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Estd 4.22.2023
Based on our saas pricing book, Price to Scale, the answer is nuanced. While it might be tempting to offer automatic discounts for customers reaching certain usage or tenure milestones, the book generally advises a more tailored and segmented approach rather than unconditional, automatic discounts. Here are some key points from Price to Scale:
• Segment Your Customer Base: Rather than simply applying a blanket discount when a customer hits a milestone, the book recommends segmenting customers based on usage, value, and other key factors. For instance, it’s important to differentiate between customers who use the product extensively versus those who received a deep discount at signup.
• Tailored Offers Over Automatic Adjustments: Instead of automatic discounts, consider “gestures of appreciation” that are communicated with a purpose. The book details that price reductions should come with conditions—such as a commitment to a longer contract or commitment to additional add-ons. This approach avoids unilateral concessions and maintains the integrity of your pricing model.
• Avoid Over-discounting: Automatic discounts can inadvertently devalue your offering if not carefully managed. By using tailored pricing reductions, you can maintain a structured pricing strategy that aligns with customer segmentation and overall value delivered.
In summary, Price to Scale suggests that while discounting can be a useful tool, it is best applied in a controlled, segmented manner with clear conditions rather than automatic adjustments triggered solely by usage or tenure milestones. This approach ensures that both the perceived value and the overall pricing strategy remain robust and strategically aligned.