How do you price a Saas which generates revenue for the customer?

Comps.

At least to start — use Comparables.

Most software has no clear reason to cost anything. Why should Salesforce Unlimited Edition be $300/month and up per user … and Gmail free, or $5/month if part of Google Apps for Work? Why?

Both cost the same to build and ship and serve (if not sell and market). In fact, given Google’s scale, it’s likely more engineers work on Gmail than all Sales Cloud. Yes, one difference is scale. But that’s not the real answer.

The real answer is enterprise software traditionally costs a certain amount. Which enterprises understand. And budget for. And it’s OK if it costs That Much. But not so OK if it costs a lot more.

Your customers need a clear signal of if the price is fair. What customers want if a product isn’t fungible, if it isn’t a commodity — is Fair pricing.

Comps are where to start. If you are Box but Better … that’s your comp. If you are JIRA but Better … that’s your comp. Etc. etc.

Then, anchor high or low against your comp. Everyone starts off feature poor, but more important is positioning in the market. Are you “more enterprise” than Dropbox? Then charge more. Or are you just “easier to use”? Then charge less. To start.

Start at comps. The customers will get it. It won’t confuse them. It will take friction out of the buying process.

And it will be “fair”.

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Published on September 15, 2016

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