Dare to charge more and then live up to the challenge. It’s not about becoming so affordable that everybody can get some value out of you. It’s about creating so much value that the right customers are happy to pay you a fair price.
We often advise SaaS startups to raise their prices. The one thing we always get is resistance.
Founders always argue: “But that’ll increase churn and lower new signups!” And they might be right.
No founder wants to risk the relationship with their customers and prospects. We’re all afraid of overpricing our product and losing all our customers and chances for future success.
If your pricing isn't cheap, a certain amount of paying customers will eventually cancel and tell you things like:
- “Too expensive for what it does for us.”
- “It’s a good product, but it simply doesn’t provide enough value at that price.”
- “We weren’t using it enough.”
When you get feedback like this, your automatic response is to retreat. Even for us at Close, whenever we get this kind of response (and we occasionally do!), we have that urge to lower prices.
It’s important that you fight that urge!
Don't Lower Your Prices
Why? Lowering prices might be solving the wrong problem. With many SaaS products, the problem isn’t that prices are too high (quite the opposite); it's that you’re not providing enough value.
You’re just being lazy by lowering prices. Sure, you can lower your prices so low that no one would get value out of your one-dollar 10-year plan with unlimited 24/7 phone support.
But it’s still not solving the problem you, as a business, should be taking on. Lower prices allow you to close your eyes longer and live in the land of wishful thinking.
Don't try to become the cheapest vendor in your vertical. The Walmart model rarely works for SaaS companies. If you can make it work for your business, you'd probably not even be reading this post but already be running a multi-billion dollar SaaS company.
Provide More Value Instead
Change the way you think about SaaS pricing: Instead of lowering prices, aim to provide more value constantly. Think of every customer who cancels as a kick that propels you to improve your product faster.
Add more features (or remove overkill features). Make it more powerful/faster/more reliable. Make it easier to use. Better onboard, train, and support your customers. Solve their problems and challenges better. Help them achieve their goals faster.
Focus fanatically on offering more value to every customer than your pricing extracts from them.
Do that by constantly adding more value to your customers' lives instead of lowering your prices and heavily discounting your product.
Want more SaaS pricing & sales advice? Download our free book today, SaaS Sales for Startup Founders.
Ready to step up your game and increase your price?
Click here to learn the strategies and tactics we used to increase our prices at Close successfully!
