Value-Based Pricing Model for your B2B and SaaS Business

Pricing is the factor that determines the ratio of profitability and scalability of your business. As there is a myriad of pricing models in SaaS and B2B business, the value-based pricing model is one of the pricing models that play a crucial role for startups and for those who have been in business for a few years.

In this article, we are going to discuss a value-based pricing strategy along with its strength as an industrial marketing strategy for your B2B and SaaS business.

What is Value-Based Pricing

Value-based pricing strategy is known synonymously with value-added pricing as the value is determined using the perceived value of the product by the customer.

In more technical terms, we define the value-based pricing model as:

Value-based pricing is a pricing strategy used by businesses to charge products and services at a rate they believe consumers are willing to pay. As opposed to calculating production costs and applying a standard markup, businesses instead gauge the perceived value to the customer and charge accordingly.

How to use Value added pricing Model as a Ladder to Success?

Exploring value-based pricing in B2B and SaaS industry has a lot of potential; one has to discover and strategize it for the business. Here are a few ways to explore the value-added pricing strategy for your business that will help you utilize the model as a success for your business.

Evaluate the Current Pricing Performance – Market Research

Increasing the prices of your products on the basis of inflation and usual rising prices is not the right step to take for the business as customers as well aware of the products and their pricing value

Evaluating the pricing performance in the market is extremely important because the merchants have to understand the value being perceived by the customers. With this fact stated, it also underpins the important fact that merchants have to maintain the average sales price after increasing the prices of the product.

Evaluating the current pricing performance in the market entails monitoring the performance of the products and consumer ratio of that pricing, monitoring the analytics of the profit ratio obtained using that price, marginal costs, and the cost-effectiveness of the product and pricing with special reference to your business.

For carrying out this, your business needs AI-powered pricing analytics that monitors customer behavior and another database. SubscriptionFlow provides you with a transactional database, providing you with useful insights that will help you determine the correct price, cost, volume, and margin information for your products.

Product Segmentation for Optimized Value-Based Pricing Model

After the performance evaluation of the pricing, next comes product segmentation based on the former results.

As we are talking about a value-based pricing strategy, the product strategy is devised on the basis of the value of the product. Product segmentation will help you categorize the products based on the core points that matter to your value. You can compartmentalize the products into different categories based on the pricing concerns, costs, and evaluation of the pricing of different products.

This will help you to make a value-based pricing strategy for your business and sell it to the customers seamlessly.

Implementing Value-Based Pricing in B2B

Implementing the value-added pricing strategy for your B2B SaaS marketing business takes into some of the factors based on which you can thoroughly optimize your products. Let’s discuss the important factors while you start to implement the said pricing strategy for your B2B and SaaS business.

Bundle The Service Packages

This is the first and foremost important thing for implementing the strategy or pricing on your business is to break down your products or services into service packages. Those service packages and their pricing must be determined by the evaluation and segmentation process that we talked earlier about.

Bundling the service packages entails a price-point for all the customers irrespective of the fact whether how much your customers or target audience are willing to pay. If you offer a good and high value of the product to your customers then there is a higher probability that your customers will switch to the tier and might upgrade.

So, executing this pricing strategy with proper research and building the packages with the right value will be the fuel to success and greater revenue generation for the business.

Inform And Interact with Your Customers – Take The Feedback

This might be not so essential step but informing your customers and taking their feedback will help you in devising, strategizing, and implementing the value-based pricing model for your business.

As we know that the value-added pricing model is determined by the value perceived by the customer, therefore, the customer’s input is essential.

Taking feedback from the client or taking a survey will help you make the bundles and set their value near to what customers perceive of them.

Informing your customers or consumers about the change in the value and pricing respectively will help build a good customer-merchant relationship. Not only this but the added value to the bundles of service packages will be noticed. Hence, creating chances for customers to upgrade and witch to bundles with higher value.

Determine The Pricing Point Using Analytics

For determining the pricing point, the first thing you must have in your hand is customer analytics and along with the study of potential customers.

Analytics such as customer behavior, buyer persona, buyer’s inclination towards the product, pricing analytics, and business advisors would be the best thing to do.

These analytics would help you to set the pricing point for your business products and the values that come with the services.

Studying the buyer’s persons will help you study your customers in detail and understand their buying preferences. SubscriptionFlow is a subscription management platform for B2B and SaaS businesses, that provides analytics and reports with great insights into the customers.

These analytics work on the KPIs determined by the merchant and further help merchants to bring those analytics to use for their future strategies and steps towards the growth of the business.

Take the STEP – Schedule a demo with us!

If you want to implement the value based-pricing strategy for your business, get useful analytics, and get seamless pricing management for your business then hit on “Schedule a demo”, NOW!

Grow your business with SubscriptionFlow!