Let’s Talk Pricing Strategies for Business

For some reason, we don’t see or hear a lot of marketers talk about pricing.

I suspect it’s because many marketers aren’t allowed to touch pricing.

(remember the 4 Ps – pricing is in there!)

Pricing is often this untouchable thing within orgs. that has either been grandfathered in and is never talked about, or is owned by some other function (“It’s too important to let the arts and crafts department look after it.”)

There are so many different pricing strategies such as discounting, couponing, premium pricing, everyday low pricing (EDLP), high-low, freemium, etc.

All which can have significant impacts on your business’ revenue and the perception of your brand.

Lately, I’ve been thinking about (and perhaps there’s data that could answer my question), for SaaS, is it better to:

a.) Offer monthly billing and allow anytime cancellations;

b.) Offer mandatory yearly billing with restrictive cancellations.

I suspect most business leaders prefer option (b) because they see it as a way to lock in more revenue and have predictable ARR.

But, I bet most customers prefer option (a), and as such, that is actually the more profitable choice.

Option (b) may dissuade customers from ever signing up in the first place. I know this to be true for me.

Whenever you think, ‘what’s best for my business’, it’s usually not as good as thinking, ‘what’s best for my customer.’

Good businesses think about profit. Great ones think about people.