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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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Based on the information gathered, here are the most common pricing mistakes SaaS companies make:
Lack of Structured Pricing Models
Many SaaS companies operate with ad-hoc pricing models, selling lump sum subscriptions without specific packages or pricing metrics. This creates several problems:
- Inconsistent sales and revenue generation
- Customer friction and objections during sales processes
- Inability to effectively monetize new strategic features
Misalignment with Go-to-Market Strategy
SaaS businesses frequently fail to align their pricing strategy with their overall go-to-market approach. For example, using transactional pricing when selling high-value enterprise solutions creates disconnect and reduces effectiveness.
Overcomplicating Package Structures
Having too many packages or complicated feature distributions across tiers leads to customer confusion. In one case study, rationalizing from 12 to 5 core packages across 3 product lines resulted in deal size increases of 15-30%.
Inappropriate Pricing Metrics
Choosing the wrong value metric for your pricing can significantly limit growth. Successful SaaS companies often need to implement combination metrics (like users + company revenue) that better align with the value delivered.
Failing to Evolve Pricing Models
Many companies resist transitioning to more appropriate pricing models (such as usage-based pricing) even when market conditions or competitive forces demand it. This hesitation can lead to revenue reduction and lost market opportunities.
Reliance on Wrong Expertise
SaaS companies often make the mistake of using:
- Expensive standard methods like conjoint analysis ($150k+) that don't apply well to B2B settings
- Consultants who lack real-world operational experience with SaaS pricing implementation
Inadequate Implementation Planning
Even with good pricing strategy, companies fail by not creating comprehensive implementation plans that include:
- Internal training
- Customer communication strategies
- System updates for billing, CPQ, and metering
- Sales enablement materials and compensation adjustments
Addressing these common mistakes requires specialized expertise in SaaS pricing strategy that combines theoretical knowledge with practical implementation experience.