SaaS subscription and pricing, how not to chase bad money
I happened to attend an industry event recently in Bangalore, India. The theme was SaaS and it promised a whole lot more than the hot and politically spicy summer that we had just been through. The distinguished crowd comprised of leading names in the VC and SaaS space and some very impressive startups.
One of the flavours served up was SaaS targeted at the retail market. While selling to the large chains and hyper-marts were kind of a marketing no-brainer, the challenge seems to come from the mom & pop stores or the one store retailers. Not that these were a particularly unreasonable or nasty breed. The challenge was not so much closure of sale, as achieving financial closure ! That’s right, they were right up there when it came to being hot prospects – couldn’t afford huge costs of hardware, native software or large number of IT folks, but they still needed the tool to be competitive and grow their business. However , realizing monthly subscription amounts from these chaebols was like running the 100 m dash with one leg, alongside Usain Bolt. These folks had ingenuous ways to beat your sales guy to the task . Not to worry…. here are some ways to still make it work.
- Have subscription plans that factor in base usage levels in terms of functionality and access
- Pricing should be aligned to tangible value that your application offers – savings in labour, time,etc
- Spying on customer’s IT budget would let you price yourself smartly
- Switch to upfront subscription and save yourself all the trouble- offer annual or bi-annual plans only
- Be generous and offer discounts for long term upfront subscription
- Find ways to increase customer stickiness and make your SaaS offering indispensable
Well, if things don’t get any better , stop chasing bad money and you could always turn off the tap