Comments

  1. You mention high value metrics v/s low value pricing metrics (bandwidth etc) – can you elaborate more on both of these? High value & low value?

    • Here’s a good post to read about that: http://sixteenventures.com/saas-pricing-value-metrics

      But the gist is this:

      low-value: things customers don’t care about

      high-value: things customers care about

      I often say low-value metrics are commodities like storage, bandwidth, etc. and in most SaaS products, that holds true (read the post I linked to).

      Of course, if you’re selling storage, or bandwidth, or something else that might be “commoditized,” that’s still what matters to your customer so go with it.

  2. 1. You touched on this a little in your Note on Discounts in Enterprise SaaS Deals, but how do you feel about using discount pricing as the beginning of a sales funnel?

    2. I know you said that in order for a discount to work, there needed to be scarcity. What if a client say, wanted to use a discount at the end of a piece of marketing material such as an explainer video. As a video isn’t inexpensive and will most likely be used over a longer period of time than say, a PPC ad, would you advice using it? And if so, how?

    • 1. Just be careful you don’t attract the wrong customer by constantly dangling discounts in front of them. If you can’t fill the top of your funnel with folks ready to pay full price, there’s something wrong (re-read the post and watch the video on how to fix this). However, if you offer a discount immediately following their initial action – and that discount results in a HIGHER ASV (Average Subscription Value) – then that’s fine and you’re doing things right.

      2. See #1, but also I wouldn’t ever put offers, discounts,… even pricing in a fully-produced explainer video if I didn’t also have the funds/resources to change that video frequently since those things will also change frequently. That said, in your example of different ads sending traffic to different landing pages – and therefore videos – I’d have the video fully developed, but produce several different endings w/ different CTAs to splice together for the different landing pages.

      I’m glad you’re looking for ways to continue the narrative from the ad to the landing page to the CTA… and beyond. But if you want to do that with video – and do it right – you must have a video that’s congruent with that narrative.

      In other words, don’t try to get away with not doing the right thing to just save a few bucks on video production… it will cost you a lot more in the end (on wasted PPC buys).

  3. Sergey Pribyl says:

    Great learnings, what aligned with my take aways of selling Value (what is valid in Western markets and then Value is not supported by vendors in their journeys to new markets, for example Russia). Local language support, accessibility, two of such examples. WIIFT is great describing if your Value is addressable on this particular market.

  4. Hey Lincoln, great post !

    Entrepreneur, especially in SaaS, should be very careful with “simple discount”. The other day, someone told me “I don’t want to go further with this customer because he knows me as the guy who give free consulting”. Word of mouth is very fast, and online brands have to build their image on value, not discount.

    I want to emphasise that offering discounts over a long period of time can actually help to get back the CAC way faster than with monthly subscription. Allowing you to increase your investment and to develop your company way faster. David Skok talks extensively about this point in his article SaaS Economics 2 (http://www.forentrepreneurs.com/saas-economics-2/)

Trackbacks

  1. […] SaaS Pricing: 3 Rules for Discounts that Work […]

  2. […] SaaS Pricing: 3 Rules for Discounts that Work […]

  3. […] A nice hack to grow Customer Lifetime Value (LTV) is to follow that action they take with a One-Time Offer (OTO) to get them to convert to a paying customer right then (to end the trial) or – if they already paid – to take advantage of an even better offer. One way is to offer them a discount, but make sure you offer the right kind of discount. […]

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