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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 principles in our saas pricing book, Price to Scale, the right approach isn’t simply to match competitors’ lower prices—it’s about clearly articulating and extracting value from what makes your product unique. Here are some key steps:
• Focus on Value, Not Just Price
– Ensure that any price increase is tied directly to the value your product delivers. Rather than lowering your prices just to match competitors, clearly communicate improvements, additional features, or superior service to justify the increase.
• Segment and Differentiate Your Offerings
– Use strategies like the Good-Better-Best packaging (discussed on page 29) to create distinct tiers. This allows you to capture various levels of willingness to pay across different customer segments. For example, you can offer a premium tier for those who value enhanced capabilities while maintaining a more basic option.
• Innovate Your Package Design
– Instead of merely raising prices on the same package, consider modifying your product lineup. As mentioned on page 553, repackage your offerings so they aren’t directly compared to previous tiers. This might include bundling different feature sets or offering new add-ons, ensuring that customers see a clear improvement in value.
• Be Proactive and Transparent
– When communicating changes, be upfront about why the price increase is happening. Customers are more likely to accept higher prices if they understand that the added cost comes with a better, more differentiated product. Use this time to explain how the new offerings better meet their needs, even if competitors continue to offer lower-rate products.
In summary, our book advises that increasing prices while competitors maintain lower pricing means leveraging a value-based strategy. You need to differentiate through segmentation, innovate your packages, and communicate transparently so that customers recognize the added value justifies the higher price.