Pricing strategy

How should i price my software as a service product?

Anonymous

August 20th, 2016

I am creating a technology tool for a very specialized group of consulting firms. The technology will customized for a specific type of consulting engagement/project that is a core part of their business (but not the only part of their business). This tool would be an integral part of the consultants day to day life on these types of projects.

How should I price it?

I could charge a flat fee per project and sell access to the tool that way. Possibly give a discount to larger firms that would "pre-buy" the online software for many projects at once.

or

I could price it in a traditional SaaS way. This was my original plan, but a standard per user/per month doesn't seem right since my clients might be paying "monthly" for users that might not be working on this type of engagement.


I prefer the first option actually, but I'd love to get your thoughts on what the pitfalls might be. Maybe there is a hybrid option where I charge a fee per consultant and length of the project?
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Kishore Swaminathan Creative thinker & doer.

August 21st, 2016

The simple strategy will be to price by the size of the project, something like: small (<5 people), medium (<25 people), large (>25 people). 

That said, what you need to pay attention to is how and who will administer the project accounts. 

1. It's not uncommon for a project member to leave the project but still act as a SME, come back to the project at a later point, or just come in from time to time to explain what he/she did. So, ideally, you want to keep the idea of people separate from accounts so that an alumni member still has access to his account. 

2. Many consulting projects will involve both consultants and client personnel. If the pricing is at the project level, you charge one party rather than billing different parties. 

3. If you are running it as SaaS, you have to be very clear who owns what data. While data pertaining to the project is generally owned by the client, any smart consultant will ask for exclusive or joint ownership of system logs (just in case there is any litigation). So separate the project data from the logs. 

4. In addition to charging the project, you should include a separate charge for a project admin on your side. This job can become onerous as there will be requests for vpn-based access, active directory integration, managing the accounts of employees who leave either company etc. Think this through since admin can become quite complex. 

Hope that helps. 




Bob Graham Engineering and Software

August 20th, 2016

Ask the potential customer what they think. Take this exact question and meet with 5 people who might buy it and ask them.

If you can't get the meeting, or they wouldn't buy it you have a problem.
If you can get a meeting and they say they'll buy it, asking how much and how you should structure it should be easy.

You can also call/skype them :)

Adam Bell Connecting China, ASEAN and the world

August 21st, 2016

I think size of customer could be one factor.  I'm a fan of hybrid so perhaps you could offer a padded per project fee,  but then by user,  if so with what limitation of time in terms of you have costs to provision the service,  though you could get around that maybe with an active,  inactive split on charges.  So it becomes per project,  user,  activity period. 

The additional as Kishore mentionned. 

Some element of Recurring revenue whether subscription or support is valuable otherwise cash flow becomes unpredictable.