Presentation from the 6th iPosao iPivo talk, held Mar 3rd 2020: https://www.meetup.com/iPosao-iPivo/events/268513664/ *Description:* There is an old dilemma in pricing: if you price your product higher, you will earn more per each sale, but fewer customers will buy it. If you price it lower, you will have more sales, but you will earn less per each sale. So, should you increase or decrease the price? Often, a business will do nothing, leaving the initial pricing as suggested by the gods of business intuition. We will explain more systematic approaches: • A/B testing on the pricing page. • Competition research. • Pricing as a market positioning tool. Using these methods, you can finally create a pricing model that will make you rich. Unfortunately, it seems your customers want you to stay poor, as they will resist any pricing change. We will discuss how to overcome that and give a few examples of SaaS companies that radically changed their pricing. Speaker: Zeljko Svedic, founder of GemBox Software and cofounder of TestDome

1. How to price your SaaS or
software product?
Željko Švedić

2. Storyline
• The magic of pricing
• Method 1: Competition research
• Method 2: A/B testing
• Method 3:
• Examples, examples, examples
• Conclusion
• Q&A
2

3. The magic of pricing
3

4. 4
Credits: Wikimedia

5. Software: even more magic
• Economy of physical items:
unit_price = unit_cost x (1 + margin)
• Economy of software:
• Unit cost is almost zero.
• Once your software is produced, you can sell use licenses at any price you
want.
5

6. 6
Thinking...
Credits: Zeljko Svedic

7. Method 1:
Competition research
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8. 8

9. Problem:
Who do you compare to?
(just call classifieds)
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10. 10
More thinking...
Credits: Zeljko Svedic

11. Method 2:
A/B testing the pricing page
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12. 12
Credits: Binpress

13. 13
C: Control

14. 14
V1: Packs order

15. 15
V2: Small font

16. 16
V3: Highball price

17. Mar-Apr 2019, V3 first pack size ⇧ 69%
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18. Problem:
A/B testing is useful for small
changes, but not for big ones
(HINT: the curve is different for different products)
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19. Method 3:
Pricing as a market positioning tool
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20. "Pricing is a part of market positioning"
20
Credits: Miramax

21. CUSTOMERS
PRICELIST
MARKETING MATERIALS
TARGET AUDIENCE

22. 22
Credits: AliExpress

23. 23
Credits: Livwell

24. CUSTOMERS
PRICELIST
MARKETING MATERIALS
TARGET AUDIENCEDiscount buyers
“office chair”
< $70
Professionals
with back pain
“therapeutic chair”
> $1,000

25. “Pricing is a part of market positioning”
• Target audience:
• Also a part of market positioning.
• Different marketing channels have different audiences…
• …and different pricing expectations (eg. App Store, SEO, IT conferences).
• Marketing materials:
• Again, a part of market positioning.
• “we have the most features” → high price
• “affordable solution” → low price
• Price is one more marketing message.
25

26. 26
Credits: AliExpress

27. Marketing channels
Consumer marketplaces:
• Methods: Apple App Store, Google Play Store, Steam, Envato.
• Price range: < $50
• Price visibility: Platform recommended prices: $0.99, $4.99 etc.
Digital marketing (organic):
• Methods: SEO, Content Marketing
• Price range: $50 - $1,000
• Price visibility: Public
Digital marketing (paid) :
• Methods: SEO, Content Marketing, paid ads (PPC, display advertising): all as lead generators
• Price range: $1,000 - $20,000
• Price visibility: can be both public and hidden (“contact us”)
• Teams: Marketing, Inbound Sales
Enterprise sales:
• Methods: Outbound Sales, Solution Selling, Conferences
• Price range: > $20,000 to many millions
• Price visibility: Hidden. Price negotiation is expected.
• Teams: Sales team, Support team (product customization, white labeling, integrations etc.)
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28. Marketing channels
Consumer marketplaces:
• Methods: Apple App Store, Google Play Store, Steam, Amazon, Envato, AliExpress.
• Price range: < $50
• Price visibility: Platform recommended prices: $0.99, $4.99 etc.
Digital marketing (organic):
• Methods: SEO, Content Marketing
• Price range: $50 - $1,000
• Price visibility: Public
Digital marketing (paid) :
• Methods: SEO, Content Marketing, paid ads (PPC, display advertising): all as lead generators
• Price range: $1,000 - $20,000
• Price visibility: can be both public and hidden (“contact us”)
• Teams: Marketing, Inbound Sales
Enterprise sales:
• Methods: Outbound Sales, Solution Selling, Conferences
• Price range: > $20,000 to many millions
• Price visibility: Hidden. Price negotiation is expected.
• Teams: Sales team, Support team (product customization, white labeling, integrations etc.)
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20x
400x

29. CUSTOMERS
NEW PRICELIST
MARKETING MATERIALS
TARGET AUDIENCE
Only a fool would try this

30. 30

31. Example 1:
Monthly subscription experiment
Customers would chose a monthly amount ($100-$1000),
depending on their testing needs.
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32. 32
TARGET

33. 33
MARKETING

34. 34
PRICELIST
Minimum was $1200 annually ($100/month)

35. 35

36. Example 2:
GemBox.Bundle
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37. GemBox.Spreadsheet & GemBox.Document
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38. GemBox.Bundle
38

39. 39

40. Enterprise sales
• Prices are multiples of packaged pricing.
• Costs are much higher: up to half of the employees are salespeople
with sales bonuses.
• Prices are hidden and negotiable.
• Sales cycles are long.
• Common pattern: small, successful product is bought and switched to
enterprise pricing.
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41. Example 3: Assembla
• JIRA competitor, used in GemBox
• 2012: $185/year for 5 people
• May 2016: Assembla purchased by Scaleworks (Venture Equity)
• 2018:
• Legacy plan $1,012/year for 14 people
• Asked for one additional user: $5280/year offer
• 9x pricing increase from 2012 (28x more for 3x larger team)
• 2019: We are with JIRA, $142.50/month for 19 people.
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42. Example 4: Optimizely
• Had a free and starter plan.
• October 2015: Optimizely raised $58 million in Series C funding (from
Index Ventures, with participation from Andreessen Horowitz, Bain
Capital Ventures, Battery Ventures, Benchmark Capital, Citi Ventures,
Danhua Capital, Salesforce Ventures and Tenaya Capital)
• “We’ve been told plans start at a minimum of $36,000 a year, for
200,000 visitors or more.” - from convert.com
42
~42x price increase!

43. Conclusions
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44. 1. Target audience, marketing
materials and pricing are all part
of product positioning.
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45. 2. Your customers decide where you
are positioned in a market, not you.
45

46. 3. After market positioning is done,
compare your pricing with alternatives
your customers compare you to.
(eg. EU banana tax)
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47. 4. As a last step,
A/B test your pricing page.
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48. Q&A
48

49. Need advice/mentoring?
Željko Švedić
zeljko@svedic.org