Tactical Sales Pricing

Sales pricing seems pretty straight forward, and on a basic level it is. Simply set the price at above your costs done, short blog post now I can go get a beer.

But like an TV infomercial, but wait, theres more. 

Theres more than meets the eye –

If your business is a SaaS business with recurring revenues then your pricing could be adjusted to reflect the confidence you have in the client renewing, this could mean you can lower the pricing below the initial years contract since you have high confidence the client will renew in the second year, this lowered cost, gives you a competitive advantage pricing wise against competitors who may have different churn rates.

Another example is with a company I worked with where they were charging ‘pre paid cards’ of 1 hour, and their numbers reflected that it took users almost 9 months to fully use up the card, if at all… since their business was selling these cards, it was a great deal for the user since each usage was only a few minutes and they only had to use it a few times. Since the cost to cater for these customers was negligible, the focus was mostly on how to increase the revenue more effectively.

In the current model we can assume that 60minutes cost 60 dollars, so over 9 months usage thats around 6 dollars a month or a 6minute usage. 

We can do a couple of things to optimise the pricing tactically, to gain some incremental income, you could choose to use one or a combination of a few and test. The bottomline, as you will see is that by applying these tactics incremental revenue can be gained.

  1. Adjust the prepaid card cost of time – if we know its averaging 6 minutes per month – we can increase revenues simply by saying that each minute costs more, e.g. 2dollars a minute, at the same usage results in 120 dollars a card
  2. Adjust the duration of the card – currently the card is for 60minutes, if we know that usage is roughly 6min per month, selling a 5minute card and using CRM to constantly resell, means that firstly the user will always need to buy an additional card to make up the short fall of 1 minute and 2 there’s always excess credit driving the user to repurchase
  3. Switch from per minute charging to per unit charging, since we know usage id 6minutes per month, we could charge on number of units per month instead, since we can estimate that 6min usage is actually 3 sessions of 2 minutes, if we charge 3dollars per session, then instead of 6dollars we’ll get 9 dollars

So as you can see, you can use pricing tactically to optimise revenues. And support crossselling and usage.

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