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Estd 4.22.2023
Based on our book Price to Scale, dynamic pricing—where prices change in real time based on fluctuating demand—is not a common or optimal approach for most SaaS offerings. Here’s why:
• SaaS Pricing Stability:
Our saas pricing book emphasizes that SaaS customers value predictability. Unlike transactional e-commerce platforms, SaaS subscriptions are built on recurring revenue models, where stability and transparency in pricing are key to maintaining long-term customer trust.
• Strategic and Gradual Adjustments:
Instead of rapid, demand-driven price adjustments, our book suggests that pricing models in SaaS should evolve gradually in response to market changes. This means validating pricing through direct customer interaction and planned transitions—such as moving from usage-based to user-based metrics as the company scales—rather than implementing continuous real-time alterations.
• Role of AI in Pricing:
While an AI could theoretically manage pricing adjustments, our book implies caution. An AI system might analyze trends and recommend periodic adjustments (for instance, to account for inflation or regime changes), but continuously fluctuating prices could lead to customer confusion or even dissatisfaction. It’s critical to balance data-driven insights with customer expectations for clear and consistent pricing.
In summary, while AI can support strategic pricing adaptations, the dynamic, real-time pricing model popular in e-commerce is generally not best suited for SaaS. Our pricing strategy book recommends measured, planned adjustments to protect customer relationships and ensure sustainable growth.