Sales teams face significant challenges that are often underestimated. Executive management prioritizes a tough stance on pricing, but frequently overlooks the need for customer-oriented packaging. Moreover, software companies frequently mimic their competitors’ pricing strategies.
This situation gives rise to risky approaches involving overly complex pricing and packaging, which hinder sales progress instead of facilitating it. Outdated pricing tiers and other ineffective methods that fail to offer reasonably scalable net prices further compound the difficulties encountered in revenue growth.
Given the frequency with which we observe these issues across companies of various sizes and levels of sophistication, we were thrilled when SPP Managing Partner Chris Mele received an invitation to join host Jane Portman on her highly regarded podcast, Better Done Than Perfect. Our objective was to help software executives recognize the significance of packaging and pricing, while also providing guidance on avoiding the pitfall of undervaluing their offerings. By doing so, companies can achieve accelerated growth and enhanced profitability.
“Every pricing model that is built carries with it a blueprint of risk. And so when you copy a competitor’s pricing you unknowingly copy their blueprint of risk.”– Chris Mele, Managing Partner – Software Pricing Partners
- Preserving Value in the Subscription Stream: In the era of cloud-based software, it’s essential to carefully consider how much value you provide within your subscription stream. While bundling new features seems convenient, it can result in giving away too much value over time. We discuss the dangers of this approach and offer alternative strategies to maintain profitability.
- The dangers of giving away too much value in the subscription stream. Before the cloud, companies billed you for each new year’s edition of the software. Most software companies roll all of these new features into the subscription stream and call it a day. However, this gives away far too much value over time.
- Effective Price Defense: Sales teams often struggle with defending prices due to poorly constructed or incomplete packaging strategies. Discover the importance of aligning your packaging with your buyers’ preferences and learn how this can bolster your ability to justify and defend your pricing.
- Moving Beyond Pricing Tiers: Traditional tiered pricing, designed for physical goods, is not ideal for B2B software. Instead, we explore the concept of smoothing out discounts, ensuring that every dollar spent by customers earns them incremental benefits. While this approach requires robust process control and advanced technology, it can significantly impact your bottom line by avoiding the 10% to 15% profit loss associated with pricing tiers.
Watch the full podcast and learn how to better defend your prices to customers
To learn more about pricing, packaging, competitive intelligence and the importance of pricing as a dedicated function within your B2B software business, listen to the full podcast here.
For a deeper understanding of this topic, don’t forget to read Why Continuous Monetization is so Vital to the Future of Your Software Company.