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The Secrets to SaaS Pricing
Lars Lofgren
Product Marketer - June 2013

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@larslofgren #KISSwebinar

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The 3 Models of SaaS Pricing1
How to Pick the Best Price2
8 Pricing Hacks3
How to Test New Pricing4
We’ll cover...

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Model 1: Targeting Small Businesses
1

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Self-service, no sales team, limited support

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Pricing in the $10 - $100/month range
This mean you need to focus on
scale and acquiring customers
cheaply.

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Similar companies

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Model 2: Targeting Enterprise
2

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Sales team, contracts, full support

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Pricing is $1,000s or $10,000s/month
Very little is automated, your team
will be working very closely with
each customer.

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Similar companies

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Model 3: The Mid-Size Hybrid
3

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Automated marketing with a sales team

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Pricing is $100’s/month
You’ll need to scale your leads but
you’ll have a full sales team to
close them.

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Similar companies

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Pick the right price range for your vision

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2 Bad Methods for Pricing

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1. Product cost + X%
You’ll undercharge some
customers and overcharge others.

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2. What does the customer want to pay?
People have no idea until you ask
them for their credit card.

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Pricing by Value

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Value-Based Pricing
Your customers get value worth $Y
and it only costs them $X.

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For B2B, focus on money earned or saved

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How much extra revenue do they earn?1
How many hours do they save?2
What other costs do they avoid?3
Ask your customers:

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Capture more value from each customer.

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There’s no such thing as a perfect price.
If you need more guidance, pick a
price that’s 10% of the value
delivered.

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8 Pricing Hacks
8

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Rule 1: Go Annual
You’ll improve cash flow, reduce
your churn, and improve your
revenue.

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Rule 2: Don’t Add Unnecessary Digits
$1000 looks cheaper than $1,000
or $1000.00

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Rule 3: Avoid Discounts Unless Launching
Discounts create destructive
customer habits. Do not use them
regularly.

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Rule 4: Offer Multiple Prices to Anchor

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Rule 5: Use pricing plans to segment customers.
Different customer types get
different value from your product.
Capture that value.

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Rule 6: Double Your Price
We all tend to UNDERvalue our own
services.

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Rule 7: Be Careful With Freemium Plans
Very difficult to make it work in B2B
markets.

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Rule 8: Grandfather Old Customers In
As long as you don’t raise prices
for old customers, you won’t get
any complaints.

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These are rules, not laws.

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How to Test New Pricing - 4 Steps

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Step 1: Track subscription plans for all customers
Subscription plans1
Each monthly charge2
Any cancelations3
Access to total revenue, average
revenue per user, and churn
4

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Step 2: Launch Your New Pricing Page

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Step 3: Track your entire funnel

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Step 4: Track ARPU and churn

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KISSmetrics helps you find the right price
Connects all data to individual people1
A/B tests for your entire funnel2
See which plans are most profitable3

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VIP KISSmetrics Demo
kiss.ly/webinar-20

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Q&ATime!
Lars Lofgren
llofgren@kissmetrics.com
@larslofgren