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SaaS Pricing

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8 contributions to SaaS Pricing
How to aproach larger companies that will only work with you if you sell them the platform
Thanks for accepting me in your community. I have spent two months reading The Pricing Roadmap book and watching Ulrik´s videos to improve my company aproach on pricing. We have a lot to work and learn and is super exciting to carry on this project. I have, however a much pressing question. We provide a monitoring and control saas service for mining, water utilities and energy companies and we also install and mantain our monitoring instruments. We deal with much bigger than us, cupper mining companies and pulp companies, among others. They frequently pick their suppliers on biddings and lately some of the biddings require we sell the platform to them because they want complete control on their data. Related to this, some big energy intensive companys have told us, no, we cannot work with you because all our data must remain within the house for security resons. So, I was thinking.. A "job to be done" would be ...I want others to develop my platform but I want to run it withouth the data going out. If we develop, and deliver an entire platform for each of this requests. How are we suposse to charge? and more important.. should we do it? Could we answer in other way with out losing this opportunities? If you could guide me in this, I would really aprecciate it. Kind Regards and excuse grammar english mistakes.
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New comment 5d ago
1 like • 5d
adding to Carstens comment: just because a clients data is not supposed to leave their premises and firewall protection, this doesnt have to mean you can not exchange telemetry (for usage or whatever pattern you use for pricing). however, the willingness of your client base might be challenging, given their size and how much they are used to simply dictating their way instead of adapting with effort to potentially better scaling approaches, etc. i dont generally see why a "data cannot leave my premises" attitude requires you to sell them the platform. it is rather a "nobody external ever touches any of my systems" attitude that you would be challenged by. but irrespective of SaaS vs. Software selling: it is then always troublesome for you to satisfy the full isolation paradigm, just thinking about technical change deployment, potential maintenance and bug fixes, let alone client specific workflow breaks that require analysis.
B2B SaaS Pricing
Hi all. Currently, I'm working at a B2B SaaS firm (Firm A), providing solutions for clients worldwide, including the subsidiaries of our Group. Transfer Pricing Challenge In the transfer pricing model, my firm must carefully manage the pricing of its services to ensure: 1. Tax Minimization: Firm A subsidiaries aim to minimize profits to reduce their corporate tax burden. This is achieved by inflating internal costs (e.g., software licensing, infrastructure costs) to reduce reported profits. 2. Benchmarking: For services like network infrastructure, data centers, and proprietary e-wallet software (which have no direct competitors in the market), pricing can be inflated without market benchmarks to justify the costs. 3. Tax Compliance: The strategy must demonstrate that the cost structures make sense from a regulatory perspective, especially in jurisdictions like Myanmar where Firm A has significant investments. Evidence Constraints To create a framework for standardized pricing, Firm A: 1. Use a Cost-Based Pricing Framework: This method is widely used in transfer pricing, especially when benchmarking data is unavailable due to a lack of competitors or comparable services. However, pricing SaaS products is inherently challenging, as they are difficult to value. 2. Document Competitive Advantage: For services that cannot be benchmarked (e.g., proprietary e-wallet software or network infrastructure), Firm A can demonstrate how these products offer unique advantages. However, we lack the information about other competitors price, and if we set our price higher, we need to prove the value proposition thoroughly during audit. Key Question Our goal is to maximize profit through transfer pricing to our headquarters in Vietnam by increasing the cost of all SaaS products. We must develop research-based evidence to proving our pricing during audits. The main challenge lies in identifying evidence: strategies and supporting data that effectively validate our B2B SaaS pricing.
