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Estd 4.22.2023
Yes, a different pricing approach is generally beneficial for B2B versus B2C SaaS products, mainly due to differences in deal dynamics, price sensitivity, and how customers evaluate price versus value.
Based on our pricing strategy book, Price to Scale, here are some key insights:
• For B2B SaaS:
– Larger, enterprise deals often involve significant discounting (up to 80% in some cases) while smaller deals might see discounts around 20%. This reflects negotiation dynamics and the need to adjust list prices accordingly.
– It is common to price on a per-unit basis where unit economics differ, with larger customers paying less per unit than smaller ones.
– More complex pricing models such as tiered or modular pricing are useful in addressing the varied needs of enterprise versus smaller business clients.
• For B2C SaaS:
– Individual consumers tend to be more price-sensitive and may expect simpler, more transparent pricing without the extensive discounting seen in B2B.
– Pricing models might favor freemium or lower entry-level tiers to capture a broad user base while encouraging upgrades based on usage or added value.
– The pricing strategy often has to consider higher volume at lower price points, ensuring the underlying unit economics remain viable.
In our book, Price to Scale, we detail approaches like the Good-Better-Best packaging which is especially effective when dealing with segments like SMB or mid-market customers. This approach helps in structuring packages that align well with the different willingness to pay between business clients (where the value and specific use cases are highly segmented) and individual consumer expectations (which are generally simpler and more price-sensitive).
In summary, yes—a tailored pricing approach is vital because B2B and B2C customers have different purchasing behaviors and sensitivities. The key is to align your model (whether tiered, modular, or freemium) with the specific needs and economic realities of each market segment.