The hottest SaaS businesses now put their pricing online, according to a recent OpenView study. In fact, SaaS 2.0 companies are twice as likely to publish their pricing compared to older public SaaS businesses. But the decision to publish pricing is a rather recent one. In fact, most organizations that put their pricing online have only started doing so over the past few years. And the added publicity around product pricing has encouraged these companies to invest heavily not only in determining the actual prices to offer, but how those numbers should be displayed online.
Despite the recent rush to publish pricing, there is a dearth of resources around how companies should actually build optimized packages and pricing pages. Recent questions I’ve been asked include:
- Should I put the most expensive plan on the left or the right of the page?
- Do I need to publish Enterprise pricing too or should I tell people to “contact us”?
- Do the prices need to end in $9 or $9.99?
- How do I growth-hack my way to higher conversion?
These are all valid questions. And getting the answers right can significantly improve and optimize your pricing pages and conversion rates. So here, I’m sharing my top 7 tips for optimizing pricing pages. And, while I’m all for nifty growth hacks, these tips go back to basics to help you get the fundamentals of your pricing page right. If your pricing page doesn’t have the basics down, no amount of growth hacking will get you to a large and enduring business. Special thanks to Steven Forth, Co-Founder of TeamFit and pricing guru, for adding his expertise.
1. Reinforce your value proposition, over and over again
Tell me if this sounds familiar. You visit a pricing page and it says “Select your plan.” There are three plans usually something like Starter, Professional and Enterprise. Each plan has a long list of features associated with it, and of course Enterprise has the most. Not terribly exciting or differentiated, right?
Now consider Typeform, the online form and survey software. Typeform makes it exceedingly clear (and human) as to who should buy each of their plans, and why they should buy. The pricing page comes across as helpful, rather than sales-y, and keeps things simple while providing all the necessary information. Their Basic package is for those who want to “get to know Typeform”, and it offers “the essentials for getting better answers online” – ie Typeform’s main value prop.
Or, you could upgrade to Pro, which offers “more power & personalization,” like customized endings, branching and skip logic, email notifications and more. And then there’s Pro+, which has “advanced features for brands” and includes options to buy multiple seats per account.
2. Incorporate more than one value metric into your pricing
In setting up your pricing, you’ll want to have a main value metric that you believe best reflects how customers perceive the value of your product. This will become the main unit that determines what price a customer pays. (In all likelihood, it’s number of users, but make sure that’s right for you!). The thing is, you don’t need to stop there. The other value metrics on your list can become fences between different packages, guiding your users and indirectly influencing the price customers pay.
Take Hootsuite, the social media management software, as an example. Hootsuite’s main value metric is clearly the number of users. Other value metrics on their list also include the size of the team that would access Hootsuite, number of social profiles, number of app integrations, number of custom branded URLs and number of social campaigns. Each of these metrics becomes a fence between their Personal, Team, Business and Enterprise packages, which enables Hootsuite to charge 10 times the price per user for businesses compared to individuals.
3. Speak directly to your different target buyers and personas
Your customers don’t all look the same. Neither should their pricing. Having one-size-fits-all pricing automatically means that some potential buyers will come to your website and feel like you do not serve people like them. A best-in-class pricing page speaks clearly to the different needs, personas and use cases of your target buyers.
I especially love how LinkedIn has tackled this. As a first step, they ask how you want to unlock the power of LinkedIn – is it to get hired, to grow your network, unlock sales opportunities or find talent? Depending on your objective, they offer a plan (or plans) with the exact things that will make you successful.
This wasn’t necessarily a no-brainer path for LinkedIn to take. Their packages share a number of features in common – InMail™ messages, unlimited people browsing, who’s viewed your profile and advanced insights. That would have made it easy for LinkedIn to offer broad sweeping packages with more features and InMails™, but it would likely fall flat for a large portion of the market.
4. Ensure that each package has a clear role in your revenue generation
Write out the role you want each package to play in your revenue generation and set clear targets for what percentage of customers will join each tier, how many people will migrate upwards in tiers, what level of churn is acceptable for each and so forth. As Steven Forth described to me, “If a tier is not doing its job in your revenue model, ask if you got the design of the tier (and its fences) wrong or if the revenue model needs to be adjusted. Pricing should be tracked daily and management should discuss it at least monthly.”
Here’s an example: You offer a freemium package as a way to attract as many users as possible, and 1,000 people sign up for it. How do you know whether that’s good and in line with your business objectives? What’s your goal for how many of them should convert to paying customers? How much support burden and other costs did you assume that each user will take up? How much have you budgeted to acquire freemium users? Setting clear goals for freemium will make it much easier to decide how to evolve the product over time to drive the best outcome for your business.
5. Emphasize benefits rather than just features
Your Product team probably built out a detailed matrix of what features go in each tier so they could build out all the right feature permissions and settings. Did that feature matrix get dumped on your pricing page as-is, leading to confusion and eye-rolls across your target buyers? Be honest.
There is a better, more human approach to consider. Let’s look at Trello.
While their pricing page is maybe a tad lengthy, the feature messaging is crisp and compelling. Instead of saying that their Business Class package comes with role-based controls and permissions, Trello explains that you can “maintain control with immediate, one-click access removal for former members” and can “stay secure by controlling who can create public or private boards.” That sounds much more useful and interesting to a buyer, and gives a sense of what using Trello would be like.
6. Put lingering fears to rest
For many businesses, your pricing page is your top-performing sales rep. It has the difficult job of convincing your buyer to pull the trigger on their purchase, and do so right this second instead of continuing to research other options.
Slack smartly puts buyers’ fears to rest with their “Wall of Love,” a rotating compilation of tweets from their users emphasizing how much they love the product, which shows up right under their pricing. And below that they showcase that they have thousands of happy customers, including world leading consumer and B2B brands. In the words of the Barefoot Contessa, Ina Garten, “How bad can that be?”
Other ways to overcome lingering doubt include having mouseover text explaining features you think users might not understand, listing out answers to frequently asked questions and / or enabling a live chat service to help buyers who get stuck.
7. Nudge buyers with insights from behavioral psychology
At this point it goes without saying that companies can nudge buyers into making different, more profitable decisions through behavioral psychology insights. There are a ton of resources on the subject. Here are a few to keep in mind:
- Anchoring: Introducing a higher tier, more expensive package to get buyers to trade up
- Guiding: Highlighting the most popular plan to visually guide buyers to selecting it
- Simplicity: Minimizing the number of choices on the screen to reduce buyer paralysis
- Charm prices: Experimenting with prices that end in “9” – although this doesn’t always work in B2B!
- Deal effect: Making certain packages look like a bargain through pricing or communication
Evernote, for instance, focuses buyers’ attention on their Premium plan, which costs $69.99 per year. They make it look like a great deal because it includes 10 times the amount of new uploads (10GB vs. 1GB) for only 2 times the price of their Plus package, and double the number of features (16 features in Premium vs. only 8 in Plus). Who wants to pass up on that deal?
What other pricing page tips do you have? We’d love to hear from you in the comments!