There are a lot of good reasons to offer companies discounts for your subscriptions and software services. Discounting allows you to gain more market share, close more deals, renew more contracts, stay ahead of the competition, drive profit, boost customer acquisition, and etc.
But what if discounts aren’t sustainable for a long-term SaaS B2B model? And how do you know if your SaaS pricing strategy will actually make you look less valuable in the eyes of your customers?
Below we’ll go into how to price sensitive enterprise SaaS and effectively create a B2B annual discount strategy for your company.
Breaking down the short-term and long-term effects of discounting
When done effectively, SaaS can sustain long-term discounting strategies. Discounting strategies are most limited when SaaS companies haphazardly hand out discounts and free incentives without getting anything in return.
Bottom line, if you’re not selective or systematic about your SaaS pricing strategy, you’ll end up giving up services for free, offering discounts that give an ample ROI, and degrading your company’s perception in the eyes of your customers.
5 of the most common SaaS pricing discount strategies
So how do companies effectively price their SaaS discounting in a B2B model in the market? Below are five of the most common pricing strategies and best practices when offering customers discounts.
1. Offering a limited-time discount
One way to attract new customers and make your numbers is to offer a discount for a limited time. For example, you might offer a $75/month subscription for only $50/month if customers subscribe within a three-month window.
2. Rarely creating discounts, so that when you do, people act fast
In order for discounting to be sustainable long-term, some sort of discount scarcity. Whether that means you’re only offering a finite number of discounts, discounts for a period of time, or discounts only to a particular customer base, you need some kind of check on your discount availability.
3. Offering a discount on the lowest-tier option
If you want to appeal to smaller companies that don’t have as much of a need for scaling, consider selling discounts on your most basic/cheapest subscription model.
4. Offering limit services at a discount
You can add a few caveats to your discounting to offer customers a good deal without losing too much on your returns. For example, you might create a mid-tier subscription with discounts on only the basic services. Limited services discounts are a good incentive for customers to get a deal out of your subscription and to test the perceived value of your services for future negotiations.
5. Bundling services at a discounted rate
Bundling a discount package is a great way to introduce customers to the different services you offer and guarantee that you’re getting a purchase on more than one product or service.
Be wary of too many discounts
There are downsides to selling too many discounts to your customer base. If you offer too many discounts, you’ll be at risk of:
- Comprising your brand image and perception among buyers.
- Attract the wrong types of customers who are not interested in long-term renewals.
- Losing out on profit that you could have gained from a smarter, more systematic pricing strategy.
- Encouraging customers to subscribe who are not a great fit for your company's growth.
- Reducing your overall perceived LTV.
Instead, an effective discount strategy for ultimate success should:
- Spark a negotiation and encourage potential customers to think about the perceived value proposition they’re signing up for.
- Protect everyone’s best interest–both your customers and your company have things to lose in a bad pricing strategy.
- Help win customers against the market competition.
- Work together with other business levers and marketing strategies.
Sastrify helps you manage your deals and understand the overall landscape of your SaaS subscriptions
So how do you know the right brand costs, quantity, and timeline for your SaaS discounting strategy? Sastrify is one of the leading SaaS procurement solutions in the world. Our platform can help your company team budget and manage your SaaS capabilities with our data-driven market pricing benchmarks and savings potential.
At Sastrify, you’ll be able to:
- Know market data to leverage deals and costs with buyers.
- Reduce waste on your software costs for profit.
- Manage your software license and renewals so you don’t have to.
- Ensure negotiations are in line so you don’t have to.
- Take advantage of renewal alerts and contract notifications, you can create timely discounting.
- Gain the benefits of an outsourced team that has the right skills to manage SaaS spend.