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Estd 4.22.2023
In the competitive SaaS landscape, getting your pricing right is both critical and challenging. Pricing is a major growth lever – in fact, 98% of SaaS businesses report positive results from making core pricing changes.
Yet optimizing a pricing strategy can feel daunting. Many companies still rely on guesswork or outdated models, and the typical SaaS company spends only about 6 hours in total on pricing strategy decisions.
Common challenges include deciding on the right pricing model (e.g. usage-based vs. seat-based), setting optimal price points, and adjusting packaging without alienating customers. On top of that, attempts to tweak pricing can stall if internal teams aren’t aligned or if changes aren’t backed by solid data, leading to confusion and lost revenue opportunities.
Our solution on where to get started is a structured pricing assessment – a systematic review of your pricing strategy that pinpoints what’s working, what isn’t, and how to improve it. Rather than making ad-hoc changes or following hunches, a pricing assessment gives SaaS companies a data-driven foundation for pricing decisions. It helps illuminate whether you’re underpricing certain tiers, targeting the wrong customer segments, or leaving money on the table with an outdated model.
This introduction to Monetizely’s Pricing Assessment will show how a focused, five-step framework can turn pricing from a headache into a growth catalyst.
The Monetizely Approach: Five Steps to Clarify Your Pricing Strategy
Monetizely has developed a comprehensive Pricing Assessment to help SaaS companies address pricing challenges head-on. This approach breaks down the complex task of pricing optimization into a clear five-step framework. By examining each of these five areas, Monetizely’s assessment pinpoints specific issues and opportunities within your current model:
- Segmentation: Evaluating how well you define and target customer segments. Are your customer profiles and segments granular enough, or are broad-strokes segments obscuring differing willingness-to-pay? This step looks at whether refining your ideal customer profiles (ICPs) and market segments could unlock new revenue opportunities.
- Packaging: Reviewing your product packaging and feature tiering. Do your pricing tiers (e.g. Basic, Pro, Enterprise) have clear differentiation, or do they overlap and cause confusion? Monetizely assesses if your packages are structured to encourage upgrades and align with distinct customer needs or if they promote shelf-ware and high discounting.
- Pricing Value Metric: Examining the unit of value that you charge for – such as per user, per API call, per gigabyte, etc. Is your pricing metric tied closely to the value customers get from your product? The assessment checks if a different value metric or pricing model (like usage-based vs. flat-rate) might better capture the product’s value and customer preferences.
- Price Points: Analyzing your actual price levels and pricing structure. Are your price points too low or too high relative to the value provided and market benchmarks? This step considers whether you have room to adjust prices (up or down), if discounts or legacy pricing are distorting your revenue, and how your pricing compares to best-in-class peers.
- Operational Readiness: Gauging how prepared your organization is to implement and manage pricing changes. Do you have the internal processes, tools (billing, CRM/CPQ systems), and team alignment to roll out an updated pricing strategy smoothly? This ensures that any changes recommended are realistic to execute and sustainable operationally.
By systematically assessing these five dimensions, Monetizely’s framework provides a 360° view of a SaaS company’s monetization strategy. It doesn’t just highlight what could be improved – it connects the dots between market strategy and internal execution, so you get a clear path forward on pricing.
Benefits of the Pricing Assessment
Engaging in a structured pricing assessment with Monetizely yields several tangible benefits for SaaS businesses:
- Benchmark Against Best-in-Class
The assessment compares your pricing approach against industry best-in-class practices and top-performing peers. You’ll see where your strategy stands relative to the leaders in pricing – for example, you might discover that your segmentation is far less granular than what best-in-class companies do, or that your pricing model isn’t as tightly aligned to value as the market leaders’. This benchmarking provides an objective reference point and inspiration for improvement.
- Identify Gaps and Opportunities
Monetizely’s deep dive will surface any gaps or weak links in your pricing model and highlight opportunities to capture more value. Often, companies learn they have been underestimating willingness-to-pay in certain segments or bundling features in suboptimal ways.
Each of the five areas is analyzed for shortcomings and potential gains – for instance, you might find that a lack of clear tier differentiation is causing customer confusion and missed upsells, with a clear opportunity to restructure packages for better conversion. By pinpointing these issues, the assessment shows exactly where you’re leaving money on the table.
