Question

Pricing as a service product, does it exist?

Is there a product that allows marketing/sales team to control pricing for a saas app? Engineering would have to integrate this product via a snippet, stripe, and maybe segment. This way the product would handle all in-app billing and subscription.

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maguay's avatar
a year ago

The closest thing that comes to mind would be tools like Chargebee or Chargify, built to manage subscriptions from a UI. The dev team could integrate them into the billing process, and then sales or other teams could tweak pricing plans over time.

Then there are tools like ProfitWell Price Intelligently that try to help teams find the best pricing for their product—but I don't think that would make it easy to let any team experiment with pricing, per se, as much as doing research before your team makes a major pricing change. We'd had a Capiche AMA with ProfitWell's founder, @Patticus, a while back, and he may have more insights here.

Another option could be to use a landing page builder like Unbounce to experiment with showing different prices to specific users—which would work for one-off purchases as well.

The greatest challenge then is keeping record of the plans you've tried so you don't show the wrong pricing to a customer who signed up with an earlier plan.

5 points
Wahidtashkandi's avatar
@Wahidtashkandi (replying to @maguay )
a year ago

Tagging onto @maguays comments above.

Booking.com are by far the industry leaders in pricing testing. However the advantage they have is that it's B2C and in a space that price fluctuations are expected. https://blog.usejournal.com/how-booking-com-a-b-tests-ten-novenonagintillion-versions-of-its-site-25fc3a9e875b

I dont know of any tools that hook up from payments to your own website pages for pricing tests. From what I've seen at Paddle testing using a tool like Unbounce mentioned above is the best approach taken. Allows you to segment things in a more customer-friendly way.

Data cleanliness wise as long as in the payments platform you're using you're able to have a unique identifier that buckets them into a variation it should be less of an issue. That can be via a passthrough parameter or for example setting up two equivalent products in whatever tool you're using.

Keep in mind when testing with pricing the impact on LTV though. Tools like Charmogul, Proftiwell, Baremetrics all help with that. It's not all about conversion rate :)

I know below there's comments about whether A/B testing pricing will upset customers and the reality is everything around pricing will always upset some customers. For example, Brazil has lower purchasing power so you justifiably should price lower there but we know that customers in North America when they see that are likely to get upset.

4 points
maguay's avatar
@maguay (replying to @Wahidtashkandi )
a year ago

Great point on Booking.com. I use Agoda (which was acquired by Booking a while back) as my default hotel booking site, and know that almost always you can shave a bit off prices by opening an incognito window and searching for the same thing, and then logging in to secure the price. It's wild.

And you're right on LTV; that's what I would be most curious about. A cheaper plan might get more people to signup initially but be less committed, and thus churn faster, and so on. I know that was something data teams I'd worked with in SaaS companies focused on a lot, trying to find the plans that both converted and retained the best.

On localization: Streaming media take that to the extreme I think, with drastically different prices per region. And yet that's mostly with music, and in markets with strong competition. Netflix—with its differentiated shows you can't access in another service—rarely discounts per-location, instead more often directly converting their price to the local currency (though they're now experimenting with cheaper mobile-only plans in some locations).

Pricing's tough!

1 point
Wahidtashkandi's avatar
@Wahidtashkandi (replying to @maguay )
a year ago

Pricing is so tough! But I'm a strong believer you need to iterate on it at least twice a year. Things move way too quickly in SaaS for you just to leave it as is. Customer twitter rants are shortlived haha.

Re: localisation you'd be shocked by the data to back that it's worth it even taking into account churn. Dropping prices by up to 50% in certain LATAM countries, for example, to drive 200% revenue growth in the region.

Cost of living really needs to get taken into account and i'd argue in our current Prosumer space that most SaaS companies are focused on, wage gaps country to country should be the focal point when thinking of pricing.

Whatever you do people should avoid the big mac index! Horrible for SaaS.

1 point
maguay's avatar
@maguay (replying to @Wahidtashkandi )
a year ago

And then someone like me will end up coming along and calculating a software inflation rate based on how much you and others change your software's prices 😜

On localization though, I wouldn't be surprised. The switch to SaaS helped as well; among a wide number of people I've talked to, Creative Cloud for instance basically only was possible by pirating, and then subscriptions made paying at least approachable at some level.

The Big Mac index is funny because so many other things go into that, one being that McDonald's is positioned as slightly more upscale in many locations than in the US. A CPI based a basket of consumer goods is likely a better metric.

2 points
MichaelKovacs's avatar
a year ago

I haven't used this product, but have heard great things. I'm not sure if it exactly what you're looking for but may be worth a check - https://www.perfectprice.com/

There are other tools that allow sales teams to update pricing (Ex. SalesRight) but don't believe they have an integrated experiences like you mentioned.

