I recently joined Linda Fanaras on the B2B Brand180 podcast to discuss strategic pricing and packaging for SaaS companies. Our conversation explored how B2B SaaS companies can develop pricing strategies that reflect their unique value proposition and market dynamics.
Timestamped Overview
03:17 Focus on Customer Value, Not Features
08:45 Define Business Goals
11:27 “Network Effects and Market Dynamics”
14:39 Pricing Models Explained
16:09 Align Pricing with Customer Value
20:48 “B2B Strategy: Focus & Experiment”
24:35 “Public Pricing: Pros and Cons”
27:01 SaaS Pricing Insights with Dan
The Pricing Paradox: When Executive Teams Must Finally Decide
When executives discuss company strategy, they often create ambitious goals that may even contradict each other. These sessions typically end with everyone nodding in agreement before returning to business as usual. But pricing forces a different outcome.
“Pricing is one of these areas where this is where the rubber hits the road,” I explained to Linda. Unlike vague strategic initiatives, pricing requires clear choices and trade-offs. You must decide which customers you’ll serve, how you’ll charge them, and, importantly, which customers you won’t prioritize.
This decision-making crucible is particularly challenging because each executive approaches pricing with different objectives:
- CMOs want to maximize leads and market share
- CFOs prioritize gross margins and profitability
- Product leaders focus on feature adoption and utilization
Before any pricing initiative can succeed, these competing priorities must be reconciled into a single, coherent goal. This alignment challenge explains why pricing often remains unaddressed despite its potential impact on growth.
The uncomfortable reality of pricing makes it both essential and frequently avoided. It forces executives to make concrete choices they might otherwise sidestep in broader strategic discussions.
The B2B Difference: Why Consumer Pricing Lessons Don’t Apply
One of the most significant insights from our conversation centered on the fundamental differences between B2B and consumer markets, particularly regarding pricing strategy.
“In B2B, it’s much less clear that those winner-take-all dynamics are actually as relevant,” I noted. While consumer markets like social media or ride-sharing often consolidate around a single dominant player, B2B markets operate differently.
Why? B2B buyers actively resist monopolies. They prefer having multiple vendors to maintain negotiating leverage. This self-correcting market dynamic means B2B pricing strategies built on temporary loss-leader approaches often fail spectacularly.
This reality creates fundamental differences in how pricing strategies should work:
- Venture-subsidized growth models that succeed in consumer markets often fail in B2B where buyers are more skeptical of single-vendor dependency
- Freemium models that work in consumer markets usually fail for enterprise software
- Network effects that create consumer monopolies rarely transfer to B2B environments
Price Metrics vs. Value Metrics: Aligning How You Charge With Value Delivery
One of the most insightful segments of our conversation addressed the critical distinction between price metrics and value metrics.
Price metrics are the units you charge for—seats, API calls, data storage—while value metrics represent how customers judge your product’s effectiveness. The challenge is aligning these two metrics to create pricing that scales with perceived value.
For example, a marketing technology platform might help companies increase revenue, but charging as a percentage of that revenue is impractical. Instead, you might charge based on contact database size, which correlates with increased marketing reach and potential revenue.
Context matters tremendously. While per-seat pricing works well for CRM systems (where more salespeople directly correlates with more revenue), the same approach would misalign value for marketing automation (where success doesn’t necessarily require more marketers).
Moving Beyond Price Points
Most SaaS executives think what you charge determines success. In reality, who and how you charge matter more. This fundamental principle guided our entire conversation with Linda and sits at the heart of an effective B2B pricing strategy.
Pricing isn’t just about picking a number. It requires understanding your customers deeply and aligning your pricing structure with the value you provide. The most successful B2B SaaS companies recognize this and approach pricing as a strategic system requiring the same governance as any other critical business function.
As I emphasized throughout our conversation, pricing forces decisions that executives might otherwise avoid. By embracing these decisions and developing a structured approach to pricing, you can transform pricing from a periodic headache into a sustainable competitive advantage.
Want to learn more about strategic B2B SaaS pricing? Connect with me on LinkedIn or visit producttranquility.com.