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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Below is our answer based on the guidance and insights provided in Price to Scale:
• Direct Answer:
Allowing product substitutions within a bundle can be a double-edged sword. While it may cater to customer-specific needs and create a sense of flexibility, it also risks diluting the distinct benefit propositions of each product and may limit your ability to upsell or cross-sell individual components.
• Book Insights:
Our saas pricing book, Price to Scale, explains that bundling should be approached with a deep benefits analysis—each product in the bundle should have a clear, differentiated value. As noted, bundling "can also reduce flexibility in pricing and limit the company’s ability to upsell or cross-sell specific products in the future." This suggests that allowing substitutions might inadvertently lead to:
- A reduction in the perceived individual value of each product.
- Complexity that may impair future pricing strategy adjustments.
• Practical Considerations:
- If you opt to allow substitutions, it’s important to maintain a structure that protects the integrity of each priced component.
- One potential strategy is to offer alternatives proactively (for example, presenting an upgrade or alternative bundle options) while keeping the pricing tiers distinct.
- Ensure that any flexibility in product substitution doesn't create an expectation of unilateral concessions or undermine the strategic segmentation outlined in the good-better-best, or modular approaches described in our book.
• Takeaway:
While some flexibility may be appealing to accommodate diverse customer needs, the book advises caution. If substitutions are permitted, they must be designed carefully so that bundled pricing maintains its strategic clarity and revenue potential isn’t compromised.
In summary, consider your bundle design and long-term pricing strategy. Our pricing strategy book, Price to Scale, underlines that any allowance for product substitutions must balance customer flexibility with the need to preserve clear, individual value propositions crucial for upselling and future growth.