18 Essential Pricing Strategies from the Price Intelligently Blog
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If you’re a Software as a Service (SaaS) business that’s just starting out, you might want to take a look at Price Intelligently Blog.
They treat pricing strategies like science, and because of that, they deliver top notch advice for any industry entrepreneur that’s committed to growing their business.
What Price Intelligently essentially does is help you price more intelligently (hence their name) by using a process that is grounded in good science.
Yes, pricing is a process in itself, and it will garner accurate results only if you can ask your customers the right questions and if you analyze the data.
If you need further proof that their blog is worth your time, please find below a few examples of their best advice, presented in easy to digest length.
Finding Your Best Pricing Strategy
- Establish Your Buyer Personas. Determining who your buyer personas are is an important step in pricing strategies that is often overlooked. Knowing who your ideal buyers are gives you insights into how much customers are willing to pay, and more. This in-depth research should help you answer a few key questions such as what price is each buyer willing to pay for your product, what is the average Lifetime Value (LTV) of each customer, or what is the approximate Customer Acquisition Cost (CAC) of each customer. It should also help you determine at least three main marketing channels you can find your customer in and at least three features they care most about. It’s important that you know as much information as possible about your customers. While you may not be able to gather all this information from the start, you should continually collect it and update it. Businesses that understand who their customers are have a smoother growth process.
- Evaluate Each Buyer Persona. After carefully analyzing your customers and establishing your buyer personas, you’ll need to devise a plan for each of these personas, and take into account that they will need space to grow further over time. Finding out which of your product features align with their persona is easy and it’s done through surveys. However, the way you construct these surveys is crucial, as you need to ask the right questions in the right manner or else, you’re not going to get much out of your customers. Use a relative preference type of analysis to force your respondents to choose which features they prefer and start working on your pricing tiers. By having customers show you what they value most helps your business make better decisions about your product.
- Set Proper Value Metrics. How are you going to charge users? Is it going to be a flat per-user basis? Or, is it going to be for certain product features? Do some users need to pay a higher price tier for some premium features? Once you’ve aligned your features with your personas, so the next step is thinking about proper value metrics, a crucial aspect of pricing strategies. Monthly Recurring Revenue (MRR), the income your business can rely on every 30 days, will very much depend on these value metrics you will set. Good value metrics should make sure to meet the following conditions: they’re easy to understand, they are in line with your customer’s needs and they grow alongside your customers. Whether you choose to use per user pricing or to take into account feature analysis, just make sure you treat value metrics in all seriousness, as they could easily shake up your business’ monetization.
- Price Your Product Accordingly. After the first three steps, you finally get to think about the numbers part of the pricing. That is, in fact, the easiest part out of all the steps. Price data is easier to collect from your customers, so all you need to do is just ask how much your customers would be willing to pay for what you offer. Additionally, you can ask what is the maximum price they’d pay, if they’d still buy it if it would start getting more expensive, what price would make them consider it as a great deal and what’s the lowest price that would make them reconsider if it is of quality or not.
For more tips on how to find the best pricing strategy for your business, please read this full article here.
- Do Your Research. First, spend some time on gathering information on how your pricing has evolved or fluctuated over time. It’s important to observe how your customers have reacted to price changes you’ve implemented in the past. Another important aspect is to see what exactly determined these price changes, whether it was product-related or just a trial and error action and how these price changes have affected your overall financial situation. You’ll probably notice that, while you lost some customers, their Lifetime Value (LTV) metric and the Customer Acquisition Cost (CAC) metric rose, which are signs of a successful price change implementation.
- Build Your Team. Implementing a price change is a process that requires more than just one person to handle it. You will need to delegate an entire team of workers that will deal with this process, will stay on top of it at all times, and will make sure everything goes as planned.
- Communication With Your Teams. While you may delegate the pricing change process to your marketing team, you want everyone to be informed of what you’re doing at least three months before you go ahead and start implementing the change. Employees need to stay up to date at all times, so they’re prepared to handle any issues that may arise either in the meantime or after the implementation of the change.
- Communicate With Your Clients. When it comes to your customers, you need to have a plan for introducing your new pricings. Preparation here is key because that way, it will be easier to stick to your plan and you’ll know how to respond to every issue that will arise. You’ll probably encounter strong reactions, objections and requests for discounts or offers in exchange for keeping them as customers. Don’t let yourself get intimidated! Hold your ground and explain how you’ve improved your product, how their experience will improve, and how you will continue to improve the product to suit their needs better.
