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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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In today's competitive hospitality technology landscape, how you price and package your hotel Point-of-Sale (POS) software can make the difference between modest growth and market leadership. With hotels ranging from boutique properties to international chains, each with unique operational needs, developing an effective pricing and packaging strategy requires methodical planning and execution. This guide outlines a structured approach to running a successful pricing project for hotel POS software that maximizes both value perception and revenue potential.
Understanding the Current Hospitality POS Landscape
Before diving into pricing strategies, it's essential to understand the current market dynamics. According to recent research by Hospitality Technology Magazine, 76% of hotels plan to either upgrade their POS systems or implement new ones within the next three years. This represents a significant opportunity for SaaS providers who can align their pricing models with evolving customer expectations.
The hotel POS software market has evolved considerably, moving from traditional on-premise installations to cloud-based subscription models. According to Gartner, SaaS now represents over 65% of new POS implementations in the hospitality sector, with this percentage growing annually.
Phase 1: Market and Competitive Analysis
Segmenting the Hotel Market
The first step in any pricing strategy is to clearly define your target segments. Hotels generally fall into several categories:
- Luxury properties and chains
- Mid-market hotels
- Budget accommodations
- Boutique and independent properties
- Resort destinations
- Extended-stay properties
Each segment has different price sensitivities, feature requirements, and ROI expectations. For example, research by HospitalityNet shows that luxury properties are typically willing to pay 3-5x more for advanced POS features compared to budget accommodations, but they also expect more comprehensive functionality.
Competitive Landscape Assessment
Conduct a thorough analysis of competitors serving your target segments:
- Identify direct and indirect competitors
- Document their pricing models (subscription, tiered, usage-based, etc.)
- Analyze their packaging structures
- Note distinctive features or services they emphasize
- Map out their market positioning
According to a 2023 report by Hotel Tech Report, the average price range for hotel POS systems spans from $69 to $399 per month per terminal, with enterprise solutions commanding significantly higher prices based on customization and integration capabilities.
Phase 2: Value Metric Determination
Selecting the right value metric is critical to scaling your pricing with customer value. Common value metrics for hotel POS software include:
- Number of terminals/points of service
- Transaction volume
- Number of outlets/restaurants
- Room count
- Staff user accounts
- Revenue processed
Research by OpenView Partners suggests that SaaS companies with value metrics aligned to customer outcomes achieve 10-15% higher net revenue retention compared to those using arbitrary metrics.
To determine the optimal value metric:
- Interview existing customers about how they measure ROI
- Analyze usage data to identify correlation between usage patterns and customer success
- Test different metrics with financial modeling
- Consider operational simplicity and customer understanding
Phase 3: Customer Research and Willingness to Pay
Quantitative Research Methods
Deploy surveys and conjoint analysis to gather data on feature importance and willingness to pay:
Van Westendorp Price Sensitivity Analysis: This methodology helps identify optimal price points by asking customers about acceptable price ranges.
Feature Value Analysis: Have customers allocate points or dollars across feature sets to understand relative value perception.
Competitor Price Benchmarking: Gather insights on what customers pay for competing solutions.
According to ProfitWell research, companies that conduct regular willingness-to-pay studies achieve 30% higher expansion revenue compared to those that don't.
Qualitative Research Methods
Complement quantitative data with in-depth customer conversations:
- Conduct interviews with potential and existing customers
- Organize focus groups across different hotel types
- Gather feedback from sales teams about common objections
- Review win/loss analyses to understand price sensitivity
Phase 4: Packaging Structure Design
With market and customer insights in hand, design your packaging structure:
Tiered Packaging Approach
Research by Price Intelligently indicates that a three-tier packaging strategy optimizes conversion rates for most SaaS products:
- Entry-Level Package: Target small properties or single outlets with essential POS functionality
- Core ordering capabilities
- Basic reporting
- Limited integrations
- Minimal customization
- Mid-Market Package: Target mid-sized hotels with multiple outlets
- Advanced inventory management
- Extended reporting capabilities
- Multiple integration options
- Moderate customization options
- Enterprise Package: Target large chains and luxury properties
- Complete feature access
- Advanced analytics and business intelligence
- Full integration suite
- White-glove implementation and support
- Custom development options
Feature Differentiation
When deciding which features belong in each tier:
- Use the feature value analysis to identify "must-have" vs. "nice-to-have" features
- Place high-development-cost features in higher tiers
- Consider operational complexity when determining feature placement
- Ensure each tier provides complete solutions for its target segment
A study by McKinsey found that effective feature differentiation can increase average revenue per customer by 15-25% compared to flat pricing models.
Phase 5: Pricing Model Selection
Common pricing models for hotel POS software include:
Fixed Subscription Pricing
Predictable monthly or annual fees based on the selected package tier. According to Zuora's Subscription Economy Index, this model provides the most predictable revenue streams but may leave money on the table with larger customers.
Usage-Based Components
Consider adding variable components based on transaction volume or revenue processed. Particularly effective for properties with seasonal fluctuations.
Hybrid Approach
Often the most effective approach combines:
- Base subscription fee for core functionality
- Per-terminal or per-outlet fees
- Optional add-on modules (e.g., advanced inventory, loyalty programs)
- Success-based components for enterprise clients
According to OpenView's 2023 SaaS Pricing Survey, 61% of top-performing SaaS companies use hybrid pricing models compared to only 38% of underperforming companies.
Phase 6: Go-to-Market Planning
Implementation Timeline
Develop a phased rollout plan:
- Internal training (sales, support, implementation teams)
- Limited beta with select customers
- Full launch with marketing support
- Post-launch monitoring and adjustment
Sales Enablement
Equip your sales team with:
- Clear value propositions for each package
- ROI calculators specific to hotel types
- Comparison sheets against competitors
- Objection handling guides
- Migration paths for existing customers
Migration Strategy for Existing Customers
If you're changing an existing pricing model, develop a thoughtful migration plan:
- Grandfather existing customers for a defined period
- Create special transition offers
- Highlight new value delivered in upgraded packages
- Provide clear communication timelines
Phase 7: Post-Launch Analysis and Optimization
The pricing process doesn't end at launch. Implement monitoring systems:
- Track conversion rates by package
- Monitor customer acquisition costs against lifetime value
- Analyze upgrade/downgrade patterns
- Conduct regular customer feedback sessions
- Review competitive positioning quarterly
According to a study by Simon-Kucher & Partners, companies that review and optimize their pricing at least twice a year achieve 10-15% higher profit margins than those with static pricing approaches.
Conclusion: The Continuous Evolution of Hotel POS Pricing
Pricing strategy for hotel POS software is not a one-time project but an ongoing process of refinement. The most successful vendors continuously adapt their packaging and pricing to meet evolving market needs, technological capabilities, and competitive pressures.
By taking a structured approach to pricing strategy—built on market analysis, customer research, and value-based packaging—hotel POS software providers can create pricing models that not only drive revenue but also clearly communicate their unique value proposition to the market.
In an industry where technology adoption continues to accelerate, those with thoughtful, value-aligned pricing strategies will ultimately capture larger market share and build more sustainable businesses.