For a niche SaaS product, is undercutting competitors’ prices a good idea, or should we focus on our unique value and potentially charge more?

Based on the insights from our pricing strategy book, Price to Scale, it's generally more effective for a niche SaaS product to emphasize your unique value rather than merely undercutting competitors’ prices. Here's why:

• Focus on Differentiation:
Our book highlights that pricing should reflect the balance between the number of customers willing to buy and the price they’re willing to pay. In a niche market, your unique features and specialized use cases often justify a premium price. Undercutting competitors can dilute the perceived value of your solution and lead to downward pricing pressures.

• Tailored Strategy for Niche Markets:
As emphasized in Price to Scale, while mass-market SaaS companies might optimize for market share with lower price points, niche products benefit more from a margin-maximizing approach. This strategy supports sustainable revenue growth and aligns with the specific needs of your target audience.

• Long-Term Impact:
Undercutting competitors might yield short-term wins, but it can also invite increased price sensitivity among customers over time. In contrast, demonstrating and pricing for unique value builds customer loyalty and solidifies your market position.

In summary, for a niche SaaS product, it is advisable to concentrate on your unique value proposition and price your product to reflect that value, rather than simply trying to win on price. This approach not only supports stronger margins but also reinforces your product’s unique benefits in the long run.