Video: How to Pick a Value Based SaaS Pricing Metric?
The idea that customers want to pay for value is too simplistic - and often wrong. Really what you want is not correlation to value - but correlation to demand.
The core idea that if pricing tracks value customers will want to pay for it is wrong.
Or rather: it's not that simple.
Because SaaS founders often mistake a value based pricing metric for a metric that correlates with - or 'tracks' - value. But this misses the key components of time, investment a and risk.
To really pick a 'value based pricing metric in SaaS you need to understand the customers value chain - what steps your customer has to go through to generate value from the solution you are selling them.
Early steps in the value chain = Costs.
Late steps in the value chain = valuable outputs.
'Value' is one of the 4 key parameters in evaluating a pricing metric, but arguably the most important one as it is the key to unlocking customer demand (the others are Operational Viability, Fairness and Density).
Check out the video below: