How do you price your SaaS offering?
Last year when we were launching DeskAway we were in a dilemma of sorts - should we price the service per user per month or should we price is per account per month? We wanted our pricing strategy to be very competitive and not come in the way of user adoption. Being a collaborative service, the more people logging onto DeskAway, the better value the company would derive from its usage. Also, the target market was the small business - they want something easy, cost-effective and yet powerful. Obviously, the pricing should justify the value it provides the end user.
Sinclair of SaaSBlogs puts it pretty neatly and I totally agree with what he has to say about this -
“The decision really boils down to understanding value acquisition from the customers perspective. In order to charge on a recurring basis, you need to be able to justify your pricing with a measure of the magnitude of value acquired by your customer along with value acquisition frequency. For example, if you’ve designed a very valuable piece of software that might be used once or twice a month by your customer in their business processes, odds are they would prefer to “pay per drink” rather than a recurring fee since theoretically you should be able to charge less in an absolute sense for that one time used instead of unlimited for a given month (they would generally be willing to pay a premium as long as total cost is lower than recurring fee models). However, if your offering has frequently recurring value acquisition from your customer’s perspective, odds are they’d prefer to pay a fixed fee at some frequency knowing that the firepower is available to them when needed and that cost is fixed but value acquisition has no ceiling.”
Hence, for DeskAway, it was all about giving unlimited users for all paid plans and have the business pay us on a monthly or a yearly basis. Simple, cost-effective and flexible - same as how you pay for your electricity bill every month.
Do you have any experience in pricing software?
