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Estd 4.22.2023
Based on our saas pricing book, Price to Scale, there isn’t a one‐size‑fits‑all answer; the best approach depends on your market, customer segmentation, and strategic focus. Here are some key points to consider:
• Instead of simply starting too low or too high in isolation, our book recommends designing your pricing and packaging around the value the customer receives. For example, the Good–Better–Best model (discussed early in Price to Scale) allows you to serve multiple segments at different price points simultaneously. This structured approach means you’re not locked into a single price that later needs to be “adjusted.”
• If you price initially low to build broad adoption, you run the risk of limiting your ability to capture the full value as your product evolves. On the other hand, starting with a high price might align well with a premium, enterprise focus but could slow down early adoption if customers are hesitant to commit without seeing proven value.
• The book also emphasizes that your pricing decision should balance revenue optimization with market share targets. For example, if your strategy is to maximize market share, your pricing might naturally be set at the lower end of what customers are willing to pay. Conversely, if you’re targeting a niche market where customers value exclusivity or enhanced features, a higher price point might be appropriate—even if it means you'll need to adjust your offer over time as the market evolves.
In summary, our pricing strategy book advises that you focus on capturing customer value from the start by carefully segmenting your market and designing the right tiered packages. This way, whether you choose to start high or low, your initial pricing is closely aligned with customer needs and justified by the value provided—reducing the need for significant later price shifts.