- Align Internal Stakeholders
A side benefit of the assessment process is bringing key stakeholders onto the same page. Pricing touches product, marketing, sales, finance, and leadership – so alignment is crucial. Monetizely’s framework and data-driven findings help build a shared understanding across teams of what needs to change and why.
Rather than debates based on opinions, the discussion shifts to evidence and best practices. This alignment ensures that when changes are proposed, everyone from the CEO to the sales reps understands the rationale and is bought in.
- Justify Pricing Changes with Data & Insights (subject to data agreement)
Implementing pricing changes often requires justification to internal executives or even to customers and investors. The pricing assessment arms you with qualitative and quantitative evidence to back up your strategy. You receive hard data (e.g. adoption rates per tier, discount levels, revenue per user) alongside qualitative insights like customer feedback or internal opinions from your team.
For example, if the assessment finds that your enterprise plan is heavily discounted and underpriced relative to value, it will also include insights (perhaps sales team input noting difficulty upselling due to unclear value at higher prices) to support a recommendation to adjust that price point. This combination of metrics and expert analysis makes a compelling case for change – you can confidently explain why a new price or package is necessary, using the benchmark data and findings as proof.
How It Works
Monetizely’s Pricing Assessment is designed to be thorough yet efficient. Here’s how the process typically unfolds:
- Input via a Guided Survey
It starts with your team answering a structured survey about your current pricing setup and performance. You’ll provide key data points on your product packages, pricing metrics, customer segments, win/loss rates, discount habits, and any concerns or goals you have. This survey is crafted to capture the essential information and internal perceptions needed for analysis. (It’s also an opportunity to get your leadership and revenue teams thinking critically about pricing by answering these questions!)
- Benchmarking & Analysis
With your survey responses and data in hand, Monetizely benchmarks your situation against SaaS industry best practices and compiles additional market research as needed. This analysis looks at how your pricing and packaging compare to similar companies and known best-in-class standards in each of the five framework areas. The result is a clear picture of where you excel versus where you lag. Monetizely identifies patterns (for example, if your churn is high in a certain segment or if your ARPU is lower than the industry norm for your stage) and ties those to potential pricing issues.
- Custom Report with Insights & Recommendations
All findings are then distilled into a tailored report for your company. This isn’t a generic checklist, but a deep-dive report that highlights your specific challenges and opportunities. It will include data visualizations, benchmark comparisons, and key insights for each of the five areas (segmentation, packaging, value metric, price points, operational readiness).
Importantly, the report also captures feedback and quotes from your own stakeholders. The report will clearly lay out suggested optimizations to your pricing model, such as “introduce a usage-based element for Enterprise tier” or “reposition and rename the Pro plan to better distinguish its value.”
All it takes on your end is a willingness to participate. a) Get your pricing stakeholders to take the survey b) Attend our pricing assessment call with the same stakeholders. Simple :)
Hypothetical Example: Insights from a SaaS Pricing Assessment
To illustrate the impact of Monetizely’s Pricing Assessment, let’s look at a hypothetical SaaS company (we’ll call them ACME Cloud) that recently went through the process. ACME Cloud is a B2B software provider with around $30M in Annual Recurring Revenue, offering an AI-powered workflow automation platform.
Despite healthy growth, ACME suspected they were not optimizing monetization and engaged Monetizely for a pricing assessment. The resulting report revealed several key findings and recommended optimizations:
- Overall Benchmark
First an overall benchmark was conducted relative to best in class and opportunity areas were identified.
- Segmentation
ACME’s customer segmentation was too shallow. They had been grouping customers in broad categories, which meant their pricing and product marketing wasn’t tailored enough. The assessment showed that ACME’s segmentation approach lacked depth compared to best-in-class peers, and that introducing more granular, data-driven segments could improve product-market fit and unlock new revenue opportunities.
Recommendation: Define clearer ICP criteria and segment the customer base more finely (e.g. by industry or use-case), then adjust messaging and pricing for each segment. This would allow ACME to target high-value customers with more precision and potentially reduce churn by better meeting each segment’s needs.
