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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 top mistakes SaaS companies make with pricing:
Top Mistakes SaaS Companies Make with Pricing
1. Misalignment Between Pricing and Go-To-Market Strategy
Many SaaS companies fail to align their pricing strategy with their go-to-market motion. For example, a $10M ARR IT infrastructure company was selling lump sum subscriptions that didn't match their enterprise-focused sales approach, causing inconsistent sales and customer objections during the sales process.
2. Lack of Specific Pricing Metrics
Selling subscriptions without clear pricing metrics makes it difficult to monetize new strategic features and creates friction in the sales process. Successful SaaS companies implement thoughtful metrics that align with how customers derive value - such as a combination of users and customer revenue.
3. Overcomplicated Packaging
Having too many packages creates confusion and complicates the sales process. We've seen companies with up to 12 packages across product lines struggling with sales adoption and decreasing average deal sizes. Rationalizing to fewer, well-differentiated packages (like reducing from 12 to 5) can increase deal sizes by 15-30%.
4. Not Tailoring Packages to Market Segments
Effective SaaS packaging should be well-tailored for specific market segments. Companies often create one-size-fits-all packages that don't address the unique needs of different customer segments.
5. Failing to Capture Upside from High WTP Customers
Many SaaS pricing models don't effectively capture additional revenue from customers with high willingness to pay (WTP), leaving money on the table from those who would pay more for premium features or services.
6. Ad-hoc Pricing Implementation Without Testing
Implementing new pricing models without proper testing and implementation planning can lead to significant revenue reduction. One SaaS leader avoided a potential 50% revenue reduction by implementing platform fee guardrails and customer acceptance testing before rolling out usage-based pricing.
7. Poor Sales Team Enablement
Failing to properly train and equip the sales team on new pricing structures leads to low adoption. Successful pricing changes require tooling and enablement, including pricing calculators and sales enablement materials to ensure organizational alignment.
8. Neglecting Differentiation Between Packages
When packages aren't sufficiently differentiated from each other, customers struggle to understand the value proposition of higher tiers, reducing upsell opportunities and creating purchasing confusion.
9. Not Accounting for Scaling and Growth
Many SaaS companies design pricing that doesn't allow for natural upsell and cross-sell opportunities as customer needs evolve, limiting long-term revenue growth potential.
10. Using Expensive, Inappropriate Pricing Methods
Relying on high-cost conjoint analysis (often $150k+) which is difficult to apply effectively in Enterprise B2B settings, instead of using practical, operationally-focused pricing approaches based on real-world experience.
Addressing these common pricing mistakes can help SaaS companies increase average deal sizes, improve sales team adoption, reduce customer objections, and effectively monetize new features.