Saas Pricing: Best Practices
Transparent Pricing: Why You Should Put Your Software Prices On Your Website
People in the software industry get very twitchy when the subject of publishing prices online comes up. For many people, the idea of going public with their price list is profoundly uncomfortable, and they believe it could be detrimental to their business. I get why there’s reluctance, but I’m a firm believer that arguments against putting a price list on your website aren’t strong enough. For me, the opportunity to offer total transparency to my target market beats them all.
Let me say straight up, I do practice what I preach. I have three main software businesses, and two of them list the licencing costs on their websites. The only reason I couldn’t make it a hattrick is because, in my third business, there are so many different ways to buy the software that it’s not possible. However, I can tell you that the costs are fixed.
So, why did I decide to go public with price in the first place? It’s pretty simple, I believe in my products and the price point we sell them at. I want clients to trust us straight away that we’re not going to BS them. Our offer is clear, our prices can be seen, and we’re confident that the price is fair. There’s no hiding behind smokescreens and wangling different prices out of different end-users. Everyone gets the same product and service at the same price. For us, that’s been invaluable because clients know where they stand with our business from the off and it’s a quick way to build trust.
Why the argument against fails
It’d be remiss of me not to address the usual arguments against displaying your prices online. It could be argued that if your competitors can see what you are charging, they can undercut you. That’s undoubtedly true, but if you are in the business of competing on price alone, I fear that you’ve got bigger problems than this. If you are supplying a piece of software that has numerous benefits for the end-user, your marketing should be focused on communicating those and your unique point of difference. Price slashing isn’t an approach I’d recommend to anyone.
Secondly, clients could make assumptions about the quality of your software based on price. If it’s very affordable, some might fear it’s too basic for their needs. If a competitor is priced much higher, it could be assumed that their offer is superior. My argument here is that if that’s the case, your website isn’t doing what it needs to do in the first place. On the home page, you should be showcasing your software to its best advantage, explaining how it helps the user resolve a problem or realise an ambition, and providing social proof. It’s unlikely that your visitors will be skipping straight to price without finding out what exactly you are offering, so make sure that messaging is crystal clear.
My software pricing gripes
Since we’re on the subject of pricing, I’d like to get a couple of gripes off my chest. It makes me enraged when I discover software firms throwing in punitive charges for clients leaving them. Those are costs that should be discussed up front, not slipped in to leave a bad taste in the mouth when a client decides to leave. Worse still, it’s deceitful not to mention anything at the beginning and then insist on charging people to get their data back. If that’s your policy, record it and let people know what they should expect.
My second gripe is with the heavy discounting brigade. These are the people that drop their price by 40% in year one and lock customers into multi-year deals that they’re tied into when the price goes back up. I do understand why clients are attracted to a ‘too good to be true’ deal. However, it’s pretty disappointing for them to discover that, one year down the line, they’re stuck with the software for many more years at a price that is far higher than better products on the market.
I’m interested to know what you think about the idea of being totally transparent with pricing. Do you agree with me that it’s a good idea that benefits customers and suppliers alike, or are you of a different opinion? Either way, I’d love to know because this is a conundrum I think the software industry will be debating for aeons to come.
