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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 SaaS landscape, a well-crafted pricing and packaging strategy can be the difference between merely surviving and truly thriving. For procurement solution providers, this challenge is particularly nuanced – you're selling to sophisticated buyers who evaluate ROI with surgical precision. This article walks you through a comprehensive approach to developing a pricing and packaging strategy that resonates with procurement professionals while maximizing your company's revenue potential.
Why Pricing Strategy Matters for Procurement SaaS
According to OpenView Partners' 2022 SaaS Benchmarks report, companies that regularly revisit their pricing strategy report 30% higher growth rates than those who don't. For procurement solutions specifically, pricing structure directly impacts both customer acquisition costs and long-term retention – critical metrics in a market expected to reach $9.2 billion by 2026, according to Gartner.
Procurement solutions occupy a unique position: they must demonstrate clear ROI while navigating complex enterprise sales cycles. Your pricing must reflect the value you deliver while remaining competitive enough to overcome the scrutiny of the very procurement professionals you're selling to.
Phase 1: Value Assessment and Market Intelligence
Understanding Your Value Metrics
Begin by identifying how your solution creates measurable value. For procurement SaaS, common value drivers include:
- Cost savings on purchased goods and services
- Time savings in procurement processes
- Risk reduction in vendor relationships
- Working capital improvements
- Compliance improvements
Collect data from existing customers on how these metrics translate into dollars. According to a study by Deloitte, procurement solutions typically deliver 8-12× ROI for enterprises when properly implemented – a powerful data point for your pricing conversations.
Competitive Analysis
Map your competitive landscape across several dimensions:
- Direct competitors: Compare feature sets, pricing models, and packaging tiers
- Pricing models in use: Subscription, transactional, value-based, or hybrid approaches
- Pricing levels: Where do competitors position themselves (premium, mid-market, value)
- Package differentiation: How they segment features across tiers
For instance, Coupa and SAP Ariba typically employ value-based pricing with enterprise tiers, while point solutions often use per-user models with feature-based tiers. Understanding these patterns helps position your offering effectively.
Phase 2: Customer Segmentation and Willingness-to-Pay Analysis
Segment Your Market
Procurement solutions serve diverse buyer segments, each with distinct needs and budgetary constraints:
- Enterprise (10,000+ employees)
- Mid-market (1,000-10,000 employees)
- SMB (under 1,000 employees)
- Industry-specific segments (manufacturing, healthcare, etc.)
For each segment, analyze:
- Specific procurement challenges
- Budget constraints
- Implementation requirements
- ROI expectations
Conduct Willingness-to-Pay Research
Use methodologies like Van Westendorp's Price Sensitivity Meter or conjoint analysis to gauge what different segments will pay. According to ProfitWell research, B2B companies that conduct formal willingness-to-pay studies achieve 15% higher average contract values.
For procurement solutions, interview both economic buyers (CFOs, CPOs) and users to understand value perception at multiple levels of the organization.
Phase 3: Develop Pricing Models and Package Tiers
Select Your Core Pricing Model
Common models for procurement SaaS include:
- Per-user pricing: Simple but may limit adoption
- Spend-under-management: Aligns with the value delivered but can create uncertainty
- Tiered by features: Clear differentiation but may create artificial barriers
- Hybrid approaches: Combining models to balance predictability with value alignment
For example, Basware combines a platform fee with volume-based transaction pricing, creating alignment with customer value while ensuring baseline revenue.
Design Packaging Tiers
Create 3-4 distinct packages that appeal to different segments:
- Entry-level: Focus on core procurement workflows with limited automation
- Professional: Add advanced analytics and integration capabilities
- Enterprise: Complete solution with customization and advanced compliance features
- Industry-specific: Tailored to vertical-specific requirements (optional)
According to Price Intelligently, the "rule of three" in SaaS packaging typically increases average revenue per user by 20-30% compared to single-tier pricing.
Feature Differentiation Strategy
Carefully determine which features belong in each tier using the following framework:
- Must-have features: Include in all tiers
- Value-enhancing features: Distribute across tiers to create clear upgrade paths
- Enterprise-only features: Reserve for top tier to justify premium pricing
For procurement specifically, consider:
- Basic requisitioning in entry-level
- Approval workflows and basic supplier management in mid-tier
- Advanced contract management and AI-powered insights in premium tiers
Phase 4: Testing and Validation
Pricing Page Analysis
Use tools like FullStory or Hotjar to analyze how prospects interact with your pricing page. A/B test different presentations, focusing on:
- Clarity of value proposition
- Comparison table effectiveness
- Call-to-action performance
Sales Team Feedback Loop
Establish a structured feedback mechanism with your sales team to understand:
- Which packages attract the most interest
- Common objections to pricing
- Discount patterns and frequency
- Competitive displacement scenarios
According to research by OpenView Partners, sales teams that receive regular training on articulating pricing value see 13% higher win rates.
Limited Rollout
Before full implementation, consider:
- Beta testing with select customers
- Time-limited promotional pricing
- Grandfathering existing customers
Phase 5: Implementation and Optimization
Sales Enablement
Equip your team with:
- Value calculators that demonstrate ROI
- Objection handling guides
- Competitive comparison matrices
For procurement solutions specifically, demonstrating TCO reduction is paramount. According to Ar