How to price SaaS?

How to price Software as a Service tool?

This is a tough nut to crack, since there are many ways you can slice-and-dice pricing. Finding the right price point is a tug of war between a few factors:

Costs vs. Demand

One way to look at the price is to see how much a new customer costs (R&D, marketing, operational costs, etc.) Then work out a price point that will make the customer profitable in about 6-15 months. This gives you a price range to start with… But then do a sanity check by asking “Will the market pay this amount?”

You vs. Them

Another point to consider is your business proposition vs. what the competitors offer. Do you want to under price the competition? Or do you offer more value and can charge a premium? And remember once you set a price, you can always offer campaign discounts, but you cant easily up the prices every 3 months.

DIY factor

And finally do consider how much it would cost someone to do it themselves, especially if you offer something that is easy to replicate. This is especially true when you are selling to a techy crowd.

And List your price

Whatever price you decide on, make sure you list it on the website, especially if you offer a self-service trial or a freemium product. You can hide the price if the product requires assisted sales. Then replace the trial button with a “Request Quote”.

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Zaki Usman

Hello, I'm the founder and CEO at ShoutEx. I like to blog about marketing, mobile and web topics. Feel free to connect with me on LinkedIn.

Comments (1)

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    Tyson G


    Don’t forget you also need to compete with tradtional software vendors who have a 20% support/maintenance contract.


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