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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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The best approach to completely change your pricing model—as opposed to simply tweaking prices—is to treat it as a fundamental transformation in how both value and pricing are structured. Here are the key steps based on our SaaS pricing book, Price to Scale:
• Recognize Customer Expectations:
• Start by identifying what your customers are accustomed to. If you simply adjust prices within the existing structure (like offering discounts on the same tiers), it can make comparisons too easy and even undercut perceived value.
• Reframe the conversation by renaming your packages (for example, turning “Pro” and “Elite” into “Premium” and “Advanced”) and refining the feature sets, so customers clearly see the new value proposition.
• Redefine Value Metrics and Packaging:
• Step away from the old pricing metrics and determine the most relevant value metric for your customer. Whether it’s usage data, features, or outcomes, aligning your pricing with the actual value delivered is crucial.
• Construct your new model to focus on feature-based or consumption-based pricing, ensuring that even as features evolve, you continue to deliver appropriate value and capture revenue effectively.
• Engage Cross-Functional Leadership:
• Changing an entire pricing model requires coordination across teams. As noted in our book, you will likely need to involve senior leadership such as the CEO, who can help drive the transformation from the top down.
• This collaboration ensures that internal teams, including Customer Service Management (CSM), understand and support the new model for a smooth rollout.
• Plan, Instrument, and Evolve:
• Prepare for a gradual transition—sometimes over a year or more—as you build the necessary instrumentation to track and analyze the performance of your new pricing model.
• Collect and organize your data effectively (e.g., via a data lake) so that you have the insights needed to fine-tune the model based on real-world usage and customer feedback.
• Continuously evaluate and iterate on your pricing strategy to ensure it remains aligned with market conditions and product developments.
In summary, a complete pricing model change isn’t just about a new price tag—it’s about a strategic overhaul that involves redefining product tiers, engaging leadership, basing decisions on data, and aligning with your customers' expectations. Our book, Price to Scale, emphasizes that innovative pricing transformations require both clear internal coordination and a keen focus on delivering differentiated value to your customers.