.png)
Estd 4.22.2023
In today's competitive SaaS landscape, effective pricing and packaging strategies are more than just revenue levers—they're strategic differentiators that can determine market position and growth trajectory. For supply chain management (SCM) SaaS providers, the complexity of the offering presents both challenges and opportunities when crafting these strategies.
Why Pricing Strategy Matters for SCM SaaS
Supply chain management solutions deliver measurable value: increased inventory accuracy, reduced stockouts, improved fulfillment rates, and enhanced visibility. Yet many SCM vendors struggle to capture their fair share of this value through their pricing models.
According to a McKinsey study, companies that proactively manage pricing can increase their margins by 3-8% within 12 months. For SaaS companies specifically, OpenView Partners reports that optimized pricing strategies can increase revenue by 11-25%, without acquiring additional customers.
The Unique Pricing Challenges of SCM Software
Supply chain management solutions face distinct pricing challenges:
- Value chain complexity: Different modules deliver different value to different stakeholders
- ROI measurement: Benefits may appear in reduced costs, improved service, or both
- Enterprise-wide impact: Solutions often touch multiple departments and business processes
- Implementation timelines: Time-to-value can vary significantly
- Industry-specific requirements: Different vertical markets may value features differently
Building Your Pricing Strategy Project
Phase 1: Discovery and Assessment (4-6 weeks)
1. Assemble your cross-functional team
Your pricing team should include:
- Product management
- Sales leadership
- Customer success
- Finance
- Marketing
According to Salesforce research, pricing projects that include stakeholders from multiple departments are 42% more likely to achieve target outcomes.
2. Conduct market analysis
- Map competitive landscape and current pricing models
- Identify price points, packaging approaches, and value metrics
- Assess market segments and price sensitivity
- Review analyst reports on pricing trends in SCM solutions
3. Customer value research
This critical step involves:
- Interviewing existing customers to understand perceived value drivers
- Conducting win/loss analysis to identify price sensitivity patterns
- Analyzing usage data to identify value correlation points
- Mapping customer ROI by segment and use case
4. Current pricing assessment
Document your existing approach:
- Revenue distribution across packages and segments
- Discounting patterns and rationale
- Customer acquisition costs by segment
- Customer lifetime value calculations
Phase 2: Strategy Development (3-4 weeks)
1. Select appropriate value metrics
Choose metrics that align with customer value realization. For SCM solutions, potential metrics include:
- Transaction volume
- SKU count
- Trading partner connections
- Revenue processed
- Warehouse locations
- User counts (by role)
According to Price Intelligently, SaaS companies using value-based metrics grow 2x faster than those using only user-based pricing.
2. Build pricing structure options
Develop 2-3 potential models, which might include:
- Good-Better-Best tiers: Starting with core functionality and scaling up
- Modular approach: Core platform plus add-on modules (inventory, procurement, transportation, etc.)
- Industry-specific packages: Tailored for retail, manufacturing, distribution, etc.
- Usage-based components: Variable pricing tied to volume or throughput
3. Package feature composition
For each tier or module, determine:
- Feature inclusion matrix
- Implementation services requirements
- Support levels
- Professional services components
- Training requirements
4. Financial modeling
Model the impact of different approaches on:
- New customer acquisition (impact on ASP and win rates)
- Existing customer migration (upgrade/downgrade potential)
- Customer lifetime value under different models
- Revenue predictability and scalability
Phase 3: Validation and Refinement (3-4 weeks)
1. Internal validation
Before market testing:
- Present to executive leadership
- Conduct simulations with sales teams
- Review implementation feasibility with customer success
- Ensure finance systems can support the model
2. Customer feedback
Test your approach with:
- Customer advisory board reviews
- Structured interviews with selected accounts
- Concept testing with prospects
3. Pilot program
According to Gartner, companies that test pricing changes with a small segment before full rollout report 30% higher satisfaction with pricing outcomes.
Consider:
- Selecting a representative customer cohort
- Implementing the new model with new customers in specific segments
- Tracking key metrics against control groups
4. Refinement
Based on pilot results:
- Adjust tier boundaries if needed
- Refine value messaging
- Modify discounting guidelines
- Finalize migration strategies for existing customers
Phase 4: Go-to-Market Planning (4-6 weeks)
1. Sales enablement
Prepare your team with:
- Value calculators and ROI tools
- Competitive positioning guides
- Objection handling playbooks
- Migration conversation frameworks
2. Marketing support
Develop:
- Updated website pricing pages
- Value proposition messaging by segment
- Case studies showcasing ROI
- Comparison tools for prospects
3. Customer migration strategy
Design your approach to existing customers:
- Grandfather periods and terms
- Migration incentives
- Communication timeline
- Success measurement plan
4. Implementation planning
Finalize operational readiness:
- Billing system updates
- Contract template revisions
- CRM configuration changes
- Commission structure adjustments
Common Pitfalls to Avoid
1. Undervaluing inventory optimization modules
Research from Nucleus Research indicates that inventory optimization typically delivers the highest and fastest ROI within supply chain suites (2.4x ROI within 12 months), yet it's often underpriced relative to its value.
2. Over-complexity in tiering
While SCM solutions are complex, pricing shouldn't be. According to a study by Simon-Kucher & Partners, 81% of prospects will abandon evaluation if pricing is too complicated to understand quickly.
3. Ignoring vertical-specific value drivers
The value of visibility differs dramatically by industry. For example, pharmaceutical companies may value compliance tracking far more than cost savings, while retailers prioritize fulfillment speed and accuracy.
4. Front-loading all costs
Implementation time for SCM solutions can be substantial. Consider pricing approaches that align payment timing with value realization to improve sales conversion.
Measuring Success
Track these metrics before and after implementation:
- Sales cycle length by segment
- Win rate changes
- Average selling price (ASP)
- Discounting frequency and depth
- Customer acquisition cost
- Net revenue retention
- Feature adoption rates
- Cross-sell/upsell conversion
Conclusion
A well-executed pricing and packaging strategy for SCM SaaS can transform both market perception and financial performance. By systematically assessing value delivery, aligning pricing models to customer outcomes, and providing clear packaging options, providers can better capture the substantial value their solutions create.
The key is balancing simplicity in presentation with sophistication in value alignment. Supply chain solutions deliver complex, multi-faceted benefits—your pricing strategy should reflect that value without reproducing that complexity.
Remember that pricing is never truly "finished"—the most successful companies revisit their strategies every 12-18 months to ensure continued market alignment and maximum value capture.