What is Limited-Time Offer (LTO) Pricing in SaaS?

Limited-time offer (LTO) pricing is a sales strategy in which SaaS businesses run different promotions or offer discounts for a limited, short timeframe to create a sense of urgency and scarcity.

This tactic can be used to gain users and influence subscription revenue.

Here are four ways in which subscription-based SaaS businesses can increase revenue through the LTO method:

• Customer Acquisition: Limited-time offers can incentivize potential customers to commit to a paid plan.
• Revenue: Limited discounts can generate subscription revenue.
• Upgrade Potential: LTOs encourage customers to switch to a premium plan.
• Renewed interest: Limited-time promotions can make customers return to your brand.

Here are the advantages and disadvantages of LTOs for SaaS offering:

Pros:

• Limited-time discounts can offer SaaS businesses a fast customer acquisition process.
• LTOs can influence short-term revenue.
• SaaS businesses can use price cuts to display premium plans.

Cons:

• LTOs can negatively impact your brand.
• Promotions may atrract customers that can later on churn.

SaaS subscriptions should consider LTOs in the following situations:

• Product Launches: Limited-time offers can generate customer interest.
• Off-Peak Periods: LTOs can influence demand during slow sales.
• Target Customer Acquisition: SaaS companies can personalize promotions to suit different regions.
• Competitive Market: You can use LTOs to make your present your offer. 

Here are five steps to create an effective LTO campaign for your SaaS business:

1. Step One: Set your business goals. Whether it’s new users or upgrades, clearly define what you want to gain as a result of running a LTO campaign.
2. Step Two: Keep your promotion simple and easy to follow by your target audience.
3. Step Three: Set a clear time limit and emphasize it to create the fear of missing out.
4. Step Four: Appy your discount to the customer segment you feel would be more receptive to it.
5. Step Five: Utilize different marketing channels to promote your campaign and reach users.