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Estd 4.22.2023
The Hidden Revenue Lever
For SaaS executives, pricing strategy often represents the most underutilized lever for growth. While product development and customer acquisition receive abundant attention and resources, pricing frequently remains an afterthought—despite research from McKinsey indicating that a 1% improvement in pricing can yield an 11% increase in operating profit, far outpacing the impact of similar improvements in variable costs, fixed costs, or volume.
As your SaaS company scales, the question becomes not whether pricing expertise is needed, but rather how to acquire it: through an in-house pricing specialist or an external consultant? This decision carries significant implications for your pricing strategy's effectiveness, implementation timeline, and overall business growth.
Signs Your SaaS Company Needs Pricing Expertise
Before determining the ideal sourcing approach, it's important to recognize when pricing expertise has become a necessity rather than a luxury:
- Revenue plateau despite user growth - Your customer base is expanding, but revenue isn't scaling proportionally
- High customer acquisition costs with diminishing returns
- Competitors consistently outmaneuvering your pricing structure
- Excessive discounting becoming the norm rather than the exception
- Customer feedback indicating misalignment between perceived value and price
According to OpenView Partners' 2022 SaaS Benchmarks report, 57% of SaaS companies adjust their pricing less than once per year—a concerning statistic given the rapidly evolving landscape of SaaS offerings and customer expectations.
The In-House Pricing Specialist: Long-Term Strategic Investment
When to Consider an In-House Specialist
Bringing pricing expertise in-house makes strategic sense in specific scenarios:
When pricing is a continuous, core strategic function
For companies with complex product portfolios or those in highly competitive markets, pricing isn't a one-and-done exercise but a continuous process of optimization. Companies like Salesforce and HubSpot maintain dedicated pricing teams precisely because pricing represents an ongoing strategic advantage.
When your business has reached meaningful scale
Generally, companies surpassing $50-100M ARR benefit most from dedicated pricing headcount, as the potential revenue impact justifies the investment.
When pricing needs tight integration with product development
If your product strategy involves frequent launches or feature additions requiring monetization decisions, in-house expertise ensures pricing considerations become embedded in the product development cycle.
Benefits of the In-House Approach
- Deep product and customer knowledge: An in-house specialist builds institutional knowledge about your specific customers' willingness to pay, competitive dynamics, and product value drivers.
- Real-time adjustments: Can monitor and respond to market changes continuously rather than periodically.
- Cross-functional collaboration: Works directly alongside product, marketing, and sales teams to ensure pricing strategies are properly communicated and executed.
Challenges to Consider
- Recruiting difficulty: Finding professionals with specialized pricing expertise, particularly in SaaS, presents a significant hurdle—often requiring 6+ months of searching.
- Compensation costs: According to Glassdoor data, experienced pricing directors command $150,000-$250,000 annually plus benefits and equity.
- Limited perspective: In-house specialists may develop tunnel vision, lacking exposure to broader market practices beyond your company's direct competitors.
The Pricing Consultant: Specialized Expertise On-Demand
When to Consider a Pricing Consultant
External pricing expertise delivers maximum value under these circumstances:
During major pricing transitions
When implementing significant changes such as moving from usage-based to subscription pricing, or developing a tiering strategy, consultants provide specialized guidance for these pivotal moments.
For specific growth inflection points
Companies approaching key milestones ($10M ARR, $50M ARR, etc.) often require pricing recalibration to support continued growth trajectory.
When market conditions change dramatically
Economic downturns, competitive disruption, or regulatory changes often necessitate rapid pricing reassessment where outside perspective proves invaluable.
For mid-market SaaS companies ($5-50M ARR)
Organizations at this scale typically benefit from periodic pricing expertise without requiring full-time dedication.
Benefits of the Consultant Approach
- Specialized expertise: Consultants bring concentrated experience from numerous client engagements across industries and business models.
- Objective perspective: External advisors can challenge internal assumptions and provide unbiased assessments free from organizational politics.
- Implementation focus: Engagement structures typically include not just recommendations but actual implementation support and success metrics.
- Market benchmark access: Consultants often maintain proprietary databases of pricing benchmarks otherwise inaccessible to individual companies.
Challenges to Consider
- Knowledge transfer concerns: Once the engagement concludes, ensuring internal teams can maintain pricing strategies becomes critical.
- Cultural alignment: External consultants must quickly understand your company culture to deliver recommendations that will be embraced rather than rejected.
- Cost structure: While potentially more cost-effective than a full-time hire in the short term, premium pricing expertise typically commands $25,000-$100,000+ per engagement depending on company size and project scope.
The Hybrid Approach: Best of Both Worlds
Many successful SaaS companies employ a hybrid strategy:
Start with consultants for foundation-building
External experts can establish pricing methodology, conduct initial research, and implement cornerstone strategies.
Transition to internal ownership
As your business grows, develop internal pricing competency by having key team members partner closely with consultants to absorb knowledge.
Periodic consultant check-ins
Even with in-house expertise, bringing in external consultants every 12-18 months helps refresh strategies and validate internal assumptions.
Atlassian exemplifies this approach—maintaining an internal pricing team while periodically engaging specialized consultants for major pricing transformations, such as their shift toward cloud-based subscription models.
Making the Decision: Key Factors to Consider
When determining whether to build in-house pricing capabilities or engage consultants, evaluate these factors:
- Current growth stage: Early-stage startups and mid-market companies typically benefit more from periodic consultant engagements, while enterprise SaaS players often require dedicated resources.
- Pricing complexity: Multi-product portfolios with complex packaging and frequent changes demand more consistent pricing attention.
- Available budget: Consider not just the direct costs, but the opportunity cost of delays in optimizing your pricing structure.
- Timeline for impact: Consultants can typically deliver recommendations within 8-12 weeks, while building in-house expertise may take 6+ months before seeing impact.
- Executive bandwidth: Honest assessment of whether leadership can effectively manage another functional area.
Conclusion: Strategic Imperative, Tactical Flexibility
Regardless of which approach you choose, the most important decision is committing to pricing excellence as a strategic priority. According to Price Intelligently research, SaaS companies that regularly optimize pricing grow 2x faster than those that neglect this crucial lever.
For most SaaS companies, the journey typically begins with consulting expertise to establish foundational strategies, gradually building internal capabilities as the organization scales. The most successful companies recognize that pricing expertise—whether in-house or external—is not a luxury but a critical component of sustainable growth.
As you evaluate your own pricing resources, remember that the question isn't whether you need pricing expertise, but rather how to access it in a way that aligns with your current growth stage, organizational structure, and strategic priorities.