SaaS companies should take advantage of the fact that Business people have more money than time.
Lately I've been doing a lot of thinking about the motivations behind our work - whether we're entrepreneurs, startup founders, programmers, designers, product managers, etc. Ultimately, there is a reason we work so hard and are so driven... what is it? Is it so we can make more money?
Well, we all know that money doesn't buy happiness - it buys freedom. It is with that freedom that you can choose to do things that make you happy, help you live the life you actually want to live rather than being forced into one you don't want by circumstances "beyond your control." "Look everybody it's Tony Robbins" you say; but its true.
Once we grow up we realize that 'stuff' isn't the most important thing in the world - that when pressed for why we're working so hard on our startups, or why we're killing it every day at work, it isn't to have a bigger TV, or a fancy sports car, boat or giant house. Rather, it is the experience that those things might allow us to have with family, friends, and our employees or co-workers. It is the people - and experiences with those people - that are the real reason we work so hard. Yeah, even the big TV...
But what is interesting is that as people start to get more money, they run into more and more problems. This applies to businesses as well. Maybe those are things to do with compliance, operational efficiency, etc. Maybe those problems are actually opportunities that they cannot take on right now but want to. While "more money" usually means an increase in revenue, it does not necessarily mean "more profit" - it often means more *complexity* which equates to more overhead, more employees, less efficiency, more headaches, more time away from family and ultimately less happiness. Sort of the opposite of all of our goals, right?
So when I'm helping SaaS & Web App companies - startups or established alike - with their pricing strategies I like to see if there is a way to scale pricing not with the size of their customer - revenue, employees, etc. - but with the complexity of the customers' organizations. For some Apps, this isn't going to work or matter - but in a lot of cases we can see a direct correlation between the types of customers and the complexity of those organizations as it relates to the problem being solved by the App and their willingness to pay.
In other words, as an organization grows its revenue, the side effect of that growth is that the complexity of the organization - human resources, operations, finance, everything else, grows too. This is a perfect example of "Mo Money, Mo Problems." As the subject of this email suggested, there's a second wave of "Mo Money" and it is for you if you can come in and eliminate or reduce those problems so they can enjoy that new money! So while having more revenue might seem like a blessing for your customers, if that all of the sudden means more work and more stress, that extra money might not seem worth it.
This is where you come in! Don't you think people would be willing to pay if you could help them reduce complexity? It seems logical that the more you can help them with the complexities of their business the more they would pay, right? This won't apply to every App or every situation, obviously, but if you haven't considered this idea, you should take a look at it. While small and medium sized businesses certainly feel this pain more than larger organizations simply because its new to them, every company goes through this. Remember that you are selling to human beings regardless of the size of the company you're selling to. What motivates them as people? Figure that out and your golden.
How does this play out in your SaaS business, though? Consider this when you are building your pricing strategy - or even if you already have it in place. If you offer all features to everyone and differentiate bundles or versions with a pricing metric like 'number of users' you *could* be missing an opportunity. For example, a very simple, but larger organization might subscribe at the 5-user level while a smaller, though more complex organization might subscribe at the 2-user level. And neither company is really willing to pay much since 'number of users' is really not where they find the most value.
On the flip side, if you considered scaling your pricing with the complexity of the organization, you would have sold the cheaper version with a few features and unlimited users to the company that previously paid for the 5-user level and sold the really expensive version with unlimited users to the company that is complex but not big who previously would have purchased at the 2-user level. Oh, and each company would pay MORE in this scenario because you priced based on perceived value of the feature bundles (not the features themselves, right?) and not some - apparently - low value metric like "number of users." Make sense?
So, when you start matching your pricing model to the needs of your customers - in this case scaling pricing tiers with the growing complexities of an organization - you are aligning with metrics that the companies and the decision makers inside the organizations will find the most value in. The higher the value perception, the higher the willingness to pay. They have Mo Money and Mo Problems... and now there's Mo Money for you since you helped them fix that by clearly understanding their value perception. And since you fixed this on your Pricing Page and streamlined your automated sales process, this additional money you now have was generated through no additional effort, stress, or time and takes you one step closer to your goals of freedom and a better life!
Let me help you get closer to your goals as a SaaS or Web App vendor. 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!
Good luck out there!
- Lincoln (@lincolnmurphy on Twitter)