Pricer’s Points: B2B SaaS Pricing: New dog, old tricks? | Mrinal (MG) Gurbaxani

They say you can’t teach an old dog new tricks, but what about teaching a new dog new tricks? SaaS companies have become the darlings of innovation, embracing the latest technology platforms, new business models and modern marketing strategies – then why are these “new dogs” adopting outdated pricing practices that their traditional industry peers have outgrown 10+ years ago? Competitive-based pricing, drastic price discounting and lack of pricing discipline have led to price wars and eroded margins in B2B high-tech, manufacturing and distribution industries for decades. It’s time for SaaS to ditch the old practices and adopt data-driven, value-based pricing that has been the gold-standard for B2B for the last decade.

First the good news: SaaS as an industry has woken up to pricing. I’ve met with over a dozen B2B SaaS companies and PE firms specializing in this space in the last 60 days alone, and the self-awareness is there: SaaS pricing is in its infancy and needs to grow up before margins are wiped out. SaaS companies are taking the right first steps by embedding a dedicated pricing function within Product Marketing, building Pricing Councils and Committees and hiring for senior pricing executives to lead the transformation.

Now the bad: The transformation is partial – many SaaS companies are approaching pricing with a paranoia regarding competitive offerings and an obsession with market share over profitability. In plain-speak, this is leading to a self-inflicted price war. SaaS companies need to see beyond competitive-based pricing the full way down the pricing spectrum to value-based pricing as their B2B industry peers have already done. Sympathetically, this shift to pricing best practice is a uniquely difficult challenge in SaaS.

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B2B SaaS Pricing: New dog, old tricks? | LinkedIn.