Here’s a common and costly mistake software companies make. They spend enormous time and resources planning and building their solution but wait until AFTER locking down the product roadmap to turn their attention to pricing.
This can lead to a product that is neither fully aligned with a well-planned monetization strategy nor appropriately designed to capture its full value potential.
Because we see this play out so often—across the spectrum of company sizes and sophistication—we were excited when SPP Managing Partner Chris Mele was recently invited to join host Matt Wolach on his popular podcast SaaS Story in the Making. Our hope was to help software executives understand the interplay between product development and pricing and how to build a process that leads to a more robust revenue stream.
“Pricing is the most powerful revenue control you have in your arsenal, which makes it a dominant part of the business model. As a software company executive, you want pricing to be treated on par with product management so that you’re making the best decisions about how you might put your offering together.”– Chris Mele, Managing Partner – Software Pricing Partners
- A constantly evolving product needs agile pricing. Ideally, your SaaS product should be ever-changing as the company consistently strives to improve the functionalities or upgrade service. To match this value growth, your pricing must be just as agile. Thus, it is vital to construct a system to revisit the price, alter the packaging, and recalculate net prices and incentives accordingly.
- Market Fairness helps defend price. There has always been a tendency in software sales to give different prices or discounts based on the perceived capacity-to-pay of the customer. While this may appear to be the route to maximize revenue, it actually is a problem that introduces significant risk and delays in the sales cycle and contributes to uncontrolled and costly discounting.
- Customer feedback can help you optimize your packaging. If you know how to listen, customers will tell you how they want to buy. They’ll tell you—sometimes directly, but often indirectly—the features they really need and the ones they don’t, which can give you great insight to construct your offering.
Watch the full podcast and learn how to get a higher valuation for your company
To learn more about agile pricing, market fairness, and optimizing your packaging, watch (or listen to) the full podcast here. For a deeper understanding of this topic, don’t forget to read Want a Higher Valuation for Your Software Company? Fix Your Pricing Model.