Whether you’re a start up, early stage, or established software company selling B2B software, odds are you’re thinking about or already building enterprise apps. If you’re not, take a look at this Forrester piece predicting $2.1 trillion will go into IT spend in 2013, with apps and the U.S. leading the way.
In any new marketplace, as the demand grows and the marketplace expands, the answer to the pricing question is one of the most elusive.
Look at the competition and price accordingly? Cost plus? Freemium model? Throw a dart and see what sticks?
While working with our pricing team and existing partners, I’ve learned one of the most helpful and important questions to ask when considering your application’s price is “what are you basing your pricing decisions on?” Your answers to this question will help you identify your pricing model and narrow your focus. While price is important, you should always consider price in the context of your broader go to market strategy, which could include factors such as:
1) What are the competitors’ price points?
2) How similar or different is your value prop compared to competitors?
3) What billing frequency fits your strategy?
4) What is your target market?
There are many different approaches to pricing your enterprise application, but simply asking “what am I basing my pricing decisions on?” at the beginning will put you on the right path to getting your pricing and sales strategy right, and it will put you on the right path early. From there, revisit often to ensure success.
Additional resources:
GinzaMetrics: Don’t Blindly Model Your SaaS Pricing on 37signals