top of page

Join thousands of people receving regular insights into ideas that help people and businesses grow.

redchilli.png
Adam Ryan Head Shot small.png

Written By

Adam Ryan

7 Steps to Pricing a Software As A Service for New Entrants


Illustration of a man reaching for the stars on a ladder
Offering different pricing options helps meet customer needs.

As a founder of a startup, pricing a Software As A Service offering is primarily focused on value-based pricing. However, this is extremely difficult to do when launching a new software as a service solution.


When pricing a Software As A Service, the following are essential steps to take:

  1. Identify the target market: Understand the target market's specific needs and pain points and how the software addresses them.

  2. Determine the cost of delivery: Understand the costs associated with developing, hosting and maintaining the software, including any external costs such as third-party services, payment gateways, and hosting.

  3. Research the competition: Look at similar software offerings in the market and their pricing structures to get an idea of what is considered fair and reasonable in the industry.

  4. Test pricing with a small group: Test different pricing options with a small group of target customers to gather feedback and gauge their willingness to pay.

  5. Set the price: Use the information gathered in steps 1-4 to set a price that accurately reflects the value of the software to the customer while also being competitive in the market.

  6. Offer different pricing options: To accommodate different levels of usage and budgets, offer various pricing options such as monthly, annual, and usage-based plans.

  7. Communicate your pricing clearly: Make sure your pricing is clearly communicated on your website and in any marketing materials and that customers understand the value they will receive for their investment.

As a new entrant into the market, the following are vital considerations when pricing a Software As A Service:

  1. Establishing a brand: As a new entrant, you may need to price competitively to establish your brand and gain market share.

  2. Building customer trust: As a new entrant, pricing may play a role in building customer trust, as they may be hesitant to pay premium prices for a product or service from an unknown company.

  3. Differentiation: As a new entrant, it is crucial to differentiate your product from existing offerings in the market, and pricing can be an essential tool to achieve this.

  4. Scaling: As a new entrant, you need to consider the scalability of your pricing model, as you may need to adjust it as your customer base grows.

  5. Knowing your break-even point: Knowing your break-even point is vital for a new entrant, as it will help you understand the minimum revenue you need to generate to cover your costs.

Final Thoughts

Pricing a Software As A Service offering is challenging and requires constant attention, a focus on tweaking the various offerings and a clear understanding of the market and customer needs.

 

About the Author

Adam Ryan is a Professor of Practice (Adjunct Professor) at Monash University and is a principal at Watkins Bay. Adam has over twenty years of start-up experience in Australia and the USA. An expert in Company Structuring for Innovation, Strategy, Mergers & Acquisitions, and Capital for early and growth-stage businesses.




 

Contact Details


Australia +61 (0) 418 325 387

USA + 1 (858) 252-0954

Email adam@watkinsbay.com


Reach out via Linked In


 


コメント

5つ星のうち0と評価されています。
まだ評価がありません

評価を追加

Join thousands of people receving regular insights into ideas that help people and businesses grow.

redchilli.png
Adam Ryan Head Shot small.png

Written By

Adam Ryan

bottom of page