This document discusses the importance of a dynamic pricing strategy for SaaS products, emphasizing continuous evaluation based on customer value and product evolution. It advises against static pricing and suggests various methods for setting and validating prices, including customer feedback and understanding user needs. Key insights include the significance of defining value metrics and the potential for upselling to maximize revenue.

1. SaaS pricing
Software as a Service Pricing Strategy
Notes made by Artur Trzop

2. What’s ?

3. What is your
value proposition?
Someone will pay you because you deliver value
proposition

4. Pricing strategy is something
you should do continuously
● If you set price once and then do nothing - this is
wrong!
● You product gets better and your pricing should
evolve with the product.
● You customers get more value you should charge
accordingly

5. Pricing page is the most
important page on your site
If users are confused and cannot figure out
what plan applies to them then they will leave

6. Perceived Value
Look at price from customer perspective, how much
she is willing to pay?
● Ask customer to pay. If she pay then you can
treat this as validated price that can work.
● If she says she would pay but she does not then
you need to iterate with different customer or
different pricing.
● Customer commitment matters.

7. Talk to people to
understand what’s the most
important thing for them
● Why they use product
● What is the most important value they get

8. Who is your user and who
pays you
● User: For instance the kids use app
● Who pays: parent pays for the game app

9. How to set price?

10. Add profit margin on top of
your costs to set price
● You limit yourself based on costs

11. Should I compare my product pricing
with other competitor solutions
● You should avoid that because you don’t have full
picture of your competitor costs structure
● You want to distinguish your product from
competitors in the first place
● Otherwise you would not do the product
● You are different and you should charge
differently

12. How to pick the price?
● Guess price and validate if someone pays or not
● Guess again and validate it
● Start with a bit high price in your opinion. Validate
if anyone wants to pay. If yes, try with bigger
price. If not then try with smaller price.

13. How to start?

14. What we want to optimise
for?
● Earnings
● Learning

15. You could start with
learning
● Give early adopters the product for free to try
● This give us knowledge how people use it and we
get feedback

16. How to validate early
adopters?
Ask people if they would like to support your product
and switch to paid plan

17. What if
people don’t want to pay?
● You doesn’t solve the real pain problem for them
● Or they are not the right early adopters with real
pain problem
● Look for people with pain or pivot your
assumptions

18. How to pivot?
How to find the
right problem to solve?
Talk to people, the problems emerge

19. What’s next?

20. What people care about in
your product?
● Learn how people use app to figure out what they
most care about
● What is the key feature they use that helps them

21. Value Metric
the metric depending on which you set your prices

22. Example value metrics
● User seats (slack, trello, dropbox business)
● Emails sent (Mandrill, Sendgrid)
● Repo number (Github)

23. What’s perfect
Value Metric?
● should align with your customers’ needs
● grow with them
● be easy to wrap one’s mind around

24. With bigger plan users get
more value
● When people needs grow they fit into bigger plan
● Charge accordingly

25. Source of revenue
● New acquisitions (new paying users)
● Upselling (sell more to already paying customers)

26. What to avoid?
(it depends)

27. A/B testing pricing
● doesn’t work unless you have huge amount of
customers
● there is risk with unhappy clients figuring out that
they pay more
● try guess price and validate it instead of A/B
testing

28. Don’t promise unlimited plan
● At some point big customers may arrive and you
should charge them based on value they get.

29. Books

30. Don’t just roll the dice
describes software pricing strategy and psychology
of pricing
http://download.red-gate.com/ebooks/DJRTD_eBook.pdf

31. Price Intelligently SaaS
Pricing Strategy
http://www.priceintelligently.com

32. Short intro articles
Ten Proven Pricing Models (slides)
https://www.caycon.com/blog/2011/02/ten-top-product-pricing-models-for-startups/
SaaS Pricing and Value Metrics - Lessons from the Top
Seeds
https://www.chargebee.com/blog/saas-pricing-and-value-metrics/

33. The most important
message
Pricing is something you work on all the time!