Simplicity wins over most things when building an XaaS pricing model and strategy — the easier it is to make that connection (and prove the value for cost), the easier the conversion
April 2022
Authors: Bryan Belanger, Colin Naples
There is a clear trend in B2B SaaS toward increased portfolio complexity as companies scale up
In March 2022, 135 companies were added to the XaaS Pricing platform to support a partnership with B2B SaaS market research vendor PeerSignal. As part of the data expansion, we analyzed the product complexity of those 135 B2B SaaS companies by looking at their portfolios to understand how product SKUs grow with company size.
The bottom line? As the chart shows, there is a clear trend toward greater complexity as B2B SaaS companies scale up. New products and subproducts (add-ons) are added, and volume tiering models are introduced to serve a broadening array of customer types while also creating revenue expansion opportunities.
This is not surprising, but it does raise two questions: What are the types of companies that are bucking this trend and staying simple as they scale up? And what can we learn from those models?
Key recommendations for XaaS vendors
- Focus on pricing and packaging model simplicity to win in XaaS.
- Usage-defined product tiers are often the best starting point for usage-based pricing.
- Per-seat pricing may not make long-term sense, but it remains a viable current model for many vendors.
- Value-based pricing is the North Star for SaaS, but practical approaches favor market-based pricing.
- Discounting is often a slippery slope in XaaS, unless positioning and messaging are impeccable.
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