SaaS pricing can be easy when you start, but it’s always more difficult to manage as your company grows. Pricing improvement decisions get complicated quickly.
When you are starting, you need to get in the price range that makes sense to your first customers relative to customer value and competition. And there are enough proven SaaS pricing frameworks that customers are used to.
But as your company grows, it’s much harder to know what’s right and then confidently make those improvements.
Everything gets more complicated: new editions, added features, department leaders with different goals, market changes, competitive responses, sales habits, and paths to profitability. Yikes.
This week on the podcast, SaaS pricing consultant Dan Balcauski discusses why pricing can become complicated and how to manage it.
Poking at one aspect of your pricing reveals big strategic questions about who you serve, what your company goals are, how customers perceive value, and your position in the market.
You can’t leave it up to your sales leaders, the marketing team, or a product marketing manager. These are very serious strategic decisions that need to be guided by and endorsed by the CEO.
And you can’t just think about pricing once a year. As Dan describes:
“One of the healthiest ways to think about pricing is that price is a thing, but pricing is a process. Like any other process in your company, it probably will have a process owner and some sort of document to describe it.
“Your first pricing iteration is probably not going to be your best iteration. You’ll keep improving it. You don’t prevent your team from answering customer support tickets until you have the perfect customer support process. It’s the same with your pricing.
“You’re going to make mistakes. Those mistakes will be way less fatal than you imagine they will be in your head. But as long as you’re committed to improving that process over time, you’re going to start moving in the right direction.”
In this expert interview, Dan shares his perspectives on key SaaS pricing challenges:
- How customer segments, value drivers, competitive alternatives, and differentiation are key building blocks of SaaS pricing.
- Why choosing the right value metric and offer configurations can help target multiple customer segments.
- How having structured pricing conversations with customers can provide valuable insights into their perception of value and willingness to pay.
- Why pricing plays a role in positioning and branding.
- How AI is impacting pricing strategies in the SaaS industry.
Check out this week’s interview with SaaS pricing expert Dan Balcauski on the Practical Founders Podcast.
