ultimate guide to saas pricing
TRANSCRIPT
The Ultimate Guide to SaaS Pricing
Lars LofgrenMarketing Analyst - February 2013
@larslofgren #KISSwebinar
We’ll cover...
Right and wrong ways to pick a price1
The two stages of pricing2
7 rules to give your pricing the edge3
Price has a MASSIVE impact on your business.
Bad Methods for Pricing
1. Product cost + X%
You’ll undercharge some customers and overcharge others.
2. What does the customer want to pay?
People have no idea until you ask them for their credit card.
Pricing by Value
Value-Based Pricing
Your customers get value worth $Y and it only costs them $X.
Why does this work?
People cannot perceive absolute value, only comparative value.
Some value is easy to calculate...
Other value isn’t...
Pricing - Stage 1
1
Stage 1 is all about the unknown.
Customers don’t understand your product and you don’t understand
your customers.
This is before product/market fit.
The price you pick won’t be the best.
Your goal = prove that the product can be sold.
Pricing - Stage 2
2
This is your growth stage.
Time to optimize your price.
You’ll need a deep understanding for how your customers use your
product.
Interview your customers
The ideal price is...
Just high enough to need consideration but low enough to
still provide plenty of value.
What if you have different customer segments?
Separate segments with features.
Price sensitive customers get limited plans, value sensitive customers get the VIP plan.
For this to be successful...
You need to talk to your customers and understand the benefits they
need the most.
Capture the full value from each customer type.
Bidsketch Case Study - Old Pricing
Bidsketch Case Study - New Pricing
Bidsketch Case Study - Results
Doubled average revenue per customer1
Only a slight drop in conversions2
No impact on churn3
Google “bidsketch pricing post”
Seven Rules for Pricing
7
Rule 1: End with a 9
$39 or $37?
Rule 2: Make Your Price Short
$1,000.00 or $1000?
Rule 3: Anchor Your Price
That product is $100, this is only $101
Was $150, now only $802
Value of $1500, selling for only $1503
Rule 4: Offer Multiple Prices
Rule 5: Double your Price
People tend to UNDERvalue their services.
Rule 6: Be Careful With Freemium Plans
Very difficult to make it work outside of mass markets.
Rule 7: Grandfather Old Customers In
As long as you don’t raise prices for old customers, you won’t get
any complaints.
These are rules, not laws.
Your 3 Tools for Getting It Done
1. The Customer Interview
2. A/B Testing
3. Customer Analytics
KISSmetrics helps you find the right price
Know who to interview1
Get A/B results from your whole funnel2
Track WHO’s doing what3
VIP KISSmetrics Demo
go.kissmetrics.com/webinar-15
Q&A Time!
For more info on KISSmetrics contactRossi Khoung
[email protected](415) 800-4156
Lars [email protected]
@larslofgren