SaaS products are one of the fastest-growing industries and are expected to grow by 110 billion by 2023. While these numbers sound promising, many SaaS companies are still unsuccessful. Business growth is driven by monetization and maintenance. That is, you charge and maintain your customers so they can continue to pay.
If your business provides a valuable service, its value can be monetized. It must be done correctly. One of the easiest and most obvious ways to increase revenue per user is to try pricing.
Price the service according to the Customer
If you don’t know who is your ideal buyer, how can you know what you really want? Your current target may think your product is great, but they can’t afford it. In that case, you need to sell it to someone else who can calculate the amount or change the price.
Customer demographics are just the beginning of understanding buyer personas in terms of purchasing power. Beyond prospect demographics and willingness to pay. Adjust the value of your company and the benefits it offers to your customers by targeting your customers with the right product mix and value proposition, taking into account your industry and the industry in which you do business.
What is your pricing strategy?
Pricing requires a cost structure that makes sense to the customer. There are some common strategies that companies use to determine to price. Here are some pricing models for you:
Cost-based pricing. This SaaS Solution pricing model is suitable for setting a base price to charge customers. This is derived from the cost of launching a product based on the desired rate of return. However, it does not take into account the perception that your customers or markets may have about the value of your service. If your service can be produced cheaply but is of high value to the customer’s mind, you may be charging a fairly low price. People prefer to pay an amount that reflects how much they value the product.
Value-based pricing. Unlike cost-based pricing, this pricing model encourages you to consider the value that the market gives to your product. The general rule of this pricing is that the intrinsic value to the customer should be 10 times the amount they are paying. In fact, setting low product prices can lead to a loss of trust in prospects.
Competitor-based pricing. This model uses competitors and their pricing as a benchmark. Do not use this method if you are trying to make it stand out. But at least when it comes to pricing, you need to understand who and how to differentiate yourself from your competitors. This is what your prospects are trying to fend for themselves, so if you can talk better with them.
How to choose a pricing model
The pricing model needs to be linked to the value it provides to its customers. If you forget the value metric, now is a good time to revisit the value metric. Often there are many price models that are combined with each other.
Price of per function:
This is a common pricing model, offering tiered pricing with different feature access at each tier. As customer functional requirements grow, upgrades to the next plan will be required, and the cost of each subsequent plan will be slightly higher. The only drawback of this model is that the combination of features must be appropriate. But Netflix seems to have mastered it.
Per-user pricing:
Prices for users are typically based on the size of the team. For example, if your team has up to 100 users, we charge $10/user. If your team has 50-100 users, we charge $8-9/user. Unfortunately, your competition might offer unlimited seats, so this could become tricky. But, the upside is that using this pricing model frees up your marketing to revolve solely around product benefits.
Consumption-based pricing:
Usage-based pricing is similar to pay as you go. Some common features of these types of plans are the transfer of unused units, sharing within a single account, and overage charges.
What is the best way to package your product or service?
Offering multiple plans is valuable to your business so that you can maximize your customers as your business grows. We tend to offer different packaging options to meet the needs of different users, but only offer plans that we can actually support. If you’re not good at supporting your plans, it’s badly reflected in your business. When defining plans focus on the main differentiators of each plan, the quality and value it provides, and the cost of service as a guide to the optimal package structure.
