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Estd 4.22.2023
Below is a summary of what our SaaS pricing book Price to Scale explains about a “build your own plan” or modular approach:
• Direct Answer
Yes, several companies have experimented with a build-your-own-plan or modular approach where customers select and pay for individual add-on features instead of choosing from a few fixed tiers.
• How It Works (Based on Modular Packaging)
Our book explains this strategy under the concept of modular packaging (see page 37 of Price to Scale). In this model, you start by listing all notable features and mapping them to the specific use cases they address. This helps you avoid the one-size-fits-all pitfall of fixed tiers and allows you to craft bespoke offerings that match customer needs more precisely.
• Pros
- Flexibility: Customers pay only for the features they need, which can lead to reduced “shelfware” (unused features bundled into a package).
- Value Capture: By charging separately for high-value add-ons (as discussed on page 59), you can capture incremental revenue that a fixed tier might leave on the table.
- Better Fit for Complex Needs: Especially useful for customers with unique or evolving needs, ensuring that they only invest in the capabilities required—for example, larger enterprises with varying use cases.
• Cons
- Complexity: As the number of features increases, you can face a high degree of permutations and combinations, making pricing and quoting more complicated.
- Sales and Operations Challenges: Customizing plans for each customer can strain the sales process, potentially slowing deal velocity and increasing overhead for account management.
- Forecasting and Standardization: Variable pricing can make revenue projections less predictable compared to standardized tiers.
• Practical Takeaway
While the modular approach can help tailor offerings closely to customer needs and unlock higher revenue per use case, it demands robust internal processes and systems to manage the added complexity in pricing, sales, and forecasting. This trade-off—as outlined in Price to Scale—should be carefully weighed based on your market segment and operational capabilities.
In summary, the build-your-own-plan approach offers significant benefits in terms of flexibility and value capture but introduces complexity that must be managed effectively for it to succeed.