Rethink Pricing Strategy to Close More SaaS Deals

The SaaS marketplace is increasingly crowded and competitive. To stand out from the pack, vendors are investing time, money, and resources to build out innovative features, ensure a high level of customer care, and drive continuous product development.

But there’s one other key area where SaaS vendors can differentiate themselves: a more creative and flexible approach to pricing. 

Eliminate friction

The industry’s most common payment models — usage-based and tiered subscriptions — are tried and tested, but they lack the meaningful options for customization that today’s SaaS buyers crave. Like consumers, today’s enterprise buyers want a frictionless and flexible sales and payment process — including options to amortize payments over time. 

Rather than prepaying for a SaaS product, for instance, a customer might prefer to make regular monthly payments — even if it means they pay more over the life of the contract. Increasingly, in fact, we’re seeing SaaS buyers choose regular monthly payments even if it means giving up substantial discounts on a prepaid rate. 

"It’s a true win-win situation – our customers get the terms and flexibility they need and we get a  long-term commitment and full revenue up front.” - Tom Reilly, Board of Directors, Talkdesk

That means offering the ability to fine-tune payment schedules as part of a streamlined checkout process makes the entire purchase funnel far more user-friendly, and gives procurement teams the ability to tailor deals to their own internal budget constraints. A buyer can score a big win for their company by reducing up-front costs, for instance, even as the vendor secures a longer contract period and larger total contract value.

With recent breakthroughs in AI and machine learning, meanwhile, vendors can seamlessly assess the risk profiles of potential customers, allowing them to offer tailored pricing structures with confidence. The entire payment process, seen through this lens, becomes one more way to offer a genuinely personalized and user-friendly purchasing experience — without taking on additional risk.   

A win-win approach

Better yet, by partnering with innovative fintech providers as they build out their SaaS payment stack, vendors can secure up-front access to capital based on their locked-in revenue streams, enabling them to build out their product and keep on growing.

Rethinking pricing strategy is better for both customer and vendor. It’s time for all SaaS buyers to rethink their approach to pricing — because in a competitive marketplace, these kinds of innovations are exactly what SaaS buyers will be looking for.

published on
December 5, 2022
Ashish Srimal
Co-founder & CEO at Ratio
Ashish Srimal is a SaaS entrepreneur and executive who has built SaaS startups and led large SaaS businesses.
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