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Estd 4.22.2023
Below is a concise answer based on the principles and advice in our SaaS pricing book, Price to Scale:
Direct Answer
When discussing a usage-based pricing model with customers accustomed to flat monthly fees, it’s important to acknowledge their current expectations while clearly demonstrating the additional value and flexibility that a usage-based system can offer. Here are some tips based on our book’s approach:
Key Tips for Conveying Value
• Acknowledge Existing Norms:
Begin by recognizing that your customers are familiar with flat fees. As we discuss in our book, it’s essential to start with what customers already know. This helps build trust and eases the transition to a new pricing model.
• Rebrand the Offerings:
To avoid direct comparisons with flat-fee tiers (like ‘Pro’ or ‘Elite’), consider rebranding your packages with different names, such as ‘Premium’ and ‘Advanced’. This subtle shift in language can reposition the model as a distinct and beneficial alternative.
• Emphasize Flexibility and Alignment with Value:
Illustrate that a usage-based model aligns costs directly with value received. Explain that instead of paying a fixed fee regardless of use, customers only pay for what they actually consume. This means potential savings during low usage periods and immediate scalability when their business grows, which can be a strong selling point.
• Highlight Success Stories:
According to our guidance, leveraging internal success stories and testimonials from sales teams who have effectively adopted and sold the usage-based model can be very persuasive. Real-world examples help customers see the model’s benefits in action.
• Discuss the Customer-Centric Benefits:
Clearly outline what’s in it for the customer. As mentioned in Price to Scale, the goal is to make it clear that the usage-based approach isn’t about a mere shift in accounting—it’s about creating a pricing model that mirrors the customer's operational reality and growth. This customer-centric focus can help overcome initial hesitations.
Conclusion
In summary, when conveying the value of a usage-based pricing model, start by recognizing the flat fee mindset, rebrand and differentiate your service offerings, and clearly articulate the benefits of paying for usage—namely, flexibility, scalability, and alignment with actual value. This step-by-step approach, as detailed in our pricing strategy book Price to Scale, can help customers understand and appreciate the rationale behind moving to a usage-based system.