Zapier charges on number of Zaps - that’s their value metric. Is it measurable & does your user agree with you on its measurement?ĭoes it scale up and down corresponding to your high & low-usage buyers? (E) Ask your customers if they agree with this hypothesis. Value-based pricing reflects the value that the SaaS product brings to customers, not the cost of bringing it to market. (D) Measure (if possible) to what degree your product makes these outcomes likely.
(C) Identify what value your product provides that corresponds to these outcomes. (B) Find out what your product value is and how is it tied to your user’s end outcome - is it time saved? is it money earned? is it % reduction in churn? Value-based: set a price based on the value customers receive from the service rather than on usage or features.
However, because its not connected to your business. (A) Start by identifying 3-5 core outcomes (Jobs to be done) that your user cares about. Unsustainable: Pricing based on your competitors is a good SaaS pricing strategy for new SaaS companies. This allows you to make sure you're not charging a large customer the same as you'd charge a small customer while ensuring at the same time you don’t leave money on the table. This happens because value-based pricing bakes growth directly into your monetization strategy.Īs the amount of value received grows up, the customer pays more, and the more your revenue grows. Why you should switch to value-based pricing?Ĭompanies that use value metrics grow 2x more with 50% less churn and 200% expansion ARR compared to flat-fee or feature-based pricing. It is based on your buyer’s perception of your product’s value to them. The SaaS value metric measures the price per unit value of your product. So i tried to figure out a way to simplify it - and I came across value based pricing. SaaS pricing is so complicated! so many rules, margins, costs, CAC etc - its overwhelming esp if you're bootstrapping
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