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Justifying higher prices in SaaS products

I've got customers who are on archaic pricing versions and eventually when they need to make upgrades, the default is to migrate them to the latest pricing version which is like 100 to 200% increase. A couple of things I'd wanna know is

  • how can you justify this to the customer when they bring up loyalty?
  • Essentially the capex in Saas companies is lower as compared to other industries, so I was thinking using the rhetoric around inflation and staff overheads to justify the price increase. Has anyone used this in the past?



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2
rekled
Opinionated
+2
Strategic Account Executive
I've been in this situation frequently and you're not always going to win. However, I try the approach of Give to Get. The Give - new product offerings - like new features/functionality that current customers receive that do not benefit customers older than "X" date. I've also used "3 months free" - not the same as delayed billing orย  spread payments over fiscal years for customers that have year end in June (like SLED) or Sept (like federal government). The Get would be the higher price, no simply a higher price - but an investment to new features and functionality in return.ย 

Understanding all of the changes and improvements from archaic version to current version of the product would be helpful to define the Give (they could even be back-end processes that are no necessarily in the eyes of customers).ย 
Icyveins
Catalyst
+4
Account Manager
I'm going to give this a shot. I'm also assuming that this should preferably be done over a call than an email?
rekled
Opinionated
+2
Strategic Account Executive
I draft a quick summary document with a table where each row indicates new functionality / feature and the benefit they can expect (or better yet if you have a use case highlighting a business challenge it resolves would be ideal).ย 

Then schedule the call and walk them through the table.ย 

Be ready for objections (such as "Oh yeah, this does not apply to me - or I would not use this feature"). This is where use cases or customer testimonials really come in handy.ย 

Then send them a PDF version following the call.ย ย 
Salespreuner
Big Shot
+11
Regional Sales Director
Provide a free user trial and showing value via cost savings, comfortabiility, efficiency improvement, productivity boost and lot more (Vs) not using this
And converting this to a % of spend Vs ROI worked best
Icyveins
Catalyst
+4
Account Manager
How would be able to quantify qualitative improvements though? For example morale improvements
Salespreuner
Big Shot
+11
Regional Sales Director
That's possible basis engagement and rapport index. You may do a regular feedback check on both through some 3rd party member from your org. Say the customer success team or account management, may be?
CuriousBard
Good Citizen
Regional Sales Manager
We're having discussions with customers on moving them from on-prem to our cloud instance, as we are shutting down our on-prem.ย 

It's very mixed how customers react. Some refuse to go over, and will just churn when we turn the on-prem version off. Some just didn't know of the Cloud-version (smh). We try to talk on that they are getting a product that continuously get upgraded, to bring them the very best version. The on-prem version was kind of limited, and didn't come with the best support.

What we have in place is that they get double the amount of licenses for the first year. This to easen the financial impact a little bit, but also have them test out to see who really needs the cloud product.ย 
Chep
Arsonist
+9
Business Development Team Lead
Honesty is the best policy
mythbuster
Catalyst
+4
Account Executive
It's completely a game of ROIย 
Bittersweet0326
Politicker
+5
Digital Business Associate
It's been said a few times, but talking ROI is huge. Also I'm sure there are certain updates they wanted and hopefully some of those updates have happened. Well they don't happen for free
Icyveins
Catalyst
+4
Account Manager
The updates part is definitely a huge selling point. Thanks
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