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Estd 4.22.2023
In today's competitive SaaS landscape, your CRM software's pricing and packaging strategy can make or break your business growth. According to OpenView Partners' 2022 SaaS Benchmarks report, companies that optimize their pricing see an average 25% increase in revenue without any corresponding increase in customer acquisition costs. Yet many SaaS executives overlook this critical lever for growth.
This guide walks you through the process of running an effective pricing and packaging strategy project specifically for CRM software, helping you capture more value while delivering solutions that truly address your customers' needs.
Why CRM Pricing Strategy Matters More Than Ever
CRM software represents a $63.9 billion market with projected annual growth of 12.5% through 2028, according to Grand View Research. With increasing competition from both established players and new entrants, your pricing approach needs to not only capture appropriate value but also communicate your unique positioning in the marketplace.
As Patrick Campbell, founder of ProfitWell, notes: "Most SaaS companies are leaving 30-40% of their revenue on the table by not optimizing their pricing strategy."
Phase 1: Preparation and Discovery
Assemble Your Cross-Functional Team
For a successful CRM pricing project, you'll need perspectives from:
- Product Management: To represent feature value and development costs
- Sales: To provide frontline customer objections and competitive insights
- Marketing: To frame value propositions and positioning
- Finance: To model revenue impacts and profitability
- Customer Success: To represent existing customer needs and potential churn risks
A dedicated project manager should coordinate the effort with clear timelines, deliverables, and decision frameworks.
Establish Your Objectives and Timeline
Define what success looks like. Common objectives include:
- Increase average revenue per account (ARPA)
- Improve conversion rates at specific pricing tiers
- Reduce churn related to pricing objections
- Create clearer differentiation between packages
- Optimize for specific customer segments
Your timeline should typically span 8-12 weeks from research to implementation, with key milestones for research completion, package design, pricing modeling, and rollout planning.
Phase 2: Market and Customer Research
Analyze Your Competition
Map the competitive landscape with a structured analysis:
- Direct CRM competitors: Document their packaging tiers, feature allocation, and pricing points
- Adjacent solutions: Understand pricing for tools that integrate with or complement CRM systems
- Pricing models: Note whether competitors use per-user, per-feature, usage-based, or hybrid approaches
This research provides your baseline and helps identify potential gaps and opportunities.
Conduct Customer Value Research
Understanding perceived value is critical. Use these research methods:
- Customer interviews: Conduct 15-20 interviews across segments to understand value drivers
- Willingness-to-pay surveys: Use Van Westendorp or Gabor-Granger methodologies with 300+ respondents
- Feature value analysis: Have customers allocate hypothetical budgets across features
- Usage pattern analysis: Determine which features correlate with retention and expansion
According to Price Intelligently research, conducting value-based customer research can increase your willingness-to-pay accuracy by over 30%.
Analyze Internal Data
Your existing data contains valuable insights:
- Usage patterns: Which features correlate with long-term retention?
- Sales cycle analysis: Where do deals stall due to pricing or packaging concerns?
- Upgrade/downgrade patterns: What triggers account expansions or contractions?
- Support and feature requests: What capabilities do customers consistently ask for?
Phase 3: Packaging Design
Define Your Value Metrics
Value metrics are how you charge for your CRM software. The ideal value metric:
- Aligns with customer value perception
- Scales naturally as customers derive more value
- Is easy to understand and predict
For CRM software, common value metrics include:
- Number of users/seats
- Number of contacts/records
- Storage volume
- Automation workflows
- API call volume
- Advanced analytics access
Design Your Package Tiers
Most successful CRM providers offer 3-4 tiers:
- Entry-level: Basic contact management and simple pipeline features
- Professional: Advanced automation, integrations, and reporting
- Enterprise: Custom workflows, advanced security, dedicated support
- Optional industry-specific: Packages tailored to verticals like real estate or financial services
When allocating features across tiers:
- Ensure each tier has a clear "hero feature" that drives upgrades
- Consider feature adoption rates when determining placement
- Use the 80/20 rule: 80% of users should find value in the 20% of core features
Phase 4: Pricing Determination
Align Pricing Models with Market Expectations
CRM software typically uses one of these models:
- Per-user pricing: Scales with team size, common for sales-focused CRMs
- Contact-based pricing: Scales with database size, common for marketing-focused CRMs
- Hybrid models: Combining user seats with usage limits
- Value-based pricing: Pricing tiers based on ROI potential
According to a SaaS Capital study, companies with usage-based components in their pricing grow 38% faster than those with strict per-seat models.
Set Initial Price Points
Set price points based on:
- Value-based anchoring: What ROI can customers expect from your solution?
- Competitive positioning: Where does your solution fit in the competitive landscape?
- Cost-plus foundation: What margins do you need to maintain?
- Psychological pricing: Using appropriate pricing psychology for your target market
For enterprise CRM, consider these pricing strategies:
- Create sufficient differentiation between tiers (typically 2-3x from tier to tier)
- Use the Rule of Three for presenting options (good, better, best)
- Consider price fences that prevent cannibalization
Phase 5: Financial Modeling and Testing
Build Revenue Impact Models
Create financial models to predict:
- Revenue impact on new customers
- Migration patterns for existing customers
- Potential churn risks
- Lifetime value changes
- Impact on sales cycle and conversion rates
Test multiple scenarios in your models to understand sensitivity and risks.
Test Before Full Implementation
Before rolling out your new strategy:
- A/B test with new prospects: Run controlled tests with segments of your lead flow
- Conduct limited beta tests: Test with a small cohort of customers
- Run sales team simulations: Have sales reps role-play objection handling
- Conduct win/loss analysis: Monitor deal outcomes closely during testing
Phase 6: Implementation Planning
Plan Your Rollout Strategy
For existing customers, consider:
- Grandfathering: Keep existing customers on current plans indefinitely
- Phased migration: Move customers to new plans at renewal with advance notice
- Value-based migration: Demonstrate enhanced value to encourage voluntary upgrades
For new customers:
- Determine cutover date for the new pricing structure
- Prepare sales enablement and training
- Update all marketing materials and website pricing pages
Develop Communication Plans
Create targeted communications for:
- Existing customers: Focus on value enhancement, not price changes
- Prospects in pipeline: Create clear transition guidelines
- Sales and customer success teams: Provide scripts, objection handling, and migration support
- Partners and resellers: Explain changes and provide updated materials
Phase 7: Launch and Optimization
Execute Your Launch
Your launch sequence should include:
- Internal announcement and training
- Partner communications
- Customer communications (if applicable)
- Website and marketing material updates
- CRM system and billing system updates
Monitor and Optimize
Continuously track key metrics:
- Conversion rates by package
- Average selling price
- Discounting patterns
- Customer feedback
- Competitive responses
- Upsell/cross-sell performance
According to ProfitWell, companies that regularly review pricing (at least quarterly) grow 30% faster than those that review annually or less frequently.
Conclusion: Continuous Pricing Evolution
Pricing is not a one-time project but an ongoing strategic function. The most successful CRM software companies revisit their pricing and packaging strategy every 6-12 months to adjust to market conditions, competitive changes, and evolving customer needs.
By following this structured approach, you can create a pricing and packaging strategy that accelerates growth, communicates your value proposition effectively, and creates natural expansion opportunities within your customer base.
Remember that pricing is as much art as science – the numbers matter, but so does the narrative around your packages and the value they deliver to your customers. When done right, your pricing strategy becomes one of your most powerful competitive advantages in the crowded CRM software market.