3 points
giohobbins's avatar
a year ago

@maguay @MichaelKovacs - appreciate the answers here. Different tangent, but do you guys think there's an opportunity there?

I've found that most saas companies would benefit from being able to tweak their in-product pricing, feature tiering, and subscription UX but it's really expensive to build. Any many startups would like to A/B test or run seasonal promotions but again, costs a lot of eng time to do. If there was something that's as easy install as intercom or segment and could be marketing owned, seems really valuable.

Would love if you could poke holes into this concept.

3 points
maguay's avatar
@maguay (replying to @giohobbins )
a year ago

My general thought is that there would be demand for such a product, and that teams would find it helpful to experiment with pricing and find the best rate to charge. If it were setup similar to A/B testing tools, I could imagine teams trying a ton of variables to see which pricing plan appeals to the most people.

I do know this is something some other SaaS companies do, by manually building new plans and testing them over time on their site. If you signed up for some products early on, it's quite likely you get more for less money than if you signed up today, due to such testing.

I could also see that being wildly unpopular with end users of the software that's using such pricing tools, where as @MichaelKovacs mentioned people would see content saying that a product charges X, and then they'd go to buy it and see it's priced at Y, and if Y > X they'll be annoyed. And if people who paid X got switched to a different plan, with different pricing or included features, they would also be upset unless the new plan was cheaper and/or included more features than they originally purchased.

The product would need to keep every historic pricing plan, to keep older customers on the plan they signed up with. It'd also need to support migrating people to new plans, if needed, to consolidate things over time. And from a documentation and support perspective, teams using the product would need to be very careful when talking to users about what a product costs, and perhaps would need a way to see the advertised price shown to each person when replying to support queries.

I think the easiest route here, both from an implementation and managing customer expectations perspective, would be to pair coupon codes with landing pages that promote limited time sales. That would let any team experiment with initial pricing, while leaving the original subscriptions alone.

2 points
giohobbins's avatar
@giohobbins (replying to @maguay )
a year ago

Grandfathering old plans would crucial functionality for a product like this. I'm also wondering if saas companies would be interested in outsourcing the UX and experience of subscribing/upgrading/cancelling. Similar to how algolia does that for search or intercom for support. Would there be value in a product that handles all of that UX for you in a clean, best-in-class way that on its own will improve conversion (before even getting into price optimization/testing). What do you think?

1 point
maguay's avatar
@maguay (replying to @giohobbins )
a year ago

It does sound like something especially new SaaS companies may be interested in.

I’m not certain how much of the process they would want to outsource; I would imagine many teams would want to keep as much of the billing process in-house as possible, though checkout flows from Stripe, Chargebee, et al may be instructive here. Essentially anything that removes friction in the payment process should be a net win.

1 point
MichaelKovacs's avatar
@MichaelKovacs (replying to @giohobbins )
a year ago

Don't know if I know enough to pokes holes :)

High level, I fell like so many products/pricing will eventually move to dynamic/yield pricing because when done well it can benefit the buyer (possible lower price) and business (increased utilization) - "Happy Hour" at a bar being the classic example.

More detailed, I wonder if the ability to do dynamic pricing and kind of a/b test all aspects is a "feature vs a product" to use the cliche :)

I could see Segment, Intercom, Shopify (core platfrom or via "apps") A?B testing tolls or any product already in that flow adding this as a "feature"

quick search of shopify apps - https://apps.shopify.com/search?q=dynamic+pricing

but that where my ignorance is - I don;t know how complex the problem is, and like most people probably underrate how complex the problem, may be, and therefore how valuable it would be to solve - meaning a dedicated product is the only way it gets solved correctly.

And there's always the worry of 2 similar people paying way different prices for, in this case, SaaS software...which is one of the things this community talks about :)

TL:DR - Seems interesting

1 point
giohobbins's avatar
@giohobbins (replying to @MichaelKovacs )
a year ago

Definitely seems like a validating pain in ecommerce that has been, to your point, solved already to an extent. I wonder of saas companies have comparably big pain despite having far fewer SKUs, promotions, and seasonality.

But Shopify has also solved the experience of buying for store owners. No one has solved the experience of subscribing/upgrading/cancelling like algolia has for search for instance.

1 point
slavakurilyak's avatar
a year ago

Check out ProfitWell which currently employs six Pricing Analysts to do the following:

2 points
giohobbins's avatar
@giohobbins (replying to @slavakurilyak )
a year ago

Super interesting - this looks like pure consulting. What stands out to me here is the competitive piece. Good pricing is relative to the competition, internal margins, and growth goals. A lot to take into account so it's easy to see why it's been a service instead of a product.

2 points
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