Reinvent the Wheel on Product. Not on Pricing.

Q: How can enterprise software (SaaS) pricing be optimally defined, taking into account that two of three versions of the software can be offered, e.g. ‘small’, ‘medium’, ‘large’?

Let’s look at Salesforce.com — it now has 11 (!) different enterprise products … each with different approaches to pricing!

Some categories, like Sales and Support, have relatively transparent pricing, with 4 tiers, going up in each tier as you get “more enterprise”:

Others, like Marketing Cloud and Commerce Cloud from the exact same company, are “Contact Us” with no transparency:

And finally, newer products that are more self-service have low-end, self-service style pricing:

Phew that’s a lot to process from the same, $16b+ revenue company.

The learning for me?

  • Segment your pricing (we know this). It’s OK. The customers today do expect different editions for more enterprise products.
  • Use pricing similar to other players. Sales and Support Clouds compete with “per seat” pricing with other vendors. Marketing Cloud competes with a host of solutions from Adobe to Marketo and more, with radically different types of pricing models. Salesforce employs transparency when it helps, Call Us in segments where the market is OK there.
  • Transparency may or may not be optimal. Look at similar and competitive applications.  More here.

In the end, reinvent the wheel on your product. Not on pricing. Look at similar apps, and copy their hard work.

After all, they’ve trained the market to expect certain pricing already …

(note: an updated SaaStr Classic answer)

Published on January 10, 2022

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