Business, sales and software genius Josh Melick has recently penned a fascinating article on his blog in which he talks about the importance of a three dimensional pricing structure for SaaS sales. The core of what Josh gets at in this piece is the need for what he calls the third dimension when talking about the differentiation of packages which software developers sell. Usually we see a bronze, silver and gold option with regards to sales packages. These are most commonly differentiated by the number of users offered with each, and the amount of usage which is offered. Josh however argues that the third dimension of duration should be added, such as offering a 12 month package only.
This is the key to success for software sales, and here are the benefits which it can offer clients and the business.
The Chance to Upsell
One of the most important reasons for implementing this three dimensional sales structure is so that you can have the opportunity to upsell to your customers. As the package expiry date is approaching, you will be able to communicate with your customers the benefits of upgrading and hopefully be able to move them up to the next level, increasing your revenue.
Transparency With Customers
It is essential that businesses continue to raise prices in order to cover their costs, but doing so in one fell swoop is certainly not good for business. Alternatively however you can manage your customers as to when their package needs to be renewed, and increase their prices with plenty of fair warning. This transparency is critical to being able to better manage your customers.
This is the perfect time for you to offer great deals to your customers with regards to their prices and the duration of their deal. For example you could easily offer a customer a deal which takes their next package from 12 months to a 14 month deal, on the basis that they upgrade the package. This again builds bonds between you and the customer and will ensure that they are happy with the service and still spending money with you.
The key to any business’ success is its ability to retain customers, which this is perfect for. Offering transparency, offering clear and easy to understand pricing options and giving them the chance to opt out or in again after the 12 month mark is the perfect way for you to ensure that your customers are not going anywhere in a hurry.
All told this is simply the best way for you to keep your customers happy and to keep them on board. Additionally you can use this three dimensional sales structure to better manage your customer base. This is exactly what Josh is getting at when he discusses three dimensional sales, and why his blog post has been incredibly successful since he penned it. This is why it is important to scale up in the business.