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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 our saas pricing book, Price to Scale, the recommended approach is not to simply match a competitor’s lower price with a unilateral discount but to use a more strategic, segmented, and value-focused approach. Here are the key tactics outlined:
• Tailored Offers with Conditions:
Instead of directly reducing the price, identify the customers’ specific segment (using tools like churn propensity scores) and offer them personalized pricing reductions. These discounts are positioned as gestures of appreciation but are paired with conditions—such as a commitment to longer contracts—to justify the reduction. This ensures that the value exchange remains balanced.
• Alternative Value Propositions:
Rather than just matching a competitor’s lower price, consider offering alternatives that may include product upgrades or add-ons. By being upfront about pricing dynamics, you can provide options that increase perceived value without simply lowering margins. This approach also makes it less likely that customers will compare prices on a like-for-like basis, which helps avoid a price war.
• Segmented and Proactive Communication:
Different customer segments (like commercial, mid-sized, or enterprise) may need varying discount ranges. Communicate proactively and transparently about both the pricing structure and the additional benefits or terms tied to any discount. This tailoring not only justifies the adjusted pricing but reinforces the overall value of the service.
In summary, Price to Scale advocates for a strategic, segmented, and conditional response to price matching requests—one that maintains the integrity of your pricing strategy while reinforcing the overall value of your product or service.