Questions

In SAAS, Can we have different Pricing plans for Different Products being offered to our Clients.

We are launching a B2B SAAS based Online platform which offers different products to clients for different application areas. All these products are stand alone and not connected to the main offering. Currently We have 3 plans which is based on Number of users. Higher plans have additional features like whitelabel etc. We have 4 different add on products which can help the same clients in case they need it. So instead of opting it to all, can we have it as an add on with separate price for each. So instead of clubbing all products and offering under one plan or one pricing, we can allow clients to pick and paying for all add ons they feel is required. So client X who wants only One product pays only for that and Client Y who needs all products pays for all 4 but at a special discount. 1. Does this kind for pricing work in SAAS? 2. Is it better for SAAS conversion to have all products offered to the client).

6answers

Do not consider this as a fixed and rigid decision. Consider this more like an opportunity to realize that you should test your pricing strategy as early as possible or at least now.

Every pricing strategy you choose does work, the question is can you find your optimum?

In your position, I'd recommend to make up your mind about your features first. Sit together and think about what features are necessary for which buying persona you are catering to. To simplify this, forget what I just wrote and think about the feature set for your MVP to make it work for your user. The minimum solution fit, a car can't drive without 4 tires - there you have your basic pricing model - features: 4 tires.

Now common practice is offering a very low pricing model that is meant to nurture your leads to upsell them to the pricing you want, your basic pricing. This almost free or free pricing tier lacks a certain feature that is "almost crucial" - what this is in your case, I do not know, because I do not know who you are ;)

Though, there is a third tier, the all feature tier which is the enterprise model. You most certainly know this, because you see this everywhere.

You can read more about pricing pages here: http://conversionxl.com/10-principles-of-effective-pricing-pages/

The problem with making your pricing model highly flexible is that prospecting customers do not know what they want/need or what they are willing to pay for it as long as you do not give them a clear proposal. Though, your SaaS might have a value proposition that might be perfect for a dynamic pricing structure - I do not know that, because I do not know you ;)

For example, there are relative pricing models like retargeter which pricing is based upon the number of impressions, instead of a feature set and on the use-case - off- or on-site.

Keep in your mind, that constantly testing pricing models might be illegal in your region. Though, you can always conduct user interviews and simply ask about this issue. But be aware, do not make the mistake to lead an answer with a too pushing question. Do not ask blatant questions like "Does the pricing of 8$ appeal to you" "Would you buy the product with this functionality for 8$" instead ask for ranges. Ask for "Would you consider to pay a price between 5-9$", which also doubles as you already have insight in your customers potential maximal buying willingness.

I'd also think about behavioural targeting - e.g. users of demographic x get displayed another price than y. This, as a matter of course, needs to be tackled very carefully and thorough. Experience helps ;)

Pricing generally is a whole own universe of conversion rate tests and techniques based upon behavioural insight and cognitive analysis. Charm pricing, decoys, reframing the environment of your prices, even the size of the font of your pricing can have an impact. Heck, even just removing the currency sign can have an impact on your CR: http://isiarticles.com/bundles/Article/pre/pdf/1798.pdf

In your case, one intuitive test I would drive would be bundles. Means offering separated tiers, but also a discount bundle (though the discount is still higher than the single prices you offer "right now" - reframed).

I am a VP of growth and my focus is on UX and CRO and this is one of those field I am personally excited about. So, sorry for the long text ;)


Answered 4 years ago

This is a classic pricing- and positioning problem, and in the SaaS-environment you can do lots of stuff with it that is harder in traditional businesses.

First off, consider the lessons from pricinglessons.com - they are a good starting point before you build your pricing structure, and they also include considerations on product quality. http://stefanmichel.typepad.com/.a/6a011570229a53970b019104666b84970c-pi

I think you should take the following into account in your work going forward.

- Different Pricing Plans for Different products makes excellent sense. Price differentiation as a great way to go, and you want your customers to choose. But don't make it overly complex (as we see f.eks. in insurance).

- It makes sense to group your offerings, but make sure, that the products are bundled in a coherent and value adding way, that fits your clients needs. Think about how your customers will use your solution. Perhaps start by offering the bundled product over the phone to a few pilot users, and try to understand their price sensitivity and will-to-pay. Once you launch it on the website, it will be harder to change.

- It could make sense to build a simple structure as you describe, where one package costs x, while 4 packages cost 4x minus a discount. But the discount has to count for something: Expected increased usage or increased loyalty? Advantage in distribution? Larger margin for you?

- In my view - especially in SaaS, pricing has to be fair and transparent, as customers have to quickly understand the structure. While it is important, that you find the optimum price, this also has to work in real life, and you have to be able to stand up for and explain your pricing structure, although product offerings get challenged less than service offerings

- Don't die from maintaining a complex IT-infrastructure to support your pricing structure - instead spend your time making your offering and positioning better, and improve fencing between the products (see pricinglessons.com for fencing definition, or search Stefan Michel Fencing HBR for an introduction).

