One of the issues that B2B software companies, which are seeking to market their products in international markets are struggling with, is whether it is advisable to openly and transparently publish the software prices on the company’s website.There are three approaches:
- The first approach holds that prices should not be publicized, fearing that customers would be deterred by the prices even before they make contact with the company as well as in order to prevent exposure of this sensitive information to competitors. In other cases, the companies are interested in adjusting the offer and the price to each customer, and they are required to conduct a process of personalizing the proposal and the correct pricing for each customer.
- A second approach, led mainly by software companies selling according to SaaS model, holds that the full pricelist should be publicized on their site since it is an integral part of the SaaS model – this is sometimes without giving it a thought whether this step will be beneficial to them.
- Companies that are debating this issue.
The second approach gains much popularity, particularly with companies with a product on the cloud or a sales model of SaaS – and in most cases justifiably.
However, as we have seen, there are also substantial reasons why prices should not be publicized, the most prominent of which is not to provide such sensitive information to competitors.
How does one decide?
To help you make an informed decision on this matter, we propose, as part of your marketing strategy, to consider a set of parameters:
Product complexity and the nature of the sales process
The more the product is associated with the SaaS model, meaning a no touch type sales, the more likely we would desire to publish the price on the site.
Such sales are often related to online marketing in general and inbound marketing in particular. Potential customers reaching the site evaluate the product, including its price and might choose to try it. If the experience is positive, they will choose, at the end of the trial period, to insert their credit card details and start using the full capabilities of the product. In such cases, the purchase is made online, via the site, so it is natural that the price will be published there – otherwise the sale will not be realized at all.
It is important to know our target customers and their typical purchasing processes. If, indeed, the information about the price is important to the customer in order to make a decision while browsing the site and making an order then perhaps we should provide him with this information. If this question intrigues the customer but is not material to the stage in question, then we may want to avoid discussing the price before we are confident (after talking to the customer) that our value proposition is clear to him and he understands what he will pay for and what he will receive.
On the other hand, if it is a complex or an Enterprise product, which requires on-going manual human involvement of salespersons (whether in the field, in meetings and demonstrations or by an inside sales team) and maybe even involvement of technical roles at the sales stage – it may not be right to do with a simple web price list.
One should be keep in mind that your product may be on the cloud and even priced in a monthly SaaS model, and yet the sale might be more similar to traditional Enterprise sales, which requires deeper understanding of the customer’s needs, a number of meetings or other interactions with various functionaries, special adjustment of the price and even a demand from the vendor to send a formal quotation. This depends of course on your target customers: if it is a bank procurement manager or an IT manager in a hospital who is interested in purchasing a product that has a high total cost, do you see them easily providing the business credit card and making a classic no touch purchase independently? On the other hand, with small and medium-sized companies or hi-tech, start-ups and software companies – this acquisition process is perceived as more natural.
Pricing complexity
Your pricing complexity may also affect your decision. Pricing should be simple, so that it is easy for the customer to purchase. However, sometimes circumstances do not allow this and require a pricing model based on several dimensions such as the number of users, number of records (such as number of contacts in the CRM system) as well as additions of advanced modules or integrations to third party systems, and more. In these cases, it seems that it will be difficult to present the prices in a simple and light Internet format and more discussion is needed on the aspect of the value before reaching the price issue and “tailoring” the proposal to the customer’s measurements.
The attractiveness of the offer
Another factor to consider is the level of attractiveness of your product and offer. The cheaper you are compared to your competitors, the more logical it is to display it on the site – because you have some advantage. Nevertheless, something substantial has to stand behind this price, because otherwise your competitors will be able to quickly compare and adjust their prices.
In cases where the low price is an integral part of your product, your marketing strategy (as opposed to an arbitrary decision to sell cheaper), the value proposition to your customer, and your Unique Selling Proposition (USP), the feasibility of advertising the price will increase. For illustration purposes, take for example an innovative product that constitutes an alternative to hardware based products such as the traditional firewall and VPN, and which offers a better solution for securing network access. The product is based solely on software, is offered as a Network as a Service and at low prices. In this case, the price is an integral part of the product’s uniqueness (USP) and therefore it would be most likely to be expressed by posting it on the site.
Too expensive? Never mind
What if your prices are nonetheless too expensive and you are afraid to scare away potential customers? In such cases, you should remember:
- At times, a high price constitutes a quality indicator for customers, so it is not certain that in terms of positioning this will not be a positive move.
- Attaching testimonials of recommending customers on the price page as well as case studies on the site will inform potential customers that there is a return on the price and reduce the perceived risk of purchasing from you.
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