- Don’t Lose Sight of Your Goals. Your ultimate mission is to work on and deliver a unique, high-quality product that is better than everything else there is on the market. That means you deliver a valuable product that you constantly work on improving and that will ultimately make your customers’ lives easier. The price should reflect that.
For more tips on how to implement a price increase, please read this full article here.
- The Importance of Pricing Adjustments. Pricing adjustments are a very important element of your business because they have a great range of influence and will determine changes in your financial situation. What you need to keep in mind is that as your business and products evolve and improve, so should your pricing. That is called value-based pricing, and it correlates the value, your product has with its listed price. Of course, there are multiple pricing strategies, such as cost-plus pricing or competitor based pricing, some of which will work in your case and some of which won’t. However, the best way of figuring out what is best for you business is to constantly monitor and adjust your pricing strategies for your company’s growth.
- The Timing of Pricing Adjustments. Ideally, you want to adjust your pricing points every six to nine months. If a year or more has already passed since your last price adjustment, then you can be certain that your pricings are outdated and you’re not taking advantage of important financial opportunities. Timing also depends on where you’re currently at with your company. If you’re still a new business, you should do reviews every quarter to get a sense of how your implemented strategies are working and make adjustments every six months. For older businesses, reviews should be conducted every quarter, with adjustments being made anywhere from six to 12 months.
- Steps Towards Pricing Adjustments. Don’t wait until it’s obvious that you need to make adjustments on your pricings. Keep them in mind at all times and take action whenever your gut is telling you to. No precaution is cautious enough when it comes to the money your business makes.
- Do Your Research – Collecting data from your customers is extremely important, especially when the moment you need to make changes comes and the best way to make any decisions is to do the research and inform yourself of previous similar situations. Don’t just take a guess at how your pricing adjustments will affect your customers and your business. Look at past similar events, analyze how, when and why your prices have changed and use this data to make smart decisions and to devise a better plan for informing your clients about why these changes occurred and how the value you place on your product raised in parallel with the improvement of your product.
- Involve The Whole Team – Make sure every employee is up to date and informed of changes to be made. Discuss pricing adjustments with team members before implementing them and help them understand the changes and adjust to them.
- Communicate With Your Customers – Always make sure to stay in touch with your customers through any means necessary. It’s important always to know where they stand, what they think of the product and what their opinion is on the current pricing and possible adjustments. This will help you maintain your relationships when you will need to explain price increases and other major changes that will affect them.
- Carefully Plan The Transition – Communication with customers is extremely important. In this case, when we’re talking about already existing customers, what you need to reinforce is that you highly value them and that you care about their needs. Plan how you’re going to inform them about price adjustments carefully and make sure you are prepared.
- Pay Attention to Design – Take into account the fact that the pricing page may be the last page your customer sees before leaving your website. With that in mind, it is obvious that design will play a huge role in whether or not the customer makes a decision on the spot. Spend some time on improving every little detail on your pricing page. Make sure the pricing information and options are presented in a clear, accurate and easy-to-understand manner. Make everything as easy as possible for the customers to understand what their options are and which of these options are the most appropriate for them. Also, it won’t hurt if the page has an eye-catching and professional design to instill a sense of trustworthiness.
- Make it a Priority. Pricing adjustments have a huge say in your business’ success. Don’t take the easy way out and think that once you’ve set your pricing, you are done. Your products and services are constantly evolving so isn’t it natural that your pricings should do the same? Taking the lazy route is easy, but if you’re committed to growing your business, you need to recognize the importance of pricing and the impact it has on your monetization. Always keep your prices relevant and don’t put off new pricing projects – now is the best time to reassess them and improve them, if needed.
For more tips on getting your SaaS business to be more profitable, please read this full article here.
Smart pricing focuses more on the value customers place on your product rather than costs or competitors, so that’s why user input is key for a good price analysis.
That’s one of the most valuable lessons you’ll learn reading the Price Intelligently blog.
Follow the link at the end of each section if you want to study each topic further.
Every article mentioned in this post is packed with insightful information.
You’ll be nothing short of impressed with the content that Price Intelligently offers, so make sure to check them out for some great advice.
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