I had the pleasure of speaking with Allan Wille, co-founder of Klipfolio, and Lauren Thibodeau, founder of SaaSCan, on a recent episode of the Metric Stack podcast.
We dive into many of the challenges of SaaS pricing, including:
- Who should own the pricing function?
- How to maximize long-term profitability
- How effective pricing helps capture fair value for the value created for customers
- The importance of SaaS packaging and the usage of deal-to-deal discounting for B2B markets
- How to gather data on willingness to pay
- Metrics that can be used to inform pricing decisions
- The role of pricing in a company’s overall market position
Listen to the episode below or keep reading for additional insights:
Timestamped Overview
[00:00:45] “3 Critical Ways to Grow a SaaS Business”[00:01:31] Understanding “Willingness to Pay” as a Range
[00:02:42] “Mastering SaaS Monetization: It’s More Than Price Level”
[00:05:21] “Should companies publish pricing on websites?”
[00:08:28] A CEO’s Guide to Pricing Strategy
[00:11:00] “Understanding SaaS Pricing: The Services (SVCS) Model”
[00:14:18] “Key Metrics to Track for Pricing Success”
[00:19:07] “The Challenges and Uncertainties of Pricing Strategy”
[00:20:46] “How to Determine Willingness to Pay”
[00:25:19] “The Role of Product Marketing in Pricing”
Notable Quotes
The Importance of Monetization in SaaS Companies: “There are really only three ways to grow a SaaS business. There’s acquisition, monetization, and retention. I think most folks entirely ignore monetization, you would say, until the recent downturn in the market, probably retention as well.”
— Dan Balcauski
Data Hygiene: “Your data is only as good as your data hygiene. And something like a competitive win rate can get polluted by data hygiene problems. Your sales reps have a very hard job. I know this very well running my own business. They don’t always consistently tag competitors in your CRM. And sometimes prospects won’t disclose who else they’re evaluating. And sometimes there’s a single field in Salesforce or whatever CRM you’re using that says, What is the competitor we lost against? Well, if there were four other competitors in the deal, and you don’t know what the prospect ended up choosing, like, what do you place there? Do you put all of them? So that can be difficult.”
— Dan Balcauski
Understanding Willingness to Pay: “My general advice is to consider customer willingness to pay as a range, even for everyday purchases.”
— Dan Balcauski
Closed Lost Metrics: “A good rule of thumb is that priced well, you should lose about a third of your deals based upon pricing.”
— Dan Balcauski
The Challenge of Measurement: “Measurement isn’t the elimination of uncertainty, but rather the reduction of uncertainty.”
— Dan Balcauski
Pricing Ownership: “Product marketing should be the leader of pricing… Pricing is very cross-functional… It’s best to bring [key stakeholders] in early and have a rational, codified process that you go through.”
— Dan Balcauski
Want more B2B SaaS pricing and packaging insights? Follow Dan on LinkedIn and Twitter.