The Opaque World of SaaS Pricing

Today most companies say they are customer-centric and try to make the sales process as frictionless as possible. At the same time more and more (most?) enterprise SaaS companies do not share their prices online.

SaaS companies lack of pricing transparency is possibly the single largest area where they put their own profit objectives above their potential customers interests. 

Pricing Driven by Profit Maximization (in the short run)

The reasons behind the practice are fairly straightforward. It is usually a combination of a few factors. The ticket price is perceived to be high and the SaaS companies try to get each customer to pay as much as possible. Not being open about the price point also helps keep competitors at arms length, or so the theory goes.

A person counting the cash.
Photo Credit: Alexander Mils

In all fairness we will agree that sometimes a solution can be complex and just sharing a price does not necessarily help. However, this is usually the exception rather than the rule. Typically a solution is not so different from everything else in that sector that it would be impossible to compare prices. 

A Perceived high price

Not sharing the prices then seems more like the SaaS company fearing that the price will scare possible customers away. They would much rather speak with you to build a value proposition that is just right. 

Done successfully the sales presentation will defend the pricing. Otherwise, the potential customers will remain unconvinced and take their business somewhere else. 

Worrying about competitors

In an increasingly competitive landscape, a lot of the SaaS companies also worry that being open about their pricing makes it easy for competitors to undercut them.

The counter argument here I feel is that if the solutions provided are so easy to switch out then maybe the focus should be on providing better solutions. There are a lot of great SaaS companies out there with solutions that are clearly better than the competition or offer unique features. Still, a lot of them go to great lengths keeping the pricing information away from everyone, also their potential customers.

Profit maximization

Another reason for the lack of pricing transparency is that not sharing the price allows for maximizing the price for each customer. 

A person hand with thumbs up sign.
Photo Credit: Nataliya Vaitkevich

This idea builds upon the first point where the SaaS company withholds the price until they have presented a value proposition. The better that pitch is and the more interested you seem, the higher the price you will end up with.

Having seen a multitude of different approaches to this I have always believed that these approaches are short-sighted. Operating in a world where you hope your customers never speak to each other in fear of what they might find out is not ideal, to put it mildly. 

The High Friction Sales approach (hurts in the long run)

The lack of pricing transparency leads to an awkward song and dance when speaking with a SaaS sales rep. Especially lower-level reps rather not say what the cost is before really having primed you for the potential benefits.  

This insecurity of a solution’s actual value is contagious and I always found it makes the initial sales process harder than it should be. Most likely it also leads to a lot of potential customers never even making contact. 

Call for Quote

Nowadays almost all procurement processes start online with someone doing some initial research. Little is as frustrating when looking for a companies’ prices on a “Pricing” page only to find “Call for Quote” instead of any actual prices.

If this is the case at your company my strong advice would be to immediately look at how you at least can word it differently. Having a pricing page with no prices is getting off on the wrong foot. 

Maybe you are able to offer something for free to start out differently. If not then just removing the “Pricing” page with no prices is likely a net benefit rather than a loss of interested prospects.

The Atlassian Way

The fact is that more than half of all large private and publicly traded SaaS companies choose not to divulge their prices on their websites. With the majority choosing this approach isn’t that proof it is the best way to go about it?

Atlassian is an Australian SaaS behemoth in the software development and collaboration tools space. They provide popular solutions like Jira, Trello, and Confluence, favored tools at most development companies around the world.

And their prices? They are all right there on their website for all to see. The reasoning behind their openness is discussed in this great blog article on 8 Principles to Guide SaaS Pricing Strategy. The post is worth a read whether you are a SaaS customer or vendor.

Maybe their single best reason to approach pricing in this way is their point “#4 Give everyone the best price”. So simple, but seemingly so difficult for most SaaS companies.

The Proquri solution

Our simple mission is to empower all our customers with the knowledge of how SaaS solutions they might already be using or are interested in using are priced. We collect prices and terms from audits we perform and use them when benchmarking solutions and advising customers.

Clear light bulb on a black surface.
Photo Credit: Pixabay

If you are interested in saving money on your next SaaS procurement while getting better terms and doing so in less time then we hope to hear from you.

You can find our prices here and contact us here. Oh and if we fail all together to help you save more money than our cost is you do not pay us at all.