- Packaging
The analysis found that ACME’s pricing tiers (Standard, Pro, Enterprise) were not well differentiated. The Standard and Pro plans had overlapping features, causing customer confusion about why the Pro tier cost ~20% more. In fact, internal feedback highlighted that the lack of clear differences between tiers was leading to sales and support inefficiencies. Data confirmed this issue: Pro tier adoption was low, while most customers either stayed on Standard or jumped to Enterprise (often with heavy discounts).
Recommendation: Restructure the packaging. ACME was advised to clearly delineate each tier’s value – for example, concentrate advanced features in the Pro tier to make it a compelling upgrade, and ensure Enterprise offers distinct extra value worth its higher price. Eliminating feature overlaps and better defining the upgrade path would drive more customers to naturally move up tiers rather than skip the middle or require excessive discounts.
- Pricing Value Metric
ACME charged customers per user (seat-based pricing). The assessment found this metric generally aligned with customer value, as larger clients who got more value would pay for more seats. However, the per-user model was not reaching its full potential – some enterprise clients with very high usage were still on fixed pricing that didn’t scale with their value received.
Recommendation: Consider introducing a usage-based element or add-on for the highest tier to capture more value from heavy users. By tying pricing more directly to value (perhaps via an add-on metric like workflow runs or API calls at the Enterprise level), ACME could ensure that revenue scales up for the customers who derive the most value.
- Price Points
The benchmarking showed that ACME’s actual price levels were on the low end compared to similar solutions, especially at the high end. Their Enterprise plan was only ~30% more expensive than the Standard plan (despite larger customers likely getting significantly more value). This, coupled with frequent discounts on Enterprise deals, meant ACME was underpricing its top tier. The assessment noted a potential to justify higher pricing with stronger positioning and ROI proof.
Recommendation: Re-evaluate price points, particularly for the Enterprise tier. Monetizely suggested that ACME could incrementally raise the Enterprise price if they also better articulated the extra value it delivers (for instance, through case studies showing ROI, premium support, and other enterprise-grade benefits). The company was encouraged to test a price increase alongside the packaging changes, and to use value-based selling techniques so that larger customers understand the justification for a higher price. This would help ACME capture more revenue from the customers who can afford to pay (and are willing to pay for clear extra value).
- Operational Readiness
Finally, the assessment looked at ACME’s ability to execute these pricing improvements. The good news was that ACME had capable teams and tools, but there were silos between product, sales, and marketing when it came to pricing decisions. The packaging confusion was causing delays in the sales cycle and muddling feedback loops between teams.
Recommendation: Strengthen cross-functional coordination for pricing. Monetizely recommended forming a pricing task force with stakeholders from each department to oversee the rollout of the new pricing structure.
After implementing these recommendations, ACME Cloud saw a clear impact. Within a couple of quarters, their mid-tier (now more clearly defined) started to gain traction, upsells increased, and discounting at the high end dropped significantly.
Equally important, ACME’s teams became more coordinated – product and sales had regular check-ins on pricing feedback, and marketing was armed with solid value messaging for each segment and tier. This case exemplifies how a structured pricing assessment can diagnose the root causes holding back revenue growth and provide a roadmap to monetize more effectively.
Call to Action: Get Your Free Pricing Assessment
For SaaS companies seeking to maximize revenue and ensure their pricing strategy isn’t falling behind, Monetizely’s Pricing Assessment offers an invaluable jumpstart. The best part? Monetizely is currently offering this assessment free of charge for qualified SaaS businesses. It’s a risk-free way to evaluate where your pricing stands and how you can improve.
Your commitment is only to get your team to fill out the survey that is part of the assessment and attend our read out presentation.
Don’t let an outdated or guesswork-based pricing model silently hinder your growth. By taking the free assessment, you’ll receive a customized report with clear insights and action steps – just like ACME Cloud did – but tailored to your business. Whether you’re preparing for a big pricing revamp or just want to sanity-check your current approach, the Monetizely framework will bring clarity to your path forward.
Ready to unlock new revenue opportunities through smarter pricing? Book a time slot with me today: https://www.getmonetizely.com/pricing-assessment