Your Pricing is all About Trust
Do you wonder if your pricing model really matter to your business? One thing’s for certain: matters a lot to your customers.
Think about how the most successful retailers use pricing strategies to their advantage. Walmart's "everyday low prices" means shoppers know that whatever they're buying won't go on sale or be cheaper tomorrow. Costco guarantees the lowest prices, so their members are comfortable investing in a six-month supply of toilet paper.
Airlines, on the other hand, are the opposite. American and United are so sophisticated with their pricing that even though you're in the middle seat in the last row, the person in the bulkhead window may have paid $100 less for their ticket. Plus, where they used to use bundled pricing, now you leave feeling nickeled and dimed. A terrible experience.
Which brands do you think are more trusted and have more loyal customers? I'll give you a hint: between Costco and Delta, which company has to give away points to keep customers loyal, and which company's customers actually pay to be members?
If you lead a SaaS or data company, the lesson is the same. Your pricing strategy is of strategic importance. It engenders trust if it's transparent, understandable, and syncs with the value you're delivering. Pricing that's based on seat licenses or is figured ad hoc based on what you think is the maximum your customer will pay, for example, undermines customers' trust that their investment in you will yield a positive ROI. Product packages that withhold the most valuable features, or aren't clearly articulated, can create a feeling of bait-and-switch, which will increase churn and decrease loyalty.
The evidence supports this: SaaS and Data companies that use value-based pricing grow 30% faster, get 50% bigger, and have 9% lower churn than those that use other models (according to a 2023 OpenView study). Yet only 21% of these companies actually use value pricing.
We have a unique data-driven method that quantifies the revenue upside you're leaving on the table with your current pricing, and the playbooks to help you transform your pricing into a strategic competitive advantage. Contact us to learn more.