Pricing is one of the highest-impact strategic decisions that startups make, yet often the least amount of time is spent on it.
As 2021 begins, companies are sitting down to finish up their annual plans. One of the most crucial parts of this process is often reviewing and refining pricing strategy, which can seem daunting. Pricing is a specialized discipline and so few companies have internal expertise.
To get you started on the right foot we’ve pulled together some of our favorite pricing articles & resources. So, let’s dig into all things pricing!
If you read nothing else, read this one. After the twists and turns of 2020, planning for 2021 may seem a little futile. But the truth is, in the current SaaS market, designing your pricing strategy is more critical than ever.
- What is happening in the pricing environment?
- How well is your current pricing model working (and is it meeting its design goals)?
- What could happen that would change how you approach pricing?
- Where do you want to go?
Steven, who is one of the most well-respected SaaS pricing experts around, doesn’t just leave us hanging with the questions. He provides a clear road map on how to answer them all—and ultimately reach your goals.
“Strategic planning is a four-step dance of asking what is happening, imagining what could happen, getting alignment and setting goals, and then putting a plan in place.” – Steven Forth
SaaS pricing strategies can seem complicated, confusing, and even overwhelming. For starters, there are seemingly infinite ways to price a SaaS product. Many products have more than one pricing plan, too, adding even more complexity.
In this piece, Corey Hanes of Baremetrics peels the layers away and helps readers get right to the heart of understanding SaaS pricing strategies. He starts with the very basics (What is SaaS pricing?), works his way through why it’s so important, and then explains how to go about choosing a pricing model and strategy for your product.
Corey even takes an in-depth look at a variety of models and strategies that might work for you. Best of all, he goes the extra mile to helps even the freshest beginners understand.
A “bottom-up” SaaS company is one whose customers typically buy the product without ever speaking to a salesperson. AKA Product-Led Growth. It used to be a novel concept, but it’s becoming increasingly common practice.
Here, TechCrunch’s Caryn Marooney and David Cahn have teamed up to show you how to take advantage of this cutting-edge pricing strategy. They cover all the bases, such as the importance of aligning your value with your pricing and how to use the MAP system (Metrics, Activities, and People) to do it.
Using this game plan, you can follow in the footsteps of bottom-up, product-led giants like Zoom, Datadog, and Slack.
This one starts with a simple question: “I’m building a SaaS product and don’t know where to start when pricing it. How should I approach my pricing strategy?”
Patrick Campbell, CEO of ProfitWell and all-around SaaS guru, goes on to answer that question as a guest writer for Lenny’s Newsletter. Even if you already have your pricing in-market, this is a good read. Patrick takes a detailed look at each step in the process, including:
- Determining your value metric
- Determining your customer profiles and segments
- Conducting user research and experimentation
Then, he follows it up with a series of rapid-fire bonus advice, all of which is pure gold for any SaaS company.
Hey, it happens to the best of us.
We’ve already said it, but it bears repeating: pricing strategies are complicated. It’s easy to make a mistake. In this post on SaaSMarketingStrategy.com, Peter Cohen wants to help you avoid that fate.
Peter keeps things short and sweet, delivering plenty of actionable tips on how to get your SaaS pricing strategy right in a quick read. He talks about using the correct metric units, such as “cost per user” or “cost per employee,” and why you should keep your pricing simple.
He also delves into how important it is to be transparent about your pricing. (Nothing makes customers distrust you quicker than hiding unpleasant surprises in the fine print.)
“The way you price your product speaks to the way you run your business and how you treat your customers. Transparent pricing is an essential part of earning trust and winning and keeping customers.” – Peter Cohen
Pricing a product too low or too high can damage the success of any SaaS company. You have to find the sweet spot, and Jory MacKay is here to help you do just that.
As with some other entries on this list, in this post for The Startup, Jory points you towards several questions you should be asking yourself when deciding on a pricing strategy, including:
- Who is your customer?
- What is your revenue target?
- Who is the competition?
Then, he takes a deep dive into the value of segmentation. Segmenting your product is an excellent way to reach more prospects and earn more from your product, and Jory gets right down to the nitty-gritty of how to put it to work for you.
And to top it all off, he goes over odd little tricks that can make your pricing more appealing, such as using odd numbers or placing your price at the bottom of an ad instead of the top. Who knew?
“All pricing is a guess (at first). But it needs to be an educated one.” – Jory MacKay
Kiran of Hacker Noon is next up with this comprehensive overview of how to get the most out of your SaaS pricing strategy. Kiran walks readers step-by-step through making the right call, then lists some pricing strategies to consider.
Which one suits your product best? Only you can decide that—but Kiran’s creative tips will make the decision all the easier.
And like Jory, he touches on the psychological aspects of pricing and how you can make your price more palatable to prospects without actually lowering it a cent. That way, you can charge a fair price for your product while making your customers happier. Everyone wins!
Make no mistake: your pricing strategy can significantly impact your business’s structure and long-term trajectory. The reverse is true, too: how your company grows can affect your pricing strategy.
In this Better Than Sure article, Marvin J. Strauss provides a synopsis of how Re: amaze’s pricing strategy has evolved over the years and where they are now. He details how each part of their process has helped them grow and compete in the helpdesk market.
By explaining the company’s logic, he offers a superb glimpse into how a thriving SaaS company ought to think about pricing.
Patrick Campbell makes his second appearance on this list with this Q&A for InsightSquared. Here, Patrick is speaking primarily as the CEO of Price Intelligently. He answers a broad range of questions, including:
- What are some of the most common mistakes many SaaS companies make when setting their products’ price?
- How should you use data analysis and customer surveys to help set prices?
- How should pricing vary for a seed-level startup, an expansion stage company, and a more established SaaS company?
With each response, Patrick gives SaaS professionals everywhere a masterclass in pricing strategy.
“What a lot of folks don’t realize is that pricing is the center of your business. Everything that you’re doing from product to support to sales and marketing is used to drive people to that price and justify that price you’re putting on the page.” – Patrick Campbell
First, Ryan explains a wide array of pricing models, from a flat rate to per-user to freemium. Then, he moves on to the various pricing strategies before also touching on the most useful psychological hacks for your prices.
And as if he was wasn’t thorough enough already, Ryan includes a list of recommended reading at the end of each section to further explore yourself.
Lastly, he drops an offer for a free 5-week course to improve your SaaS pricing approach. That’s a lot of value for one article!
This is the most comprehensive pricing resource available: a free, downloadable e-book from Price Intelligently. Chapter titles include:
- Why You Need a Pricing Strategy
- How to Find the Right Value Metric for Your Business
- How Your Company Can Build a Pricing Machine
- Why You Shouldn’t A/B Test Your Prices
Every section is packed with practical advice to help you understand and hone your pricing strategy. Statistics, quotes, and graphs abound, all working together to point readers in the right direction.
Once you’ve finished this PDF, you’ll have completed a priceless course in business strategy. It doesn’t get much better than that.
“Growth is more revenue, not more customers.” – Price Intelligently
Last, But Definitely Not Least, Designing Products Around Price
We love listening to Monetizing Innovation Author Madhavan Ramanujam talk all things pricing. In this hour-long video, he gives some straight-talk, compelling examples, and practical information about pricing strategies. Including why he starts with price before product.
Happy Reading (and Watching)!
Armed with these expert insights, you’ll be on your way to kicking off your 2021 pricing initiative.
Good luck out there!