Whenever I discuss pricing with founders in highly competitive markets, the first thing they mention is the competition. They are convinced there is a price ceiling dictated by the price of the competition (plus ~20%).
I’m here to tell you that –despite your competitors leaving money on the table– you don’t have to. Better yet, you might be able to wipe their table clean too.
How? By implementing a premium pricing strategy.
"You might be able to charge more for less."
Premium pricing strategies are nothing new, but they are rarely implemented in the SaaS industry. Whenever markets become commoditised, premium products enter the scene. If your industry is crowded, it might actually be a signal to explore a premium pricing strategy.
Let’s set the record straight first. If you sell the exact same product with the exact same positioning, it’s going to be a tough sell. However, if you can (1) narrow your positioning to target a more specific group and (2) execute one job better than anyone else, you might be able to charge more for less.
Superhuman is the perfect example of a successful SaaS product with a premium pricing strategy. For those who aren’t familiar, it’s essentially a fancy user interface on top of your email client (I’m actually an avid user). They charge €25/month in exchange for you to process your emails in a more efficient digital environment.
At the same time, a Google workspace subscription starts at less than €10/month and grants you access to their email client, Docs, Sheets, Slides, Meet, Forms and more.
They are competing directly with Gmail as the interface for email processing, but are able to charge >300% for only a fraction of the solutions. It gets even crazier… you actually need a Gmail or Outlook account before you can use Superhuman.
Most founders would’ve looked at Google’s or Microsoft’s pricing to assess how much they could charge for another email solution. They’d have ended up at less than 1/5th the price of Superhuman. Rahul Vohra, the Founder of Superhuman, figured out that a sizeable group of professionals are actually willing to pay a premium price for a solution that just nails the email experience.
The trajectory for most SaaS companies is that they keep introducing more and more functionality over time to attract a larger audience. However, when you try to cater to five different groups, you often cater to none.
The common denominator between winners has always been the ability to focus.
Stripping away all the fluff, simply nailing one job, and sharpening your positioning might be all it takes to break through the imagined ceiling your competitors placed on your industry.
Want to learn more about SaaS pricing and packaging? Follow Money on the Table or schedule a free consult at https://revfixr.com/contact
Tjitte Joosten is the Founder of RevFixr, the one-stop shop for better monetisation of your customer base. RevFixr turns pricing into your biggest growth lever. Prior to founding RevFixr, Tjitte was responsible for the commercial strategy and operations at tech companies like Docfield and Experfy.
