In the current economic climate, it’s more important than ever to be thoughtful about your company’s pricing strategy, and to have the ability to innovate with agile and dynamic pricing as needed. So we’ve created a list of pricing challenges, from current customers and prospects alike, along with the solutions and strategies we believe can be implemented effectively in a variety of business types to solve those problems.

The overall trend is that pricing is getting more complex as companies innovate to attract and retain customers in the face of budget challenges and economic uncertainty. More use of bundling. More use of multi-factor pricing. More movement to usage and blended subscription and consumption models.

Making these types of pricing strategy changes — and finding a software solution that supports agile pricing and dynamic pricing — can deliver tangible value to customers, increase new logos, retain existing customers and help make a business run more efficiently and more in line with their overall vision. Let’s review exactly what these challenges are.

It’s common for startups to pitch their products to a broad range of potential customers, all with different needs. Your company might believe your greatest value lies in a subscription model—but then you meet a potential customer who is a great fit for a usage-based pricing model instead or a hybrid of the two. Your ability to respond quickly without breaking your billing and finance processes could be critical to your growth.

Pricing Strategy Solution: Flexible Pricing Wins the Business

Get yourself a pricing solution that allows for multiple pricing models, or the ability to change your company’s offerings from one to another quickly and easily. Cater to a prospective customer by spinning up a usage or credit burndown model on top of subscription based offerings within hours.

One of our customers approached a strategically important customer with a new subscription-based offering.  The customer, while interested, was not prepared to commit to the subscription model but would accept a usage-based model to start.  The ability to pivot the pricing in just a few hours to a commitment plus overage pricing model enabled our customer to win the business and opened up a new pricing strategy for other customers.  And because they had Nue billing as well, they were able to proceed with confidence that they could bill the usage as well.

Why It Matters: 

This type of pricing strategy flexibility is amazingly useful for startups, because it can entice customers at the early stages of a company’s growth, while reducing the customer risk that comes from signing up for a long-term subscription.

Customers love your product. But they are frustrated about how long it takes to buy an additional seat. Meanwhile, your finance team is pointing out that the cost of processing small upgrades is eating all the profit of the upgrade. But many customers have specific, negotiated pricing that you need to honor. This type of upgrade can suck up a lot of your AEs time, and ends up leaving your team with an ever changing series of quotes and invoices. 

Pricing Strategy Solution: Add Integrated In-App Self Service and PLG

Adding an integrated in-app self-service or PLG motion allows customers to serve themselves and make thoughtful changes that are right for their business in real time, without interference or the need for in-depth oversight. The customer is happier because dynamic pricing enabled them to get their upgrade in minutes at the price they negotiated. Your AEs have complete visibility into your high-growth customers so they can spot larger upsell opportunities. And your cost per sale is way down.

Why It Matters:

If your goal is customer satisfaction, then it pays to let your customers get into the weeds and make small changes on their own (adding, for example, one additional license at a time). In-app self-service can be key to ensuring customer growth without exploding headcount along the way.

Sometimes, increasing customization is right for your business. Other times, customers want to buy one-at-a-time upgrades, but you want to force a limit on how much a customer can grow under a lower priced package and force the upgrade to a more profitable tier.

Pricing Strategy Solution: Custom Bundles… With Restrictions

Creating a custom bundle allows you to control what your customer can and cannot do to their account. You can sell tiered price packages, and only allow for customers to go from one to the next, in order to cut down on the confusion of customization. For example, you can sell licenses in bundles of five, or only allow for upgrades if a customer hits a certain use threshold. 

Why It Matters: 

This strategy streamlines your upsells and maximizes upfront revenue. It creates a more efficient, straightforward land and expand process, which is still customized for each customer’s needs, while allowing you to cut down on the number of different packages and strategies going on at any given time.

Customers may love one of your products. But maybe another, related product has very low levels of enablement. This second feature or license may be instrumental in helping the first feature run effectively, or might provide value in a related way that is often overlooked. Microsoft has famously (or infamously) exploited this approach across its product line.

Pricing Strategy Solution: Sticky Bundles

Creating a sticky bundle means a customer can’t buy one type of license without another. Or that buying a specific type of license or product requires you to add on support hours. You can also create sticky bundles in increments, so that if one type of license count goes up to five, so does the other. 

Why It Matters: 

If you truly believe that one product type enhances another, sticky bundles can ensure that your customers navigate your product most effectively and have the highest chance of satisfaction upon implementation.

Sticky bundles help increase adoption of less popular products that offer a lot of value to customers, and even improve the popularity of the original product — Both of which increase revenue. They can also be used as an upsell function: bundling features into a discounted deal for early adopters (as enabled by agile pricing) may increase the use of those features in the future, and make adopters more likely to add on additional products in the search for even more added value.

Churn might be the most hated word in business. And the scariest time of the customer lifecycle is the moment when that customer reaches the end of their subscription and is faced with a decision: re-up, or cut? How can a company make churn less scary, and make the renewal process more enticing? 

Pricing Strategy Solution: Custom Discounting on Term Extensions

Churn’s best friend is friction. And its greatest enemy is additional benefits for free. A business in need of renewals can consider a plan that leverages agile and dynamic pricing to let a customer extend their term by a couple of months for free — or at a steep discount. At the same time, with the right solution, your management and finance teams can obtain clear visibility into the current MRR and the long term value of the contract.

Why It Matters: 

Even if a customer is interested in continuing to use your product, the idea of signing on for an additional package is intimidating. Prices might change. New quotes and paperwork are necessary. So, make the experience frictionless and increase customer value by using tools that allow you to incorporate and discount add-ons and contract extensions at will.

There you have it. Five real-world pricing problems, and five innovative pricing strategy solutions that can revolutionize the way a company runs its business. These strategies ensure the best chance of success for both landing new customers and expanding the current customer base. 

And if you’re looking for a pricing solution that can handle anything you throw at it, no matter how complex, specific, or flexible, Nue has got you covered. We've handled these specific pricing challenges and more! Learn more about what we have to offer here.