Josh Melick has been all a lot of people in the SaaS world have been talking about of late, owing to a piece which he wrote on his blog about the errors which so many SaaS providers have been making on pricing. What Josh was trying to get at in his piece was the importance of something that he cals three dimensional pricing.
Josh is referring to the tired price structure which many use — bronze, silver, gold for example. Usually these tiers offer an increase in users and usage as you move up. These are what he calls the first two dimensions which sales teams are offering. The third dimension which Josh discusses is time, or more specifically, a time limit. Instead of contracts which roll on month by month, sell a 6, 12 and 18 month contract. One of the clear benefits of this is the ability to upsell, and here is how your team can use this renewal point to upsell.
Knocking Off Points
Josh describes how beneficial this expiry date is with regards to pushing up prices. This is something which all businesses have to do, yet there are certain ways and means to go about it, which will keep the customer sweeter, such as a natural expiry and renewal process. With this in mind, SaaS businesses can use this increase as an upsell. To do this simply offer the next package up, which is going to be 7% more expensive than the previous year, yet offer it at just 5% if they upgrade.
Another great way in which the business can upsell is to bundle software suites together. Offering a customer two or three extra software products if they upgrade could save them money elsewhere. That may inspire them to upgrade with you and have all of their products under the same roof. There is no doubt that all SaaS providers have the capability to do this, given the range of software products which they work on and sell.
The Increased Time Offer
Offering some months free if your customer upgrades their package is another great idea which could be enough to convince your customers to take that step. instead of offering them a 12 month silver package, let them know that they can get 2 months for free on the gold package, and lock them down for 14 months. This will entice them to stay and it means that you can count on them using gold for a full year, in the hopes that they will like it enough to stay there in the future.
There are so many ways in which you can use this third dimension as a method by which you can upsell to clients. You will also be able to have more interactions with the customer which gives you a chance to give them world class customer service, further strengthening their bonds and loyalty towards you.