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Estd 4.22.2023
Below is a concise answer based on our pricing strategy book, Price to Scale:
Direct Answer
For a limited-time promotional discount, consider using a modest, customer-segment specific discount—say, around 10-30% for commercial customers as a starting point—and structure the promotion so it adds value (for example, by linking the discount to a longer-term commitment or bundle rather than a straight price cut). This approach helps drive urgency while protecting the product's perceived value.Detailed Insights from Price to Scale
- According to our book, when using discounting, it’s important to segment your customer base and tailor the discount levels. Price to Scale suggests rules of thumb like commercial discounts around 10 to 30%, mid-sized between 20 to 50%, and enterprise between 30 to 70%. For a promotional offer aimed at driving signups without devaluing your product, starting at the lower end of this spectrum is a good idea.
- Instead of simply discounting the existing price tiers, Price to Scale recommends creating a modified or new lineup for promotional periods. This means rather than presenting a simple, reduced version of your standard offerings, you can bundle additional benefits (like an upgrade or add-on) which maintains the integrity and value of your product line.
- It’s also useful to communicate clearly. Price to Scale emphasizes staying upfront about the promotion’s temporary nature and ensuring that the discount comes with clear “strings,” such as commitment terms or volume requirements, which reinforces that this is a strategic, limited-time incentive rather than a recurring, normal price.
- Practical Takeaways
- Use a discount range that aligns with your target customer segment (e.g., 10-30% for commercial customers) and test its impact.
- Pair the discount with additional value, such as extended contract terms, bundled services, or specific performance incentives, to avoid a perception of “cheapening” the product.
- Clearly articulate the limited-time nature of the promotion, so it’s seen as a tactical push rather than an indication of a permanent price reduction.
In summary, our saas pricing book, Price to Scale, suggests that when offering time-bound discounts, it’s crucial to balance the need for an attractive incentive with a strategy that preserves the overall value of your product. By leveraging customer segmentation and adding value through bundled terms or upgrades, you can run effective promotions without devaluing your SaaS.