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Recession Buster #5: Refresh Your Pricing Approach

By now, your sellers are running around trying to close. The reality is that customers have put a stop to deal-making until they understand how their companies are going to be positioned in this recession. This is to be expected when stock markets are crashing, and investments are drying up. However, it is essential to anticipate the pressure your customers and prospects might put on you when it comes to pricing. Procurement and finance teams might be unwilling to consider investing in your SaaS solution or at least might consider a downgraded version of your solution for now if they see the true value in it.

Now is not the time to give up and to fall into the discounting spiral. It is the right time to be creative with pricing options and to refresh pricing strategies and tactics to account for this shift in market dynamics. What does that mean in reality? Here are seven points to consider:

  • Revisit your product and pricing packages to make sure customers and prospects have more choices. If you are offering a single package today, you are offering a YES or NO solution only. Moving to a good/better/best packaging strategy might be a better option for now.
  • Add more value to your packages to make the offer more attractive. You can do this in multiple ways. First, you can include add-ons into your packages to beef up the value. Second, you can accelerate your product roadmap and include innovative and high-value features as part of the revised offers. Third, you can create new bundles at a lower price to the customer than buying the components separately.
  • Consider adapting the ratio of upfront annual platform fees versus usage-based variable fees. Prospects might be more interested in paying less upfront than being put on a consumption-based pricing regime. Make sure you explain the pluses and minuses of both options.
  • Consider offering a 90-day free trial for prospects who are on the edge of buying. The “cheapmium” model is also a good option. In that case, you offer three months at a fraction of the normal pricing. Make sure you set up the customer fully in your system and you delight them during the trial period. For that, value realization teams can create miracles!
  • Modify the tiering of your pricing structure and consider lowering the bottom level tiers so that prospects start using the platform right away and benefit from greater discounts faster as they scale.
  • Make a stronger connection between pricing and value. Speaking in terms of ROI and payback might be more compelling than just speaking pricing. I know that in a downturn, customers worry less about payback and ROI and are focused on the acquisition price. But it is worth having the value conversations even if they are tough right now.
  • Include special incentives for faster adoption or a greater share of the wallet. Introduce special one-time end-of-year rebates or bonuses to promote proper adoption or usage behavior.

The natural reaction in times of crisis is to increase discounts and to close deals at any cost to keep the lights on. There are things you can do without giving away the farm. Pricing can be a creative and innovative tool to accomplish remarkable success while delivering more value to your customers and prospects.


Bio

Dr. Stephan Liozu (www.stephanliozu.com) is the Founder of Value Innoruption Advisors (www.valueinnoruption.com),  a consulting boutique specializing in industrial pricing, digital business, and value models, and value-based pricing. Stephan has 30 years of experience in the industrial and manufacturing sectors with companies like Owens Corning, Saint-Gobain, Freudenberg, and Thales. He holds a Ph.D. In Management from Case Western Reserve University, and has written several books, including Dollarizing Differentiation Value (2016) and Value Mindset (2017).