Pricing right in a recession can be challenging. Budget cuts and a more price sensitive market are no small hurdles to a company’s success. One of the big questions I’ve heard from execs— “how do I discount to retain customers without hurting long-term ARR and LTV?” 

I recently sat down with Docusign’s pricing team: Jan Pasternak,VP of Services and Pricing Strategy, and Maggie Bouscaren, Strategy Director, for a conversation about setting a competitive price for your SaaS product during a recession. We also covered some solid advice on pricing in general.

The tl;dr is that the best pricing strategy (not the best price) will win long-term, even after the recession is over. But what are your options right now? Read on for the top takeaways from the podcast interview:

What’s your company’s long-term goal — Market share? Segmentation? Reaching into competitive spaces, even when the SaaS market has contracted? “There are multiple elements that a company can solve for. Unfortunately, usually we cannot solve for all of them at the same time,” says Jan. That’s where alignment really matters across an executive team. Because, let’s be honest, pricing often doesn’t have a definitive owner until your company gets large. So where do you start? 

Jan emphasizes a strategy of getting your executives on the same page as far as short-term and long-term goals, and then working backwards to figure out how to price your SaaS product to get you to your goals. Margins, direct revenue, reach, and churn mitigation might all be important, but zero-ing in on one or two at a time will have the most impact.

“If the value of your product has changed with this new market, are there things you can do so that you bring it back to its original state?” asks Maggie. Exploring a new use case or a way to use your product that customers haven’t taken advantage of can increase its value and allow you to keep your prices stable. 

Another value add strategy from Maggie: “If you know that certain features or use cases drive stickiness and are then less likely to result in churn, partial churn, or customers leaving you, can you proactively go in and make them your focus?” 

Alternatively, making sure that you’ve individually monetized features of a bundled offering is critical. That way, when a downturn hits you have many more levers to pull at a granular level than just slashing the entire price of the product bundle itself.

Flying blind with your pricing re-jig? Don’t. “Relatively risk free management of changing a pricing model comes in three steps,” says Jan. 

• Step One: Create model changes based on data, through online testing, A/B tests, or any other proven methodology for your company. 
• Step Two: Road test your new pricing with sales reps to gauge potential enthusiasm and pinpoint possible roadblocks to your new pricing strategy. 
• Step Three: Count on a staged rollout—by segment, or by country, depending how you want to introduce the new model.

This approach to pricing changes allows you to triple-check your work and identify potential oversights before committing to a big change in SaaS pricing.

“Think about differentiation of the price point depending on the customer situation, their needs, and willingness to pay,” says Jan. Offering tiered pricing plans and introductory offers that allow customers to get a taste of your product before fully committing to an extensive package can help get your foot in the door and make your case for value add. Those with vanilla, one-size-fits-all pricing will find themselves missing out on customers who are interested, but potentially price sensitive, especially in a down market. 
 
In addition, thinking about trends in pricing — like adding a PLG motion, offering a free trial, or switching to a freemium model — can help you zoom in on what tools will be most effective in your toolkit for the products you’re offering right now, and in the future.
 

Bundling, tiered pricing, PLG, different packaging, free trials, discounts, pay-as-you-go. These are all radically different models for how to price your SaaS product, with different practical considerations behind them. And here’s an important one: Can your tech stack even support offering these models? 

What if you want to change from one model to another, or offer more than one? If you’re getting handcuffed into a single pricing model that’s difficult to change up as the market ebbs and flows, you’re setting yourself up for disaster. 

“You have this grand idea. Everyone says ‘Awesome. Go. Execute.’ And then you realize you can't really do it in a scalable way,” offers Maggie. “It gets to the point where the strategy and the goals for growth are pushing beyond the constraints of your tech stack and then you're forced into manual steps which are vulnerable to errors and costly because it requires human capital.” If you don’t have the right tools to price right for the right economy, well, you’re doing it wrong.

“If you're set up for a more flexible and agile CPQ billing tech stack, it will allow you to be more nimble in the way you price and package and go-to-market with your products,” she adds. 

If you’d like more insights into how the pros at DocuSign are thinking about pricing, and how to apply these ideas to your business, check out our whole RevOps Review Podcast conversation with Maggie and Jan here.