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Estd 4.22.2023
Based on our saas pricing book, Price to Scale, the recommended approach isn’t to react with a knee-jerk across-the-board price drop but to be strategic and customer-focused. Here are a few key points to consider:
• Segment Your Customer Base
Price to Scale emphasizes the importance of understanding different customer cohorts. Instead of adjusting price uniformly, determine which segments are price-sensitive and might be at risk of churning. Then, tailor promotions or price adjustments only for those specific groups rather than diluting your overall value proposition.
• Offer Targeted Alternatives
Rather than simply lowering prices, be upfront about any reduced pricing and couple this with a value-add—such as an upgrade option or a discount in exchange for a longer commitment. For example, if a competitor’s price drop threatens to pull away more cost-conscious customers, you might offer a specialized package that preserves your brand’s value while addressing their budget concerns.
• Maintain Your Value Proposition
For segments that perceive your product’s higher price as a reflection of its superior value—perhaps due to additional features, support, or integrations—the book advises maintaining your current pricing. This strategy helps in preserving the brand’s premium feel and communicates that your pricing is justified by the value delivered.
In summary, Price to Scale advocates for a balanced, segmented approach. Instead of a reactive price war, focus on proactively offering tailored solutions and stick to your value proposition where it resonates. This method not only helps preserve margin but also ensures long-term customer retention in the face of competitive price fluctuations.