How to avoid conflicting pricing for your software start-up
Pricing your SaaS product can be a challenge. Especially if your product has broad appeal and applies to a diverse number of use cases. How do you define a pricing strategy which makes your product accessible to both singular and enterprise users alike?
The dilemma is singular or low-volume users are making a cost-based decision while enterprises are making a value-based decision and you don’t want to leave potential revenue on the table. This is known as channel conflict.
Here are 2 approaches you can take so your startup can continue to target both customer segments.
Differentiate your product offering
The easiest way to appeal to both market segments is to differentiate your product offering. On your pricing page offer a limited free version, a full paid version, and an enterprise version. The full paid and enterprise version are the same product but the enterprise version comes with extras. Extras such as enterprise-level support, IT management features and service-level agreements can justify the additional expense for enterprises.
Different branding and marketing
The 2nd option is to separate the business to appeal to the different customer segments. This is achieved by having one brand and website targeted at individual users and a separate brand and website targeting enterprise customers. This approach will add costly overheads to your startup and may therefore only be appropriate in limited circumstances.
TAKEAWAY: Remember, if you choose to approach the challenge of channel conflict, make sure you are targeting and pricing your product to suit that customer segment. Enterprises due to their size are often able to generate much greater value from a SaaS product than an individual can. This is the value that you need to capture a piece of.