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Josh Melick – Mistakes Made With SaaS Pricing

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Josh Melick should be everyone’s go-to guy when it comes to anything regarding sales and software companies. This is a man who has spent his life working in the industry and who comes from a background of math and engineering. We mention this because Josh has recently written a fantastic piece which all SaaS developers should read, about the way that their price plans should be set up. These companies may be brilliant when it comes to developing software but there are some serious holes in their price planning which Josh discusses.

If you are operating in this sector, here are the common mistakes which you must seek to avoid.

Failure to Include the Third Dimension

When most SaaS providers tier their price plans, usually into three, they will offer extra value as the tiers go up. Josh refers to these as dimensions, with most companies providing just 2. The two dimensions which differentiate the tiers are based on the number of users on offer and the amount of usage which the customer can enjoy. Josh believes that the third dimension of time should be added here, as in how long the plan will last for. Currently there are many SaaS providers which are just offering a rolling plan, which Josh believes to be a mistake.

Failure to Increase Prices

One of the benefits which Josh talks about with that third dimension is the ability to increase prices for the customer. Price hikes are absolutely necessary in business, to meet with inflation and rising business costs. The end of the plan provides the perfect opportunity for businesses to speak with their customers and discuss the price rise, which is a far better way than just sending them an email telling them that prices are going up.

Failure to Upgrade Customers

Reselling to customers is a great way to get them to upgrade, and this is made very difficult when they are on a month-to-month rolling contract. If however they have a clear date when their plan will end, this will give SaaS businesses the perfect opportunity to remarket to those customers and try to get them to upgrade to a better plan for the coming year, with a discount of course. This is a huge opportunity which businesses will miss out on if they are not employing that third dimension.

Failure to Bundle Software

And finally we can use this third dimension to offer additional promos to our existing customers such as bundling software. This is a great opportunity to showcase what the business can do and get customers to spend more money on improved packages. If your company is not doing this then it is missing out a lot of business which could be coming its way.

As you can see, Josh has really hit the nail on the heard regarding this third dimension and the wide range of benefits which it can offer. There really is no excuse for not taking this advice.

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