What is SaaS Value-Based Pricing?

Value-based pricing for SaaS (Software-as-a-service) is a monetization strategy that sets the product’s worth based on the value users receive, not production or competitor costs. 

To find the correct price points, eCommerce developers should determine how the product improves the user’s workflow and business results. It’s important to identify measurable benefits. 

Salesforce, a well-known customer relationship management (CRM) software, uses this strategy. 

Salesforce’s different pricing tiers display the increasing feature access users obtain. 

Lower-priced tiers simplify core sales processes, whereas higher ones offer additional features like analytics or automation.

SaaS value-based pricing emphasizes the customer’s perspective, whereas cost-plus pricing looks mainly at production expenses. This difference in approach allows value-based monetization to validate premium pricing if the product offers significant gain.

Take into account these aspects while determining whether this monetization method is appropriate for your SaaS product.
First you need to look at product type. Solutions with quantifiable benefits are suitable candidates.
Next, consider the target market. Value-based pricing functions when the intended audience understands the USP (unique selling proposition) right away.
Additionally, look into business objectives. SaaS products are an appropriate option for value-based pricing.

To determine your SaaS product’s value, you first need to perform customer research. You can identify customer challenges and ways your brand can address them through surveys, user interviews, and focus groups. 

Once you pinpoint the improvements your product brings, you should convert them into tangible benefits like revenue growth, greater efficiency, or cost savings.

Value-based pricing is a strategy that can influence customer experiences. For instance, if users believe they are fairly charged for a product or service, they’ll remain by the company’s side. 

Additionally, once your clients understand that your services can affect their operations, they will continue purchasing products, impacting their customer lifetime value (CLV). 

Moreover, when employing this strategy, your offering is changing status, going from service to solution.

To figure out if your SaaS product requires value-based pricing, consider the following questions: 

• Does my product offer tangible and measurable value points? 
• Do I have a thorough understanding of my target audience and their needs? 
• Should I adopt a flexible pricing strategy that has to be recalibrated based on user feedback?