How to price your SaaS product in 2022
Denis Shatalin
Founder Coach, Serial Entrepreneur
You could be losing out on valuable profits by pricing your SaaS startup incorrectly. Many SaaS founders make the same small mistakes which result in significant financial losses.
Below I'll reveal common mistakes and show you how to price your SaaS products and services correctly.
Here are 5 tips you can use to correctly price your SaaS offer so that you can stay ahead of the game and maximize profits:
Below I'll reveal common mistakes and show you how to price your SaaS products and services correctly.
Here are 5 tips you can use to correctly price your SaaS offer so that you can stay ahead of the game and maximize profits:
Don't come up with SaaS pricing by yourself
Many people tend to undervalue their solutions when they price them themselves. We are often too close to our work to be objective about it. People also want to offer their services for the best deal possible, but in reality, they diminish the value of their product by offering it at such a low price.
Instead, talk to your customers to learn what they are willing to pay. Remember, your customers may understand the value of your SaaS even better than you do at times, so be sure to get feedback from them during your pricing process.
You'll then want to consider this information when pricing your solution to ensure that it is both fair for your business and beneficial to your customers.
But how do you know the price you choose is both fair to you and valuable to your customers? The best way to do this is by keeping your price within the "No Brainer Zone."
Instead, talk to your customers to learn what they are willing to pay. Remember, your customers may understand the value of your SaaS even better than you do at times, so be sure to get feedback from them during your pricing process.
You'll then want to consider this information when pricing your solution to ensure that it is both fair for your business and beneficial to your customers.
But how do you know the price you choose is both fair to you and valuable to your customers? The best way to do this is by keeping your price within the "No Brainer Zone."
Find the "No Brainer Zone" for your SaaS
The "No Brainer Zone" is the sweet spot for pricing your SaaS solution. Customers are happy to pay in this range because they receive more value than the price they pay. In other words, you want to save your customers so much money that paying for your SaaS is a “no brainer”.
A good rule of thumb when identifying the ideal "No brainer zone" is to price your SaaS at 10 times less than its perceived value.
For example, if you provide automation software that can save a company $30,000 in development fees, you should price your software at $3,000. This way, you're still making a profit, but your customers are also getting a great deal.
It's also essential that you provide a useful solution that solves a real problem for your potential customers. If you don't provide a meaningful solution to a problem, they'll never see the value in what you're offering, no matter how low you price it.
Be sure to consider the specific problem you're solving for your customers, and remember your customer base may change as you learn more about your SaaS, so don't overthink your business model.#nbsp
A good rule of thumb when identifying the ideal "No brainer zone" is to price your SaaS at 10 times less than its perceived value.
For example, if you provide automation software that can save a company $30,000 in development fees, you should price your software at $3,000. This way, you're still making a profit, but your customers are also getting a great deal.
It's also essential that you provide a useful solution that solves a real problem for your potential customers. If you don't provide a meaningful solution to a problem, they'll never see the value in what you're offering, no matter how low you price it.
Be sure to consider the specific problem you're solving for your customers, and remember your customer base may change as you learn more about your SaaS, so don't overthink your business model.#nbsp
Don't overthink your business model before 10 paying users
You really don't know what you're selling until you have your first 10-20 customers. This is especially true with SaaS businesses. As you get feedback from your early customers and learn more about what they need, you may need to tweak your business model.
After your first few sales, you may even decide to completely throw away your original business plan and focus more on a different problem point that you may not have even considered before.
However, don't let this fear of change stop you from starting a SaaS business. Startups often pivot their business models multiple times before finding one that works.
When you remain dedicated to learning and improving your solution, your customers are much more likely to remain loyal.
After your first few sales, you may even decide to completely throw away your original business plan and focus more on a different problem point that you may not have even considered before.
However, don't let this fear of change stop you from starting a SaaS business. Startups often pivot their business models multiple times before finding one that works.
When you remain dedicated to learning and improving your solution, your customers are much more likely to remain loyal.
Get into calls to find what they are willing to pay
When you're starting out, selling to customers one-on-one can be incredibly beneficial because you can learn more about their specific needs and the price they'd be willing to pay for your solution. This will help you determine a more accurate price point for your SaaS.
Start by asking your potential customer if they think your product would be useful to them. If they say yes, then ask how much they would pay for the service.
You may be shocked at how much your customer is willing to pay for your SaaS, so the last thing you want to do is come up with pricing on your own and miss out on potential profits.
Additionally, by selling to customers one on one, you build trust and credibility with them. These are essential factors in getting customers to actually use your software.
Start by asking your potential customer if they think your product would be useful to them. If they say yes, then ask how much they would pay for the service.
You may be shocked at how much your customer is willing to pay for your SaaS, so the last thing you want to do is come up with pricing on your own and miss out on potential profits.
Additionally, by selling to customers one on one, you build trust and credibility with them. These are essential factors in getting customers to actually use your software.
Don't attach your SaaS pricing to Netflix subscription or a cup of coffee!
Many people have a tendency to compare the price of their SaaS to other subscription services or everyday purchases, such as a cup of coffee. However, this is one of the main ways you can end up underpricing yourself by 10 times.
Your SaaS is a unique product that provides a unique solution, so comparing it to the price of a Netflix subscription or cup of coffee is not an accurate way to determine its value.
Instead, focus on the specific problem your software solves and how much money your customers will save.
Figuring out the right price for your SaaS can be difficult, but it's important to get it right. You want to make sure you're making a profit while also providing a valuable solution that your customers are happy to pay for.
By following these tips, you can be sure that you are on the right track to finding the perfect price point for your business.
Your SaaS is a unique product that provides a unique solution, so comparing it to the price of a Netflix subscription or cup of coffee is not an accurate way to determine its value.
Instead, focus on the specific problem your software solves and how much money your customers will save.
Figuring out the right price for your SaaS can be difficult, but it's important to get it right. You want to make sure you're making a profit while also providing a valuable solution that your customers are happy to pay for.
By following these tips, you can be sure that you are on the right track to finding the perfect price point for your business.
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