- Make sure you capture all data, that will document the customer journey from consideration to quote to conversion. Otherwise, you cannot adjust your pricing and nuance in the future as you produce new offerings and the market changes.

If you want to discuss this further, I will be happy to set up a call as pricing, positioning and business model optimization are of great interest to me!

Best regards
Kenneth Wolstrup


Answered 4 years ago

I am assuming that the optimal price and pricing tier is out of scope for this discussion. The problem is company X as A,B,C,D,E Products and can the price be a,b,c,d,e ?

The answer is "ITS ALWAYS LIKE THAT" if you are selling 5 different product with can function independently and and got noting to do with each other. Like SOAP, SHOE, BAG, CAR and PENCIL ..

The moment you have 5 products that can be linked to each other, under the same umbrella (website or any other channel), we get into a situation of PARADOX OF CHOICE ! And this may hamper the conversion.

A simple way to solve the above issue is to keep separate landing pages and pricing details for each product. Check out https://www.atlassian.com/software

Another great example (not SaaS but the concept is same) is TESLA MOTORS. http://www.teslamotors.com/ They have 4 products. 2 are cars and the remaining 2 are battery related. It is a sub-portal within the site.

Getting into details
-------------------------
Assuming that the product are related to each other (unlike tesla) there are 3 scenarios

A) Each Product is a standalone and not an extension of each other
. E.g ADOBE http://www.adobe.com/products/catalog/software._sl_id-contentfilter_sl_catalog_sl_software_sl_mostpopular.html
E.g Photo editing, Video editing, and Video distribution. The market segment or target market is same but each prospect may buy any 1 or 2 or all the 3

Strategy - (1) Avoid clutter and have sub-portals (2) Up-sell and Cross-Sell the most appropriate next buy (3) Provide a bundle one price deal (E.g COMCAST Phone + Cable + Internet for $99 a month. Each individually could cost $199)

B) Each product is a standalone but is also an extension to each other. It has the SYNERGISTIC EFFECT when integrated or used in the same ecosystem
E.g
OFFICE 365 (https://products.office.com/en-us/business/compare-office-365-for-business-plans)
ATLASSIAN (https://www.atlassian.com/software)

Strategy - (1) Tiers (Basic to Premium) as per your understanding of your target's behavior. This definitely needs experimenting E.g OFFICE 365. Each tier has different set of products too. (2) Consultative Cross Selling (E.g https://www.atlassian.com/purchase/product/jira-software ). When you buy JIRA, they suggests what else goes with it.

-----------------

The largest Product page I have ever seen is MICROSOFT AZURE (https://azure.microsoft.com/en-us/ ).
- More that 2 dozen products
- All different pricing, with trial and free offers
- A customer may need a combination of 5-6 products at-least to build a solution

strategy (1) Pricing calculators to relieve anxiety (2) Detailed documentation with use case and examples (3) Well done 'information architecture' (ia) while categorizing the various products under different groups.

Hope it helps...
Nefin


Answered 4 years ago

Simply answer - Of course you can. Not only should you have different prices for different plans, you should offer something equivalent to Bronze, Silver, Gold, Platinum, Diamond, etc. The name is not so important as is actually using a 3-6 Tier system. In the end, it is about what the customer wants. However, you should be able to do a back-end calculation and direct the customer to the Tier that is most profitable for your business. You just simply make it the most attractive with an "Irresistible Offer." If you want to be more sophisticated with this system, you can even offer add-ons within the plan itself. You do this by taking the customer through a series of screens with additional offers that are beneficial by may not be essential to the business needs. This is an opportunity for up-selling and providing what the customer wants.

Best of Luck,
Mike
From the Trenches to the Towers Marketing
I will be glad to help as my time permits.
TheLittleGuysWayToRiches.com


Answered 4 years ago

You should plan on dynamic pricing tied to Audiences, Persona Groups, and Personas, we build platforms that price down to an individual pricing unit per user.

Do the extra work and make your service price flexible, and always start at the top of the market.


Answered 4 years ago

This is really not a SaaS question as much as it is a simple marketing question. And, the assumption is you do not have $20 million to spend on marketing.

1. Focus - identify one buyer persona. Who is your ideal customer. Everyone equals no one!
2. Simplify - too many choices confuse buyers and slow or hinder sales.
3. Test - do some targeted marketing and monitor the results closely.
4. Pivot - make changes in your marketing and pricing quickly based on your results.

Summary: build a sales funnel targeting a single buyer for a single product/package then up sell them as appropriate. Focus on your sweet spot. Don't try to appeal to everyone.

Hope that helps. I noticed some good advice mixed in with the other answers. Good luck!


Answered 4 years ago

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