FAQ’s

Frequently Asked Questions

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When should I consider revamping our pricing strategy?

You should consider revamping your pricing when you notice declining ASPs (Average Selling Prices), high discounting levels, or significant market changes like new competitors or feature commoditization. Additionally, if your sales team frequently needs to create custom packages or work around your existing pricing structure, it's a clear sign that your current pricing model isn't aligned with market needs.

How do I determine if we need usage-based or seat-based pricing?

The decision between usage-based and seat-based pricing should be based on how your customers derive value from your product and what's common in your market category. If your product's value is directly tied to consumption (like data processing or API calls) and you have good usage instrumentation, usage-based pricing might make sense; however, if your product is more of a system of record used by specific roles (like CRM or HR software), seat-based pricing is often more appropriate.

What's the biggest mistake companies make when implementing new pricing?

The biggest mistake is rushing to implement new pricing without proper cross-functional alignment and operational readiness. Many companies focus solely on the strategy and price points while neglecting the critical aspects of sales enablement, system updates (CPQ, billing), and customer communication, leading to poor adoption and execution.

Should we display our prices on our website?

The decision to display prices should align with your go-to-market strategy and target market. If you're targeting SMB/mid-market with standardized offerings and high-velocity sales, transparent pricing can help accelerate deals; however, if you're primarily selling complex enterprise deals with significant customization, displaying prices might actually hinder your sales process by anchoring prospects to specific price points too early.

How do we handle existing customers when implementing new pricing?

Existing customers should be handled with a careful transition plan that includes grandfathering options and clear communication about any changes. Consider offering extended transition periods (12-24 months) for existing customers to adapt to new pricing, and ensure any changes provide clear additional value or maintain existing terms if they're significantly different from new pricing.

What role should the sales team play in pricing decisions?

Sales teams should be consulted during the pricing development process as they have direct customer feedback and understand deal dynamics, but they shouldn't have final decision-making authority. Their input is valuable for understanding practical implications and potential objections, but pricing decisions should ultimately be driven by a combination of product strategy, market analysis, and executive leadership alignment.

How do we determine the right number of pricing tiers?

The right number of pricing tiers should be based on your distinct customer segments and their willingness to pay, typically ranging from 2-4 tiers for most SaaS companies. Too many tiers can create decision paralysis and operational complexity, while too few might leave money on the table or fail to adequately serve different market segments.

What metrics should we track to evaluate pricing success?

Key metrics should include both revenue and operational indicators, such as Average Selling Price (ASP), discounting levels, win rates, deal velocity, and customer acquisition costs. Also track feature adoption rates within packages and customer satisfaction scores to ensure your pricing aligns with value delivery.

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