
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.
Based on the information gathered, here are the best practices for SaaS contract negotiations and pricing:
Align Pricing with Go-to-Market Strategy: Your pricing model should reflect your sales approach. For enterprise-focused solutions, implement pricing structures that support high Average Selling Prices (ASPs) and complex sales cycles.
Choose Appropriate Pricing Metrics: The most successful SaaS companies use a combination of metrics that align with customer value. For instance, combining user-based pricing with company revenue can create a more effective model that scales with customer growth.
Optimize Package Structure: Rationalize your offering by simplifying package options. As demonstrated in our case studies, reducing packages from four to two or from twelve to five can lead to clearer customer choices and increased deal sizes of 15-30%.
Implement Platform Fee Guardrails: When transitioning to usage-based pricing, include platform fees to protect baseline revenue while allowing for flexible consumption options that meet customer needs.
Conduct Customer Acceptance Testing: Before fully implementing new pricing models, test with select customers to validate acceptance and identify potential issues.
Prepare for Objection Handling: Develop clear frameworks for addressing common customer objections during the sales process, reducing friction and improving conversion rates.
Ensure Cross-Functional Alignment: Successful pricing changes require alignment across product, engineering, sales, and finance. Address technical requirements for CPQ systems, engineering feature flags, billing systems, and sales compensation adjustments.
Develop Sales Enablement Tools: Create pricing calculators and training materials to support your sales team in effectively communicating value and navigating negotiations.
Create Clear Implementation Roadmaps: When rolling out pricing changes, include detailed plans for internal training, customer communication, and system updates.
Usage-Based Options: For certain SaaS solutions, particularly in communication and infrastructure sectors, usage-based pricing ($/voice minute, $/message) can enable new use cases and counter competitive threats.
Feature Remapping: Strategic redistribution of features across packages can eliminate shelfware and increase perceived value for customers.
Empirical Research: Base pricing decisions on tier/package performance analysis, price bearing capabilities across different segments, and usage analysis to ensure metrics align with actual product usage.
By implementing these best practices, you can create a SaaS pricing strategy that not only improves deal sizes and reduces sales friction but also ensures your pricing model evolves with your company's growth and market conditions.
Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.