There has been much talk lately about the pricing structure which SaaS providers are implementing. Much of this comes off the back of a piece which the brilliant Josh Melick scribed, regarding the area in which most of these companies are missing out. What Josh was describing was something he calls third dimension pricing, which few companies offer.
In particular Josh was discussing the tiered system which many companies offer, standard, premium and platinum for example. Within this the only real items to differentiate them are the number of users allowed and the amount of usage. Calling these the first two dimensions, Josh then adds what he believes should be a third, which is time, or an expiry date. Instead of having a rolling plan, this third dimension offers a 6 or 12 month option. There are untold benefits to this kind of pricing structure, and here are just some of the key advantages which it offers.
The Ability to Upsell
Remarketing to customers is not always easy and companies have to pick their moments carefully. When it comes to a package which has a clear beginning and a clear end however, this becomes so much easier. Companies can use the renewal point to look at ways in which they may be able to upsell to the customer for the coming year ahead.
Increasing Prices
Raising prices in a business is absolutely necessary, but it is not always easy. This can be a delicate situation which must be handled with care, so as to keep the customer on side. It is not that customers are not expecting the price to rise, it is that it should be done in the right way and with enough fair warning. This expiry date gives businesses the perfect time to raise their prices, without putting customers off.
Easy Planning
If a company has no idea how much longer its clients are going to stick around for, it can be tricky to plan them into the financial outlook. If however they can comfortably say that a certain number of customers will be there for at least 6 months more, as per their agreement, it makes this process a great deal easier.
Engaging With Customers
Above all else, this expiry point gives the business and additional chance to deal with customers, without them feeling bothered by it. here businesses can look to show off their high level customer service and work with the client too further gain their trust and loyalty. Not only is this going to be something which will help to increase the success of the business, it will also increase the brand’s reputation, which is something we all need.
As you can see from what Josh describes with his three dimension pricing structure, there are so many benefits which too many businesses are missing out on. Any SaaS provider should be looking seriously into what Josh is saying, and looking to add that third dimension.
