Important SaaS Product Pricing Strategies & Tips

 

Pricing is such an integral part of the SaaS business model that you must get it right no matter what. Here are some essential SaaS Product Pricing Strategies & Tips that we at DFY SaaS have learned from launching a myriad of SaaS products and services. 

Too often, we have seen SaaS business owners and marketers try to model their pricing by simply following the footprints of other successful companies. Unfortunately, it’s a fatal mistake that could annihilate your business’s future. Why? Because you will unintentionally toe the line with options that your competitors are already offering rather than offering something unique to your users and prospective users to set yourself apart. 

So, without further ado, let’s give you some fundamental tips to help you understand what tips each strategy could use.  

Fundamental Tips for SaaS Pricing (SaaS Product Pricing Strategies & Tips)

  • Set Value-Based Pricing 

Take your time and determine the actual value of your SaaS product or service and then convey it to your potential users through your marketing material or your website. So, the moment they land on your pricing page, they can consume what they need. 

Your pricing plan should be based on robust data, assessments of what your ideal users would pay for a similar product, or surveys about the SaaS products and services that matter the most to your target audience. If you already have a pricing regime in place, don’t hesitate to reevaluate it regularly. Also, make sure all your primary departments perform basic pricing analytics. 

  • Keep the Pricing Options Simple  

By the time your ideal users land on your pricing page; they have already gone through several other story-focused pages on your site. So, when they hit your pricing page; they are searching for valuable comparison points that will enable them to make an informed decision. Find the right balance of info that gives users; what exactly they are looking for rather than something that’s far too difficult or distracting. 

The good idea is to unify three different dimensions of your pricing plan on your website:

  • With the right positioning, align it with the right users. 
  • With the right packaging, show your customers a mix of features based on their needs. 
  • Show the right price points that reflect the value and what your users are willing to pay. 

When you know who your ideal users are, what they can pay, and what features they like to see in a package, it becomes easier to keep your pricing range clean and minimalist. 

  • Help Users Convert Currencies 

If you are functioning in more than one region or market, make the buying decision easier for users by allowing them to see pricing in their local currency. 

SaaS companies that show this kind of localization or understanding of local market dynamics enjoy better growth rates than others that fail to offer services with a local flare. However, there is more to local prices than just converting your base currency rate into the currency of the target region.

Following two ways are the best way to go about it: 

  • Leverage cosmetic localization to quote local prices on the basis of prevailing exchange rates. 
  • On the other hand, a proper market-based localization uses unique target market data points like buyer demographic data and local market saturation to re-compute your price the way we did above. 

Pricing Strategies for SaaS Companies 

Strategic pricing is one of those overlooked models for SaaS companies that help drive growth. Businesses that spend much of their time on customer acquisition, smart monetization, and pricing of what your company has to offer manage to see a four-fold impact on proceeds. 

An effective way to monetize your offerings is to devise a value-based pricing strategy. These strategies help you establish your pricing based on how much your target users think the product or service is worth it. This depicts that the price of any SaaS product or service should not be a random act. Instead, it should be based on a thorough analysis that must be performed on:

  • Target market.
  • Market positioning. 
  • The number of users to be served with the product or service. 
  • The lifespan of the users.
  • Benefits are obtained at various levels of the service.

Assessing these factors will enable you to have a more realistic idea of the actual value of your SaaS product or service. In turn, it will be easier for you to determine the price levels and packages for your offerings. Following are some common pricing strategies that are frequently used by SaaS businesses:

  • Reference Pricing 

If you have created a unique SaaS product, you can charge any price that best fits your marketing strategy. But if your product or service is similar to others that are already available to the users, you must develop a price plan that should be the best offering of your closest competitor. 

  • Fair Pricing 

It means you should set your price at a close level to your target users’ perceived ideal price. You can do this by carrying out thorough research to determine what your audience perceives as the ideal price. 

  • Cost-Plus Pricing    

This is one of the oldest pricing models on the books that efficiently calculates the cost of value you are providing. Plus, it adds your desired profit to help you determine a lucrative price.  

It has been in use for ages because of its ease and effectiveness. You are not required to do all-hands research or your competitors’ or users’ perspectives. It would be best if you simply put a price on your own work.  

Struggling to Get Your SaaS Idea Off the Ground

DFY SaaS can help you avoid costly pitfalls by building in the right way from the start, so you can go the extra mile and increase your chances for success.

  • Thank you for reading this blog post. If you want DFY SaaS to save you thousands in development costs & fast-track your project, just set up a call.

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