This post is by Jason Lemkin from SaaStr
Click here to view on the original site: Original Post
A few thoughts at least:
- The stronger the brand, the more complex the pricing page can be. So yes, copy Salesforce, Twilio, Slack, and other iconic leaders. But bear in mind their brands make them a default choice. That means their prospects will be more patient with complex pricing. But your prospects may just move on if the pricing page makes it seem too … hard.
- Familiarity in your pricing schema is key to maximizing sales velocities with less well-known vendors. Innovation is great … just often not on pricing. At least not in the early days. Prospects need context. Copy someone’s pricing page and style that your prospects often already have purchased. That will give them context.
- “Editions” are super helpful when you sell to customers of varying sizes (i.e., S, M and L). Big companies intuitively know they “want” the Enterprise Edition. So add one. We’ve bought 50–100+ apps now. We know which segment we are at this point, more or less:
- Be thoughtful on non-transparent pricing. It works, but it also has a cost. Yes, “Contact Me” can work well in the enterprise and for larger deals. But it will turn off many smaller prospects. Err on the side of transparent pricing, at least until you have experience and data to suggest you should move away from it. 90% of the time, transparent pricing just takes friction out of a transactional / short sales process. Or put differently, perhaps use transactional pricing for any customer segment than can close in 30 days or less. More here: Turns Out, 85% of the World Likes “Contact Me”. Even Though You Don’t. | SaaStr
- It’s OK to leave money on the table in the early days. In the early days, you want to close every possible lead. Later, what will matter more is closing the most revenue from the leads you do have. Those imply very different strategies.
- Anchoring high works, but you have to go all-in to make it work. Pricing is a message, and if you price at the highest end of your competition and segment, that will send a message you are the most valuable vendor. It may well be easier to close large customers if you are the most expensive vendor in the space. But if you chose this strategy, you have to go all in. You have to truly be the most secure, the most redundant, the best integrated, the most enterprise vendor. You also need enterprise-grade approaches to customer success and deployment. So Anchor High if you can deliver. It can be the fastest way to increase revenue 50%-100% or more, if you can pull it off. But you can’t go half-in here.
- With bigger customers, it’s total deal size that matters. If you can simplify this calculation (like Slack and Atlassian do), it can help. Bigger customers really want to know what it will cost to deploy you to their division, their team, their org etc.
- No one wants to get ripped off. This is maybe the most important thing to think about in the end. To have happy customers that spread your brand through word-of-mouth:
- Pricing should seem fair.
- There should be pricing protection for renewals and later years.
- Upsell should be as organic as possible.
- Concerns should be addressed, and support should be as close to real-time as practical.
- Finally, remember what really really matters is CLTV. The total lifetime value of the customer. And customers in SaaS can last decades. Think more about how to naturally grow the account over the years to come. And a little less about how to get every nickel on Day 1.