Setting the right price for your tech service can be a daunting task. With these eight insightful tips, you'll navigate the complexities of pricing, striking a balance between value and profitability, and ultimately, driving your tech business towards success.
What are the foundations of a solid, scalable pricing strategy?
Consider market factors, the perceived value of your product, the price ceiling, and the size of (if any) existing budget you’re attempting to grab off your competitors.
- Get into the mind of the buyer, understand their wants and needs, and get a close handle on how competitors have priced their product.
Test and Adapt
When you first go to market, irrespective of how well prepped you are, how well understood the market is, the chances are your pricing model will need to adapt as you grow and the market changes.
Understand Your Costs
Ensure you understand how much your product has cost to develop, how much it will cost to deliver, and how that cost will scale as more clients come on board
- This will help you formulate your pricing strategy and set the foundation for the future.
The Existing Budget
Think of this as putting yourself in the shoes of the company exec pitching their budget.
- What saving or benefit will they need to demonstrate to win the approval of the CFO?
- Which exec will be the one to best position your product to get the green light on budget?
Understand the market
Just because you’re in the same market as your competition doesn’t mean you have to copy their pricing strategy
- Use what they’ve done to understand their buyers and the psychology behind it
- Understand how their pricing scales
- If there’s a well understood theme across your market, you should adopt it
Taking inspiration
The most successful businesses will have spent a lot of time and money in understanding the customer, their psychology, the market, the budgets and many other factors.
- SalesForce is the masters
- Their pricing model is simplistic, but their way of incentivizing you to reach the next level in the pricing matrix encourages you to do so.
Don’t be afraid to deal to get going
Clients want to see case studies and proof points
- In order to sell, you need case studies, but in order to get case studies you need to sell
- Be willing to battle and do deals to get your first 20 clients
Perceived Value
You don’t have to be the cheapest company, but you also don’t need to the most expensive.
- SaaS companies have struggled by going to market with a super cheap pricing model, then had massive success by raising their prices considerably.
The Price Ceiling
Most Business to Business (B2B) SaaS solutions top out at about £10,000 per month per problem that they solve.
- The price ceiling is really about understanding the amount of money you’re saving the client
