For B2B SaaS companies pricing and packaging is not just about numbers; it's a strategic lever that can significantly impact your company's growth and valuation. When a strategic buyer evaluates your business, they will delve into these aspects to gauge your company's long-term value and scalability.
Orchid Black, with its expertise in pricing and packaging for B2B companies, has identified seven key questions that strategic buyers will ask about your pricing and packaging strategies.
The buyer wants to know if your pricing and packaging strategies are designed to attract new customers effectively.
We use a data-driven approach to optimize our pricing and packaging for new logo acquisition. Our pricing model is meant to entice new buyers to sign-up, but leaves room for expansion in the future. For additional insights on where some companies get this wrong, check out Episode 72 of The Dirt.
The buyer is interested in understanding if the pricing metric you use aligns with the value that customers derive from your product.
Our pricing metric is closely aligned with customer value. We use a price metric (e.g., per user, usage based, per transaction, etc.) pricing model that scales with customer usage, ensuring that customers find our pricing fair and directly correlated to the value they receive.
The buyer is interested in your strategies for lowering the barrier to entry for potential customers and seeing if you have a freemium option.
Depends on your offering. What’s most important is that you have a “why” behind the answer either way (and data to support). If you have an offering that consistently expands after usage (typically product led growth companies), a freemium offering would be expected.
The buyer wants to understand if you have governance in place for discounting that balances new account acquisition with profitable Annual Recurring Revenue (ARR).
We have a structured discounting policy that is designed to attract new accounts while maintaining profitable ARR. Discounts are approved through a multi-step process involving sales and finance teams.
A strategic buyer is looking to discern the clarity and effectiveness of your market segmentation and the alignment of your packages with distinct customer profiles. They are evaluating whether your packaging demonstrates a clear understanding of different customer needs and how well it differentiates between service tiers.
Our packages are differentiated by a deep understanding of our customer segments. We've identified core needs across our user base and have tailored our packaging to address those specific requirements. This segmentation allows us to provide targeted solutions aligned to customer expectations, ensuring each package offers unique value that justifies its price point.
The buyer is interested in knowing if you have a standard pricing model even for customizable or negotiable packages, for example, companies SaaS commonly have “Contact us for Enterprise pricing” as an option at the end of their packages.
Yes, even our customizable enterprise packages are based on an underlying standard pricing model, which serves as a baseline during negotiations.
This question seeks to reveal your awareness of the competitive landscape and whether your P&P strategy is a strength or a vulnerability. It also reveals your own understanding of how your offerings stack up against the competition.
Our pricing and packaging has been structured with awareness towards competitors, but not deference. We've conducted comprehensive competitive analyses to ensure our offerings are acceptable in the industry, but we are positioned based on the value we provide and are not concerned with the competitor perception in the market - because we are not our competitors. This is an example of a company getting P&P right.
By preparing to answer these questions, you not only set the stage for successful discussions with strategic buyers but also fine-tune your own pricing and packaging for sustainable growth. Orchid Black's expertise in this area can provide you with the insights and strategies you need to maximize your company's value. For more in-depth discussions on B2B SaaS pricing and expert opinions, contact Orchid Black today to discuss further.
Orchid Black is a boutique advisory of former CEOs, CROs, CMOs, strategy execs, and board members. We are accomplished operators with an investor mindset and deep M&A experience.
Like an orchid, a company’s maximum value emerges from cultivating growth. Orchid Black’s unique business model not only accelerates value, but aligns our compensation with our partners’ success. We invest together, betting on a collective vision, using shared skills and expertise.
If you would like to learn more please contact: grow@orchid.black.
