TL;DR: Pricing power starts by understanding and articulating your ideal customer’s unique dynamics, fears, values, and aspirations.
The first big question to answer when creating the pricing strategy for your SaaS solution is this one: ‘Where do we have pricing power?’
Let me illustrate this with a quote from Matt Danna, CEO of Boulevard
Cost savings resonate when you’re selling to a CFO. But we sell to the more significant Spa’s and Hair salons, and being able to point out they’re able to generate a lot more top line, and even things like gratuity, really resonate.
It gives us pricing power. When you can generate in the mid-teens of additional revenue for a business, then they won’t look at you as a cost center. And then you’ll avoid raking through the coals on pricing.
Here’s the thing
Many SaaS solutions help save costs. But often, they contribute to top-line growth and other valuable benefits as well. Unfortunately, more often than not, we seem to need to remember that.
That’s doing nobody a favor. Here’s why.
If you’re in the cost savings zone or (worse), people position you in that zone; buyers perceive your solution as a cost of doing business. You’re selling a solution they need (not one they want.) In this category, people often want to have the cheapest solution.
The moment you can credibly position yourself differently, moving you into the zone of growth acceleration, competitive advantage, or status, then it becomes something that people want to have. It’s both valuable and desirable. That’s where people happily pay a premium.
For this, segmentation beyond the traditional demographics and firmographics is ultra important.
Question for you to reflect upon:
Where do you have pricing power?
Like this message?
Every day I send out a short 2 min reflection on shaping a B2B SaaS business no one can ignore. Join the 1,000+ subscribers that have become fans.
Not sure? Browse the archive