnd at what terms (your billing, discounts, cancellation). A proper SaaS pricing strategy includes:ĭeciding on how much you charge (your price point) andĮspecially for what you are charging for (your value metric), This means your SaaS pricing is more than just a simple number. The Anatomy of SaaS Pricing Strategy defines the price as the exchange rate on the value you’re creating in the world. Today we cover the topic of SaaS pricing strategy and the question of ‘What is the right pricing for my SaaS product and how to approach it properly?’.
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