Perfect SAAS Pricing Model!

Perfect SAAS Pricing Model!

Pricing – Model/Point is an eternal quest for a new product/service. It gets tricky for new segments of market you target to launch your product. There is never a “Perfect” pricing strategy or a pricing model. It gets more complex with SAAS based solutions. Even more complex when targeting markets/segments that are not mature.

So what do you do?

I call this as a “Pricing Development” approach, which involves understanding the basic models of Pricing that already exists around us in the SAAS space. Pricing Development approach involves around the ability to work closely cross section of customers across segments to understand the price range the customers are willing to pay for the perceived value you offer through the product. This approach not only helps you identify barriers, but also helps you discover more avenues to monetize your product/service.

No matter what “Price” you arrive, it can never be the same for a long time. Its has a Shelf Life or Expiry date, as its value ceases to exists once the value diminishes or increases.

Below are some of the articles that we found extremely useful in putting together a pricing model for our product www.pharmeazy.com. We are currently in the “Pricing Development” process, hope to arrive at a price point soon that our prospects will love

http://www.slideshare.net/lincolnmurphy/develop-saaspricingmodel
http://sixteenventures.com/pricing-value-metrics
http://www.pwc.com/gx/en/technology/software-pricing/assets/pwc-the-future-of-software-pricing-excellence-saas-pricing.pdf
http://www.bvp.com/blog/software-service-pricing-strategies-white-paper-released
https://blog.kissmetrics.com/saasy-pricing-strategies/
https://chartmogul.com/wp-content/uploads/2015/02/Ultimate-Churn-Cheat-Sheet.pdf

What were some of the factors,constraints,assumptions of “Pricing” Strategy for your SAAS Product/Service

Customer Beta is Hard Work!

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https://dexterhinkson.wordpress.com/tag/beta-test/

Customer Beta is Hard Work!

Why Customer Beta is so important!

We launched 3 versions of www.pharmeazy.com in our target market. Logically they were released as Alpha, Beta & Go Live. We made a conscious choice to work closely with our target segment of customers as we were building a product of commercial and disruptive nature in this segment. This intent led to lot of things, often questioned by the team as “Why this is important”. Though I was big fan of Lean Startup and Customer Development models, some practical lessons that Indian Business Segment taught us are shared here.

1. Whom are we building for?

Every product has its segments of Markets. Identifying those few to start your alpha/beta is critical. We discovered new segments only when we to the customers. You get to learn so much from them. Business software is not for demo but can make or break an organization. Its meant to be used by companies of all sizes to manage customers, increase sales, reduce costs thereby generating a lot of profit.

Market Validation of your product to a segment fit on addressing the paint point with a set features is the biggest take away. Some of the other significant learnings your will find the range of customers such Innovators, early adopters, majority and laggards.

Different segments have different buy decision factors, need of alignment of the workflow to their processes. Its very important understand these during your alpha/beta release cycles.

2. Why choose your beta customers?

Are you kidding me? How can we choose our beta customer? Any customer in the target segment willing to use our product should be our beta customer?

Think Again!

The innovators and early adopters are really that type of customers you would want them early on as your beta customers. They are dreamers just like you (creator of the product). They see the world differently in which they compete and operate upon. They are looking to adopt solutions that can take their business to the next level, differentiate themselves in the market.

So any b2b product you are building on, ensure that you work closely with the beta customer. Choose your customers wisely during the Beta period. Having a demanding customer during beta can strain a lot of your resources and reduce your learnability and adaptability factors. During our several product demos, we shortlisted a few customers and followed up with them to adopt our new technology. We consciously left behind a few as we believed that they using our beta would not help us and strain our limited resources.

3. Dont take them for granted !

Any prospect/customer agreeing to use an alpha/beta version means a LOT on their confidence on you and your product. So look at avoiding the common pitfall of ignoring and considering that that confidence is good enough to make it right for them. Remember they are taking a big risk to use your half backed product in their environment for a win-win tomorrow.

FREE beta has no value, hence make it count & valuable with your product & customer service experience

Often customers who decide to ride on a beta journey are looking for “perks” along the way and being associated with something big in future. Work closely with them to help them use the software effectively and solicit candid feedback. There will be times, where you may to extend support in all cases (HW/SW/NW/Internet) etc. DO IT ALL, as it  build a great trust and comfort factor the client, that here is a “responsive” company/team that helps me take care of it anytime, every time. You have won most of the battle here.

Be extremely transparent in communicating “what’s in it for them”. This was a big eye opener for us, as some of them expected a huge discount upon conversion, few did mention that they need better media coverage, some even shared interest in investing in our company 🙂

4. Pricing and Marketing

Critical Learning from the alpha/beta experience was determining the pricing strategy, understand the key buy decision factors, competition, how they perceive the  product, how do they feel using the product, in-tangibles they relate in life on how the product has changed their life, how fast word of mouth spreads.

Money is the simplest language that all people understand (educated or uneducated). So use this time to understand how the market reacts and responds to your pricing strategy and fine tune your approach further. Sales channel and partnerships are key to stitch them up together and be prepared for launch.

 5. Support

This by far was the biggest and most tangible take away for us as it taught us lot of things to look for and understand the plan to have support team. Its every right a customer to believe that they should be given the highest priority when an issue crops up. This is extremely important for any team in having the ability to respond quickly to acknowledge and resolve the issues. Support activity helps you understand the nature of issues that can crop up as you scale and also technical glitches that can jeopardize the entire experience of a SAAS product.

Review your Beta Program results

Like every activity, Beta program should have set of goals you need to measure and track for you to determine the success and failure of the program. During all times, keep a watch on the target and make adjustments to the execution depending on response you get from the market.

Lessons from alpha/beta program are invaluable as you move towards your full launch. Its not easy work, but a lot of hard work. Can be achieved only a clear set of expectations and closely working with your segment of customers!