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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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Validating pricing assumptions before product launch requires a systematic approach that balances quantitative research with qualitative testing. Our pricing methodology follows a structured process organized into two key phases:
Hypothesis Formulation Phase
- Customer Segmentation & Needs Mapping
- Identify distinct customer segments
- Map the value delivered to each segment
- Ensure your packaging aligns with specific segment needs
- Market & Competitor Analysis
- Analyze competitor pricing models
- Benchmark your pricing structure against industry standards
- Identify market positioning opportunities
- Pricing Model Design
- Develop a tailored pricing model (e.g., tiered, usage-based)
- Align pricing structure with business goals and customer needs
- Create initial pricing hypotheses to test
Testing & Launch Phase
To validate your pricing assumptions, we employ three categories of research methods:
Statistical/Quantitative Methods
- Van Westendorp Surveys: Find a range of acceptable price points through a set of 4 specific questions
- Conjoint Analysis: Identify optimal feature combinations and packaging options
- Max Diff Analysis: Prioritize features based on customer value perception
Empirical Methods
- Pricing Power Analysis: Understand $/metric across geographies, segments, and tiers
- Tier/Package Performance: Analyze discounting, usage patterns, and potential shelfware
- Usage Analysis: Verify alignment between product usage and selected pricing metrics
In-Person Qualitative Methods
- Customer Interviews: Conduct in-depth discussions with prospects and existing clients
- Willingness to Pay (WTP) Research: Assess customer perceptions of value through surveys and interviews
- Pricing Package Testing: Validate proposed pricing and packaging across a sample of clients
Real-World Success Story
A cybersecurity leader planning to expand from one product to two new product lines leveraged our validation methodology with impressive results:
- Validated new "Supply Chain Risk" positioning across CISOs
- Discovered customer willingness to pay was 20-30% higher than expected for both product lines
- Established a significantly higher price point for their new External Attack Surface Management product line
The complete validation process typically takes 6-10 weeks depending on research complexity and stakeholder alignment. This methodical approach helps mitigate launch risk and ensures your pricing strategy is built on validated customer insights rather than assumptions.