How do SaaS business find out how to much to charge for their products?

You copy other, more established applications. Most importantly, copy someone that provides similar value to roughly similar buyers.

Most software costs only pennies to deliver in the cloud. Maybe millions to develop, millions to market, and million to sell. But only pennies in hosting and delivery costs.

So how much should you charge for it? There is no way to base this on any underlying cost basis for most of us. Not for pure software.

The good news is, your buyers have been trained. They’ve been trained by market leaders like Salesforce, Slack, Box, etc. to pay certain amounts in certain ways for certain types of products.

Just look at the 2 or 3 big, public SaaS companies that are most similar to you in terms of true value-add, and buyer. Be honest. We aren’t all worth $200+ a seat like Salesforce.

They maybe charge 70-80% of that to start.

That should be OK to start.

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Published on September 19, 2018

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