Another insight from Tim Thyne around pricing:
If a company has a large sales team, they have more capacity to work 1:1 with potential customers to close deals, even small ones. That means that they will tend to negotiate more on pricing compared to a company without a large sales team. Remember that when you see the pricing they display on their website: the actual price that their customers pay is likely less than that.
If you have a newsletter that includes people who haven’t tried your product, you can learn a lot by emailing those people and asking why they haven’t tried your product.
It helps you understand not just about where they may be from a sales opportunity perspective, but also to learn about their perception of your product. For example, maybe they don’t know about your product, or thought it worked in a different way, or thought it was comparable to a product they already use, or didn’t realize it could help them, or thought it did something completely different than what it actually does. You can then use what you learn to optimize your sales and marketing efforts.
Hat-tip Tim Thyne for the insight.
Edit: And also hat-tip to John Bonini, Director of Marketing at Databox, for sharing the idea with Tim.
Highlights from a discussion at Help Scout about the benefits to customers of paying annually:
- Finance teams will plan or budget for their teams web apps cost for the year.
- Similarly, most managers prefer to know their budgeted spend and to make that spend upfront. It helps them avoid mid-year “I need more money to pay for our software” surprises.
- This also helps managers secure their budget and get their needs resourced upfront because later on they may find their budget is cut and anything that isn’t already committed can be subject to those cuts.
- During the planning stages for purchasing software, there is often an ambitious vision for the roll out. By securing the resources/budget for an entire year, it helps the manager realize that vision.
- The ideal behavior is letting companies prepay, but then drawing down on that credit based on usage/engagement. It helps companies avoid paying for services they aren’t using and also lets the business earn more for companies that grow during the year. (We do this at Help Scout and I’ll write a detailed post about the mechanics of it in the future.)
Hat-tip David McFarlane for these insights!
One of the benefits of working with so many brilliant people at Help Scout is that I’m exposed to a lot of wisdom about how to build and grow a SaaS company.
I’m going to try to start sharing more of that wisdom here, not just for my own records but to help anybody else looking to build or grow their own software business. To avoid sharing anything competetive I won’t always be able to provide context, but hopefully the quotes mostly stand for themselves.
On SaaS plans:
In self-service models, it’s really important that customers have no hesitation about which plan to choose. They need to immediately know when they look at the plans which one is right for them.
And on pricing pages:
Pricing pages are the revenue powerhouse in a self-serve model.