Large B2B SaaS companies spend far more time and energy on developing the product than on setting the price. That’s a shame as get pricing right unlock good growth

Unlock good growth. Get pricing right. Just.So.Important. 

Get pricing right. What you charge for, and how much you charge – is worth investing the time and effort. It matters as one of only two levers in the equation that determines how much revenue you make. As it drives that volume of sales and is good growth because: What’s more fair and more transparent than earning a share of the value you’ve created?

Three examples illustrate how pricing to the value you create moves the needle on LTV, and fast to unlock good growth.

Price nerds should note how the pricing model is anchored to structural growth drivers in the customer’s industry.

  1. A vendor of automation for 3PL warehouses was licensing their solution by site. They started to charge for every operation they automated. MRR was set to net them 50% of the productivity saving. By shifting the pricing anchor to the savings they created, they doubled MRR.
  2. A vendor of health claims management software to healthcare payers, was licensing their solution by volume of beneficiaries served. They started to charge for the efficiencies they created to reduce cost to serve. They began to charge for both the volume of beneficiaries and the volume of claims they manage. Both factors grow structurally 5+% CAGR every year. 
  3. A SaaS vendor of supply chain solutions to container shipping was licensing by per site. They began to charge for every container they processed. That alone increased LTV by 7% (the annual global growth in volume of shipping containers).

This isn’t magic. This is pricing well done.

Pricing anchored in value created for the customer, on a fair deal and grounded in good data. Not on gut feel.

Do you know of other SaaS companies whose pricing innovation moved the needle so much and so fast? If so, I’d love to hear about these cases.

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And you might like the 5 things you can do now to increase price transparency.