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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 the competitive SaaS landscape, pricing strategy can make or break your business. While innovation often takes center stage in product development, there's considerable advantage in being strategic about when to lead and when to follow—especially when it comes to pricing. The fast-follower pricing approach allows companies to learn from market pioneers while avoiding their missteps. This calculated strategy has enabled companies like Microsoft, Amazon Web Services, and Zoom to achieve remarkable success despite not being first movers in their respective categories.
What Is a Fast-Follower Pricing Strategy?
A fast-follower pricing strategy involves closely observing market leaders' pricing models, analyzing their effectiveness, and then implementing refined versions that address gaps or inefficiencies. Rather than blindly copying competitors or starting from scratch, fast followers leverage competitive intelligence to create pricing structures that resonate better with customers while avoiding the pitfalls experienced by pioneers.
According to research by McKinsey, fast followers in technology markets often outperform pioneers, capturing an average of 15-20% greater market share over time compared to first movers who may have initially grabbed attention but failed to optimize critical elements like pricing.
When a Fast-Follower Pricing Approach Makes Sense
Market Uncertainty
When a market is nascent and customer willingness-to-pay is still being established, letting others test the waters can provide invaluable data. Adobe's transition from perpetual licensing to subscription pricing wasn't first, but their careful study of earlier subscription models helped them execute one of the most successful business model transformations in SaaS history.
Resource Constraints
For scaling SaaS companies with limited pricing research budgets, learning from competitors' pricing experiments essentially provides free market research. As Patrick Campbell, founder of ProfitWell (now Paddle), notes, "Companies that leverage competitive pricing intelligence typically achieve 15% higher revenue growth compared to those that price in isolation."
Complexity Reduction
In markets with complex product offerings, observing how leaders have structured their pricing tiers and feature allocation can help fast followers create more intuitive models. Atlassian's pricing approaches for Jira and Confluence weren't revolutionary, but they simplified competitors' models in ways that resonated with customers.
Executing an Effective Fast-Follower Pricing Strategy
1. Conduct Thorough Competitive Analysis
The foundation of an effective fast-follower approach is comprehensive competitive intelligence. This means going beyond simply looking at competitors' pricing pages.
Jason Lemkin, SaaS industry expert and founder of SaaStr, recommends "creating competitive pricing matrices that track not just list prices but discounting patterns, contract terms, and pricing changes over time." This depth of analysis helps identify the true pricing strategy beneath the surface numbers.
2. Identify Market Gaps and Pain Points
Fast followers succeed by focusing on what isn't working in current pricing models. Salesforce gained significant advantages by studying early CRM pricing and identifying that customers preferred predictable per-user pricing over complex licensing schemes prevalent at the time.
Look for:
- Customer complaints about competitor pricing
- Confusing or unnecessarily complex models
- Misalignment between price and perceived value
- Underserved customer segments
3. Add Unique Value, Don't Just Discount
The least effective approach is merely undercutting competitors on price. According to data from Price Intelligently, companies that compete primarily on price see 30% lower growth rates than those that compete on value differentiation.
Successful fast followers like HubSpot didn't just copy Marketo's pricing—they created innovative bundling approaches that aligned better with customer needs while maintaining healthy margins.
4. Test and Iterate Rapidly
Once you've learned from competitors' approaches, the advantage shifts to execution speed. Monday.com effectively followed Asana in the project management space, but their rapid experimentation with pricing models allowed them to find optimal structures faster than the pioneer.
Kyle Poyar, Partner at OpenView Venture Partners, notes that "the most successful SaaS companies run pricing experiments quarterly, rather than annually, allowing them to capitalize on market learnings faster than competitors."
Real-World Success Stories
Zoom: Simplifying Where Others Complicated
While not the first video conferencing solution, Zoom studied the complex pricing of WebEx and GoToMeeting, identifying that customers were frustrated by seat-based limitations and complicated plans. Their simplified freemium approach became a cornerstone of their explosive growth.
According to Tomasz Tunguz of Redpoint Ventures, "Zoom's pricing clarity created a 41% higher conversion rate from free to paid compared to industry averages."
Microsoft Azure: Learning from AWS's Pricing Missteps
Microsoft wasn't first to cloud computing, but they studied AWS's early pricing models extensively. They identified that AWS's initial pricing complexity created friction for enterprise adoption. Azure's subsequent simplified pricing approach helped them rapidly gain market share despite being years behind in market entry.
Avoiding Common Fast-Follower Pitfalls
1. Delayed Response
The "fast" in fast-follower is crucial. According to data from OpenView's SaaS Benchmarks, companies that delay pricing changes for more than six months after identifying competitive optimizations see 18% lower growth rates than rapid responders.
2. Surface-Level Copying
Many SaaS companies fail by copying competitors' pricing page without understanding the underlying strategy. HubSpot CEO Brian Halligan warns, "Copying competitors' pricing without understanding their unit economics is like copying their website design without understanding their brand strategy."
3. Ignoring Customer Feedback
The most valuable insights often come from customers who have experience with both your solution and competitors'. Regular win/loss analysis should include pricing perception questions to validate your competitive positioning.
Implementing a Fast-Follower Pricing Framework
- Create a competitive pricing intelligence system with quarterly deep dives and monthly monitoring
- Establish a cross-functional pricing committee including product, sales, and finance leaders
- Develop a pricing experimentation roadmap that tests hypotheses derived from competitive analysis
- Build feedback loops with customers and frontline teams to validate findings
The Bottom Line
The fast-follower pricing strategy isn't about imitation—it's about informed innovation. By systematically learning from market pioneers while avoiding their mistakes, SaaS companies can create pricing models that better serve customers, drive growth, and establish sustainable competitive advantages.
As you consider your pricing approach, remember that following fast doesn't mean following blindly. The most successful fast followers combine competitive intelligence with their unique understanding of customer needs to create pricing that doesn't just match the market but improves upon it.
The question isn't whether you're first or second to market, but whether you're learning faster than your competition. In pricing, as in product, sometimes the smartest strategy is to let others take the arrows in their backs while you follow with a more refined approach.