In this month’s report, we deep dive into one of the most important elements of XaaS pricing strategy: How often should you revisit pricing?
May 2022
Authors: Bryan Belanger, Colin Naples
Pricing strategy firm ProfitWell suggests making incremental changes (such as tweaking a feature within a package) to pricing strategy every three months and making major changes (such as changing price points or introducing a new package) every six months.
While ideal, this level of frequency requires:
- Commitment to continuous internal and external data collection, often through multiple internal and external sources, including win/loss interviews, CRM data, customer and competitor market research, and product analytics tools
- An appropriate pricing organizational structure with dedicated pricing resources
- Pricing processes and technologies that facilitate frequent implementation of updates and experiments
Most midsize and larger “as a Service” tech companies that we support with pricing research are conducting pricing research on an annual cadence and make changes based on those results annually.
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The role of the competitive and market intelligence function in agile XaaS pricing strategy
Pricing strategy setting is related, but separate, from competitive intelligence tracking. In most large organizations competitive intelligence follows an annual or quarterly schedule for major projects, but ongoing intelligence is often also collected daily, increasingly with technology.
Competitive intelligence (CI) platforms like Crayon and Klue, as well as sales enablement tools like Gong, enable companies to capture competitive signals as they become available, including related to pricing. Crayon, for example, alerts customers to changes in their competitors’ pricing pages, much like XaaS Pricing.
In this way, CI provides a key data feed for pricing teams and is well-positioned to serve as a key functional enabler for pricing teams as well as a springboard for implementation of more agile pricing strategies.
As noted previously, availability of data is central to an agile pricing strategy. CI teams are often arbiters of market data. If appropriate mechanisms can be implemented and relationships can be formed, a competitive pricing intelligence program can emerge as a key driver of pricing strategy.
Any vendor seeking to implement a more proactive, agile pricing strategy process should consider how market and competitive intelligence teams can be integrated into pricing committees and processes.
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