.png)
Estd 4.22.2023
Other products in adjacent markets often determine their pricing by balancing the value they deliver with broader market dynamics and competitive benchmarks. In our saas pricing book, Price to Scale, we outline several key takeaways from analyzing these strategies:
• Competitive & Category Insights:
– Products in adjacent markets don’t price themselves in isolation. Instead, they consider the price points within their category. This includes analyzing both head-to-head competitors and substitutes in similar market segments.
– For instance, in blue ocean scenarios—where a new way of doing things replaces an old one—firms enjoy more degrees of freedom, as they aren’t directly compared with traditional competitors. This insight can be used in your pricing by assessing whether your product is in a differentiated space or facing direct comparisons.
• Value Differentiation and Pricing Structure:
– Some adjacent products choose premium pricing to reflect the high value perceived by their customers, while others might employ a predictable, lower pricing model to emphasize simplicity and accessibility.
– Studying these models can help you determine if you should optimize for high margins or focus on volume and market penetration, depending on how your SaaS product is positioned within its competitive landscape.
• Learning from Operational Strategies:
– The book also touches on the challenges of operationalizing pricing decisions in SaaS, emphasizing the importance of internal alignment. Even when benchmark pricing strategies from adjoining markets look attractive, it’s vital to ensure that all teams—from sales to product—understand and support the rationale behind your chosen pricing structure.
In summary, by evaluating how adjacent markets set their prices, you can gain insights into industry pricing norms, elasticity, and the trade-offs between a premium versus a mass-market approach. This analysis allows you to make a better-informed, strategic pricing decision that not only reflects your product's value but also positions it effectively relative to competitors.