Pricing Strategy pop-quiz: What do a two-person consultancy and a department in a Fortune 500 company have in common? Right... so why are you marketing to them the same way?
In my last post where I talked about the things you'll learn from the SaaS Pricing Page Design Workshop, one of the items on the list was:
"Market Segmentation & the FALLACY of the one-size-fits-all pricing page"
I chose the word fallacy deliberately because there seems to be a notion that as a SaaS or Web App vendor we need to have a single "Plans & Pricing" or "Editions & Pricing" page. On that page we need to have a comparison grid that shows the prices and features for anyone that might use our product - from independent consultants to Fortune 100 Enterprises.
I hope seeing it written out like that calls attention to the absurdity therein. Really? The lone consultant at his home office and the manager of a division within a European business unit of a multi-national corporation will both find the same value in your service? That is the assumption you're making by marketing to both types of customer at the same time. You realize that, right?
Whether you know it or not, you are also saying, "yeah, those people care about the same things, find the same value in the product and need to see how their price compares to all of the other types of customers, too." Really? Think about that for a minute. Again... you aren't leaving money on the table here. You are actively flushing it down the toilet.
So, after meeting with a new client yesterday I saw this first hand and it was bad. Really bad. They had a clean, designed pricing page and seemed to understand their target market pretty well. But as we were digging into the pricing strategy they already had in place, I saw something that made me want to change the FALLACY blurb to:
"Market Segmentation & the DANGERS of the one-size-fits-all pricing page"
No more FALLACY... having a one-size-fits-all pricing page can be downright DANGEROUS. Simply put, my client had designed a pricing page for all customer types. But the customers were very different, not only in their value perception of the service, but in their willingness to pay for the service based on that value perception. There was a segment of their target market that was very willing to pay much more for the service because of the incredible value proposition of my client's service. But, since my client adhered to the popular "best practices" for pricing pages - not the real ones that actually work - my client had come up with three versions or bundles of features and applied prices to those versions.
Unfortunately, my client thought that the step-up in price from the middle tier to the higher tier was too big. Let me be very clear here - the higher tier was the one that would appeal to a different segment of the market than the other tiers. And this segment has a willingness to pay a higher price because they have a different value perception of the service. Here's the terrible part... they lowered the price on the large bundle to make the step-up "look better" in an effort to make the overall pricing page look better! I'm not sure what happened at that point, but I think I might have blacked out.
Luckily, when I regained consciousness, we caught this and figured out some great market segmentation techniques - within their already well-defined target market. We also worked to align their value proposition and the value perception of the different segments and come up with pricing that actually fits the different segments within their defined market.
You need to know that more often than most people realize, overall SaaS pricing decisions are made based literally on the layout of the pricing page. There is a pretty good chance that you - yes you, the one reading this - have done something like this when designing your pricing strategy or pricing page.
What this should mean to you is that understanding what a Pricing Page really is, how to effectively leverage it, when to use bundles/tiers/versions and when not to, etc. is much more important than you probably first thought! I cannot stress enough the importance of the Pricing Page to SaaS and Web App companies!
Market Segmentation is just one of the things we covered in our SaaS Pricing Page Workshop. I've put together a 5 Hour video series - the Pricing Page Success Formula - to help you get the most out of your Pricing Page. For a limited time you can get the Pricing Page Success Formula video series - with content on Value Pricing, Pricing Page Design, and even Price Testing - for the Introductory price of ONLY $297.
Go get this amazing video series for only $297 right now. As soon as you get it, immediately watch the 35-minute Value Pricing Basics for SaaS & Web Apps video; it will truly change the way you look not only at pricing, but your entire marketing strategy, your customers, and your offering as a whole!