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What will customers pay for your SaaS?

How do you know if customers will pay good money for a SaaS B2B solution?

The international software as a service market is worth USD 186.6 billion this year. Why are large companies paying enormous amounts to broaden their reach into their target market? How much should you charge for your solution?

Today is the right time to expand into SaaS, which means more competition. This means you need to know what customers will pay for your SaaS. Developing a pricing strategy is essential but getting the buy-in from marketing, finance, and sales is a contentious path forward, as you may be changing your pricing regularly. This calls for plenty of open, honest discussions along the way.

It would be good if you were quick on your feet and ready to make decisions guaranteed to make your business thrive. But how can you ensure it? Let\’s look at how you can move forward.

Your Product Doesn\’t Sell Itself

Having an excellent SaaS product is just the first step out of many to creating a successful startup. SaaS doesn\’t sell itself. If you want to market SaaS successfully, stop selling features. Instead, create a desire for your product and deliver value, emphasizing the benefits.

Myths You likely Believe

1. You are not selling until your service is perfect. Or can you? You absolutely can and should sell your product early.

2. Data is king. It would help to collect qualitative data by talking to your customers. These insights will inform the other team members about customer pain points, funnel opportunities and much more.

3. Send a proposal and be patient – Don\’t be patient. Contact and ask the decision maker what is going on between receiving the submission and making a buying decision. Spend more time discovering their needs and offering value wherever possible. Refuse to play the guessing game. Help your buyer, help you. In fact, these days, a prospect needs upwards of 30 touchpoints and up to 12 follow-ups!

Don\’t take the approach of \”Just Checking In\”. This is a self-serving approach. Instead, you should follow up with your prospect and deliver additional value.

4. Customers will come, just create content – no sir, no longer correct. B2B content creation is at an all-time high. You need to stand out in your specific niche market. You need to give them what they are looking for – otherwise, you are just another blog.

Content is one part of the marketing puzzle. Ensure your content is aligned with the in-depth intentions of sales and marketing. Writing content for the mere sake of putting out something wastes time and effort.

Salespeople talk to prospects and know your target market\’s needs and challenges. This is one of the primary sources of content that your potential customers will respond to. The marketing department should gather this information and put it out as blogs, eBooks, and videos, but as importantly, for your SaaS strategy. This is where the success lies in converting prospects into customers.

5. Don\’t market until your SaaS is perfect – it would be nice to have a finished product, but it is not a good strategy. I suggest starting \”selling\” the day you start designing by selling the solution and the vision to your team and, most notably prospective customers – get buy-in and suggestions from everyone. If you already have potential customers excited and waiting to give you their credit card by the time you finish the first version, you are on to a winner!

Champions of your SaaS Project

In the early stage of development, find a customer who believes in what you intend to do and is prepared to give you money in advance to support you. And then find another one. Support these people like super-stars; they are champions of your SaaS project.

You now have discovered the myths; let\’s get back to work and look at pricing.

Pricing is no easy task regardless of how many accountants and marketeers you have involved. Everyone has an answer based on their perspective. It is the most contentious issue among your team members – the countless stakeholders want their opinion heard. Even with consulting firms helping you come up with their angle on how you should approach this unanswerable dilemma, there is still no substitute for the most important stakeholder.

The ideal stakeholder is the customer – the best place to start, as I mentioned earlier. Get the buy-in at concept time with one and then two successful customers who are keen to see you succeed.

The bottom line is to ensure your future customers can afford it.

Start high and offer first-time users discounts in exchange for unbiased feedback. Using this pricing method means you can chop and change your pricing strategy until you discover your price.

This is less on science and more on logic coupled with gut feeling and feedback from that first supportive customer.

Slowly you will build up facts and figures that support your guiding philosophies without changing your principles. Here are some pointers to help you on your journey.

1. Make it easy.

Start with a self-service model that makes things easy for the customer. Possibly start online and offer it for free. Make buying easy without contract negotiations as the customer steps up the pricing ladder for additional benefits. You easily avoid the traditional hurdles of not knowing new technologies and having to pay high prices.

Customers go online and purchase a licence – keep making it easy.

2. Price for volume

More customers using your services in the early days is far better than maximizing revenue. This is called the \”flywheel\”, where you optimize for volume. Imagine a mechanical flywheel that moves quickly with a little force. In this scenario, you remove friction and apply force like SEO and nurture campaigns to make the flywheel turn faster.

Grow the happy customers who tell others about your service at the start, and so you grow your customer base.

Ensure the value your products provide is greater than the prices you charge. Then continue this process for higher volumes offering more significant price benefits.

3. Be Consistent

Do not deviate from your conventional pricing model – to avoid customers closing the door on your new product. Customers do compare prices with ones they are familiar with.

But you can introduce new pricing strategies with new customers in new markets.

4. Give everyone the best Price

Many top software companies do not make it easy to discover their prices. If they do, there is often a quick offer to contact them for a better price.

This is not the route to take. The only way is to treat all customers fairly by treating them all the same, offering one-off discounts to a select few messes

with their trust and your entire database. Treat all customers the same and make all special offers to everyone.

5. Keep it Simple and flexible

There is an infinite number of pricing options. If you don\’t keep them in check, your pricing policy will be chaotic. As soon as you launch your first service, you\’ll be thinking about the following product, new features, add-ons, and premium 

features, and before you know it, your pricing strategy no longer exists, and you could be making a fool of your company.

I suggest maybe aiming eventually for four versions, keeping your pricing strategy intact:

  • Free
  • Standard
  • Premium
  • Advanced

Whatever option a customer selects, they will have access to the product\’s core features. Simplicity keeps the sales moving online. Aim for a low-touch, uncomplicated approach.

6. Make entry inexpensive

As we mentioned, going in high and offering significant discounts or a free trial with most of the features included, but for a very limited time frame, either 7 or 14 days.

From my research, whether you start high or very low, you still want to gather as many customers as possible in the shortest time. Then you decide on a more structured approach

The bottom line is price low to begin the process and make the decision easy.

7. Price increases

Some companies increase prices in small increments over a long time; others drive value with increases, and others double, even triple, their price

overnight. Others realize their model is not working, and so they start again.

Price increases put the breaks on growth. So, with price increases must come a plan to maintain growth before the subsequent price increase. Give yourself plenty of space to work within managing the two aspects – allow your gut feeling to play its part in this space.

8. Who do you trust

Many people can offer logical advice and show you analytics spreadsheets as your start out until you become the industry leader. You need this advice and good data at times to support some of the most significant changes you need to make on your journey.

Remember, no one knows your business as well as you do. When it comes to making the call, use your gut feeling. No one knows your customers as well as you do to explain your changes to your customers confidently

However, be very careful that your gut is not driven by limiting beliefs. Often it is best to consult someone who has already done it successfully themselves!

What do you do if your solution requires a complex implementation and it is impossible to offer a trial? This is when you have to hammer the economic benefit to the prospect, and you could even ideally link the offer to a proof of concept, and or link the price to a benefit such as a percentage of value created like cost savings or productivity or revenue improvement.

In conclusion

Don\’t mess with the customer. Price indicates the company\’s and

service\’s value. Customers hate hidden prices. Sudden high price increases will lose your customers\’ and others\’ respect. Play the price game with your customer as a partner, not an outsider.

Remember, the pricing started with a guesstimate.

 

Jan

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