Hi, I’m James. Thanks for checking out Building Momentum: a newsletter to help startup founders and marketers accelerate SaaS growth through product marketing.
Every so often, I’ll see a Twitter or LinkedIn post go viral in the SaaS community and the topic is nearly always the same:
I decided not to request a demo from a SaaS company because they didn’t publish pricing on their website! Imagine how many leads they’re missing out on!!!
And honestly, it grinds my gears a little. And usually, these complainers have something in common: they’re all individual ‘makers’ or from early-stage, pre-PMF startups trying to buy from established SaaS companies that are usually targeted to more mature businesses.
Quite simply, if you (as a buyer) need to know pricing before requesting a demo or getting more information and the company doesn’t publish pricing, they are sending you a message: you are not their target customer.
In this post:
Why SaaS companies don’t publish pricing
Good go-to-market strategy should discriminate.
Being something for everyone is a waste of time, effort, and focus. Most companies are focused on attracting up to 10% or maybe 20% share of the total market.
As startups mature they are often naturally pulled upmarket, away from serving very small businesses and SMBs who traditionally have lower average contract values (ACV) and higher churn. SMBs can also be expensive to acquire through paid performance marketing, and then still require an inside sales journey.
As companies are pulled upmarket, they win bigger, more mature companies as customers. These traditionally come with larger ACVs and more concrete growth prospects.
The effort to win a $10k customer is about the same as a $30k customer. From there, it’s only a period of experimentation and hiring the right people to get to $100k ACVs. These customers also cost less on the paid performance side, but can still be tended to and won by inside sales teams.
This whole process does leave a gap at the bottom of the market – which is usually quickly filled by other early-stage startups, and the same thing happens.
So as those companies mature, should they craft propositions and a buying experience that works for the 100%? No. They will focus on bigger ICPs, and adapt their marketing, sales, and product strategy accordingly.
It then makes less sense for these companies to publish pricing on their website for a number of reasons.
- The buyer may not require pricing before getting more information. Larger businesses have more flexible budgets, and if the challenge to solve is important enough, budget can be created.
- It leaves revenue on the table. Understanding a buyer’s problems before discussing pricing means you can size the proposal as required. A customer with a $1m problem will gladly pay $100k a year to solve, but if you’re setting public pricing at $50k, you’re missing out.
- For perception. I don’t know about you, but I often feel companies without public pricing are going to take a more custom, solution-oriented approach to my problem. Not publishing pricing can help build perception as a higher-quality service.
What you can do instead
As a product marketer, you might be instructed to hide pricing on the pricing page – regardless of whether it’s the right thing or not – and you want to hedge against it.
And in some cases, you may want to offer hints on your pricing page, especially if you’re working through that transition period.
Here are two different ways you can bridge the gap.
Create an anchor with ‘good, best’ packaging
Defining a reference point on your pricing page can help your customers to understand how your product and value – and therefore, pricing – is likely to compare.
This might be a very low-touch plan that you offer with zero customization capabilities, or very cut down features. You can attach a per-user price, a platform fee, or whatever other value metric makes sense.
Usually, you won’t actually sell this to users – but it’s priced high enough that it’s an easy upsell to the minimum pricing for a basic offer for your ‘best’ plan, the one you actually want to sell.
This creates a anchor in your customer’s mind. If the first plan with not many features is priced at $x, then the recommended package must be higher.
Create an anchor with a competitor comparison
When you’re competing against low-value competitors but have clear, high-value differentiators, you can use this to your advantage.
You can group your competitors together as ‘Alternatives’ and present them in a comparison table, along with the primary features – and include your differentiators. For pricing, enter a range for the alternatives – and for your product, just use ‘Contact sales’ or ‘Request pricing’ or whatever works for your customers.
This format helps separate you from the crowd, set yourselves apart in terms of features and value, and offer a pricing anchor too. Your potential customers visit the page and instantly expect you to be higher priced, but have some point of reference.
Be very clear who your product is for
This one is contentious because for some reason, it’s considered a little gauche to say exactly who your target customer is.
But if you can push through, there’s no harm in stating something like
- Our product is best suited to customers with 500 to 5000 employees and spend an average of $1m per month on performance marketing
- We serve Enterprise customers who handle 50k transactions per day
- Customers typically invest $1m per year across their cybersecurity stack
And you have all of these guidelines already – your sales reps are using these in qualification calls. Could you experiment being upfront and transparent on your website? Would this help your SDRs be more productive?
Understand your customer, iterate
When it comes down to it, the companies that win will be the ones that best understand their customers – and support their buyer’s experience with the right information, at the right time.
Ultimately, the impact of transparent pricing on the website or not is unlikely to be the needle-mover you (or your execs) think it will be.
Give it a try, or don’t. But definitely get out there and understand what your customers want, then do that.
Thanks for reading! Let me know what you thought – find me on Twitter and LinkedIn.
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