April 29, 2020

Why SaaS Pricing Pages Don’t Show Pricing

We talked to them to find out.

by @awwstn

founder/ceo @capiche
awwstn's avatar
Categories
Cloud Computing
Accounting
CRM
Business Intelligence

A pricing page that only says “Call Us!” isn’t exactly a pricing page, is it?

Almost every day I come across tweets and comments from people who are frustrated with this strategy from software vendors.

Some people simply refuse to sit through a 30 minute sales demo just to learn how much a product costs. Others literally built a solution from scratch because they were unwilling to jump through hoops to buy a product.

So much of sales and marketing advice suggests reducing friction. So why on earth do so many software vendors have hidden pricing?

Well, I think I can explain. I’ve spent time talking to vendors, founders, and leaders at SaaS companies over the past few months, and I think I can explain.

To be clear, I’m not defending this behavior. Pricing opacity is one of the main reasons I set out to build Capiche. We believe not only that pricing transparency is better for buyers, but also that it’s better for vendors in the long run. But conversations with vendors revealed the thought process behind why SaaS companies increasingly hide pricing, especially on higher level plans.

In most cases, opaque pricing comes down to four things: Lead conversion, lead qualification, case-by-case pricing, and negotiation framing.

Lead conversion

If pricing is not listed on the site, the pricing page will collect more email addresses than it would if everything were listed. That’s just a fact. Why does Pinterest make you sign in to see all the content you came to see? Same thing.

The frustration you experience when you can’t find the pricing for a product you’re interested in? That’s a powerful motivator. If the website tells you everything you need to know to make a decision, then you’re far less likely to drop your contact information.

Now, whether an opaque pricing page converts more revenue is more complicated, but the vendors who hide pricing are quite confident it does.

When you have marketing teams that are measured by the number of leads they deliver, you’re going to have websites optimized for converting leads.

Lead qualification

Some companies believe — and it’s not for me to say whether they’re correct or not — that the customers who think about price first, and who are unwilling to put in the time to do a demo call, are going to be high-maintenance, high churn, low ROI customers. So, they don’t mind letting those frustrated potential leads walk away.

This goes beyond simply opaque pricing in many cases. They intentionally put friction at various points in their funnel, because it means a smoother down-funnel sales process and less churn.

Case-by-case pricing

Case-by-case pricing is basically a euphemism for price discrimination. Vendors want to be able to have huge discrepancies in the amount customers are paying for their software. They want to decide how much they think you’re willing to pay, and charge you that.

Is this fair? Not really. In theory, customers should be agreeing to buy a product if the price matches the value they’re getting, irrespective of what anyone else is paying. But nobody likes to discover they got a raw deal.

It’s not just about setting higher prices for bigger or deep pocketed customers. It could be based on your use-case, industry, optionality...or even naivety.

Negotiation framing

If a potential customer comes to the negotiation with a clear understanding of what other people are paying, then they’ve framed their expectations and will want what they perceive as a “good” deal based on that framing.

If the negotiation happens in a silo entirely controlled by the vendor, then that framing could be vastly different from what everyone else is paying.

This makes a huge difference. Sales teams know that people love to feel like they got a great deal, but they are happy to admit that this can be accomplished regardless of the starting point.

If their goal is $9-10K/mo., they’ll start at $12K/mo. and work with you until everyone’s happy. If you walked into that negotiation knowing that most customers at your level are paying $8-10K/mo., then you’d be aiming to hit the low end of that window.

So, is this “right”?

I don’t know. It’s annoying, that’s for sure. Since it’s so common, the vendors who have opaque pricing likely pay very little brand/reputation price for doing it. But the more we all share our pricing with one another (whether you’re doing so here on Capiche or elsewhere!) the less effective price opacity becomes.

These tactics won’t change simply because people find them frustrating, but they will change as they become less effective. And, to the extent that our invoices aren’t under NDA, we all can contribute to making that happen.

FORMAT WITH MARKDOWN; DRAG AND DROP IMAGES
Livenadav's avatar
@Livenadav (replying to awwstn )
4 months ago

So true.

Speaking about showing (or not) enterprise pricing in a SaaS service, EVERY SaaS service in UK that wants to join the Digital Marketplace for Gov UK G Cloud MUST show pricing on their site. I had a chat with them "Are you open to flex it up a bit" as a lot of SaaS don't show pricing as a way to bespoke tailor-made price according to client's budget - But the answer was... NO. You can join this B2G portal ONLY if you show your pricing on your site.

So now you're glad you're in US or not?
:-)

4 points
preshdkumar's avatar
@preshdkumar (replying to awwstn )
5 months ago

Great read, thanks for sharing!

2 points
anuaimi's avatar
@anuaimi (replying to awwstn )
4 months ago

For most SaaS services, large enterprises make up a significant part of the overall revenue. These customers normally don't just buy from websites as they have custom requests, both features and contract terms. So they normally don't have a problem with the 'call us'.

2 points
qthdh's avatar
@qthdh (replying to awwstn )
4 months ago

You know what's worse that having a separate "Call us" pricing column?
Not showing a clear link to the pricing page on one's homepage. This drives me nuts.

1 point
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