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Estd 4.22.2023
Based on our saas pricing book, Price to Scale, here’s how to approach finding the right price for a brand new SaaS product when market data is scarce:
• Begin with exploratory market research
Since you’re launching a nascent product, rely on qualitative and beta testing methods. Talk to potential customers, run pilot programs, and collect early feedback. As noted in our assessment section (see Price to Scale, Chapter on “Early Product Launch”), you won’t have precise empirical data; hence, your goal should be to be directionally accurate rather than pinpoint perfect pricing from the outset.
• Understand your cost structure
The book emphasizes analyzing the difference between average and marginal cost. For a new SaaS product, your marginal cost (the cost of adding an extra user) is considerably lower than your average cost. This insight helps you define price floors and avoid overestimating costs, which could otherwise make you reluctant to explore lower-cost or freemium pricing models.
• Adopt a value‐based pricing mindset
Even with limited data, focus on the value your product delivers. Instead of basing your decision solely on what competitors might be doing or what your cost suggests, anchor your pricing on the tangible benefits and improvements your solution provides to customers.
• Be prepared to iterate
Recognize that early pricing is an evolving process. Use early customer interactions to refine your pricing strategy. Small-scale experiments and adjustments can help you hone in on the optimal price point as more data becomes available.
In summary, when launching a new SaaS product with little market data, Price to Scale recommends conducting robust market research, understanding your cost components, leveraging a value-based pricing perspective, and remaining agile. This approach ensures that you set a pricing strategy that is both directionally sound and adaptable as real market feedback rolls in.