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New comment Sep 11
3 likes • Sep 6
wow. i am not certain about this, and would also be interested in someones more experience based opinion on this, but here is my two cents: - there are separated aspects of this for 1) purely internal finance matters (tax optimization, overallocating some cost categories compared to others, etcpp). you do this internally to optimize the tax situation. and 2) external value based pricing model, i.e. how does your customer pay for different value created. i would keep them separated as much as at all possible. - now, there obviously is still a possible connection, based on tax practices or legislation. for example if you can only allocate something to license income if you explicitly in the contract formulate this as license income. this will of course limit your universe with regards to how creative and value driven your pricing model can be. - you can do a cost-based pricing model (i call this COST+, as in cost plus margin): but this means you design (and also limit!) your operating margin with such a model. if your technology and service construction is superior on the market, your clients would potentially pay more, but you won't use that potential for your margin increase. i apologize if this is not really answering the question - but that was what shot through my head when i read this. ;-)
How do you usually quantify customer value & differentiation?
I'm wondering, what is your approach towards value quantification? It's easy to take $X revenue your product generates or calculate how many frauds it prevents, but how do you do it for competition? I obviously know MaxDiffs/CJAs analyses can help, but how do you guesstimate without the research or initial data? Calculating value for every feature seems like an absurd task, and there is no way you can do it regularly.
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New comment Sep 19
How do you usually quantify customer value & differentiation?
2 likes • Sep 2
@Maciej Wilczyński to be fair though: competition analysis always was hard. And you don’t play with utterly open cards towards your competitors either I suppose. ;) in reality, it also only matters what value creation your customers PERCEIVE your (and other's) products to have. And that you can still find out in B2B through talking to customers and prospects. Talk to some of your loyal customers and why they are loyal to you … and some of true competition. If you don’t cold call them for that, but use an industry event or a conference or so, this is actually quite doable.
The downside of usage/consumption-based pricing
I was recently running a pricing consultancy project with a company that created an "automatic scheduling" API-as-a-service to integrate with the scheduling software. The value of the service is that it saves the time of the manager from having to schedule the shifts. Their pricing model was solely usage-based with the metric being: per scheduled employee per month. This had 2 major downsides: 1. No revenue until the customer started using the service. 2. Seasonality fluctuations with lower revenue during holidays and vacation periods. We came up with 2 possible models to mitigate these revenue lulls. 1. Hybrid subscription model, where you pay a subscription fee per month from day one in addition to the transaction fee per scheduled user. 2. 3-5 Transaction buckets/packages that you start paying for from day one. i.e. Package 1 includes x nr of transactions and if you go over you need to upgrade to the next package, etc., etc. @all in the community- which one would you have chosen?
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New comment Sep 13
0 likes • Aug 30
Apparently the seasonality is a challenge … but I would like to understand why that is. Is it a volume challenge (as in, if we had 10x number of customers, then who cares -> Cashflow and ultimately a liquidity challenge) or is it a systemic problem (and then, are your overall margins too low to compensate the seasonality..?). If it was the latter, increase your price point (assuming the model overall is suitable). If it was the former, make consumption easier (or: don’t step away from consumption based pricing if that is indeed lowering the purchase barrier)…
Value-delivered vs Expectation-to-pay
brilliant concept in the webinar from yesterday. very tangible example with the plumber ... nevertheless, even after applying this to the ai21 case, i am still struggling a bit to translate that to our own reality, or at least how i evaluate where on the two scales a certain aspect ranges. that might have to do with me (in this case) working on a new offering that doesn't have customers yet. What is your experience @all: If you can't ask existing customers, do you start elsewhere than suggested on the webinar? Do you ask prospect customers for your future, even though they might not understand your product/service without explanation? I know its a bit the chicken-egg thing - just curious for your experience.
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New comment Aug 30
0 likes • Aug 30
@Florian Compe yeah, that was also my obvious way of going about it. I was just wanting more security in assessing the different value and especially expectation-to-pay aspects than via this path ;) thx for the answer!
0 likes • Aug 30
@Marco Dalic interesting ideas. Thx for sharing!
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Mark Henoch
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10points to level up
@mark-henoch-9669
Seasoned B2B SaaS and Technology Executive

Active 5d ago
Joined Aug 29, 2024
ENTJ
Germany
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