TL;DR
- Hiring a SaaS Pricing Consultant is a strategic decision to enhance your company's profitability and market demand without compromising quality, loyalty, and perception.
- Identify a SaaS Pricing Consultant with relevant industry experience to ensure they understand your business's unique pricing challenges.
- The ability to set and adjust prices according to market dynamics and business goals is a must-have skill for your consultant.
- Technical acumen is essential for a consultant to analyze data and employ the latest pricing tools effectively.
- Your consultant should have a deep understanding of consumer behavior to set prices that resonate with your audience.
- Comprehensive market research skills are critical for understanding the competitive landscape and customer preferences.
- Choose a consultant skilled in managing price threats to maintain market stability and customer satisfaction.
- Adaptability in a pricing consultant ensures your pricing strategies remain innovative and competitive.
- Engaging a SaaS Pricing Consultant is crucial for navigating the complexities of pricing and securing your company's financial health.
Product, Pricing, and Profitability are the three powerful Ps that drive a business. Of the three, pricing is a random “accident” where someone created a pricing model, and people have lived with it ever since. Profitability, on the other hand, is more dependent on external factors like the economic environment, production costs, market value, and product demand.
Any SaaS organization that’s used to steady profit improvement can experience a sudden, dramatic decline in revenue if fluctuations within these factors are ignored. With so much on the line, it makes more sense to hire a pricing consultant to monitor the numbers and keep the company running.
SaaS Pricing Consultant: Who Are They & What Do They Do?
SaaS pricing consultants are professionals who guide companies in pricing their products and services. The prime job of a consultant is to prevent SaaS companies from making pricing decisions without any quantitative input and analysis. Once hired, the individual consultant or the entire team works to:
- Enable price optimization for target customers
- Advise on future pricing strategies
- Optimize pricing tiers for various customer segments
- Decide on the suitable pricing model that suits the product
- Analyze pricing trends, competitor’s pricing, and customer behavior
Apart from all these responsibilities, the ultimate goal is to ensure the product generates good revenue and has high market demand. The pricing consultant is responsible for ensuring all this happens without compromising quality, loyalty, and perception.
All in all, pricing consultants shoulder the responsibility of deciding how to price your SaaS product and make it a winning deal in the market.
So, if you decide to hire an individual pricing consultant, how will you make your choice? You cannot just randomly choose someone and entrust them with this huge responsibility.
There are several parameters to tick in order to hire the right person, team, or firm. Here's the list.
8 Must-Have Criteria to Evaluate a SaaS Pricing Consultant
1. Industry experience
One of the basic aspects to tick off is whether the consultant you are trying to hire has the experience to tackle your business-specific pricing challenges. If they have already worked in a similar field, they will be able to understand the situation and deliver pragmatic and appropriate solutions. Their experience will help them break down the challenge and take the right approach to solve it.
So, look for someone who has relevant experience in your domain. If required, seek case studies or references of businesses they have consulted before to get a better understanding of their track record. This will help you make an informed decision and identify someone who can add real value to your pricing strategy.
2. Price setting skills.
A pricing consultant’s essential requisite is to know how to set prices based on:
- Product type
- Audience segments
- Market condition
- Business objectives
- Business model
- Competitor’s pricing
As easy as the term sounds, setting prices is no walk in the park. There is a lot of groundwork involved, and your candidate should be able to test the waters with pricing strategies like:
- Skimming pricing
- Penetration pricing
- Promotional pricing
- Dynamic pricing
- Value-based pricing
- Cost-plus pricing
Pricing is never a one-time effort. So, your pricing consultant should constantly be able to assess the performance and make necessary adjustments. They should work in tandem with your team, understand your objectives, constraints or limitations and work on a strategy that aligns well with your needs. Ultimately, their price point should ensure good ROI, maximize revenue, and protect your profit margins.
3. Technical skills & industry expertise
How tech-savvy is your pricing consultant? In this digital age and time, your candidate must be up-to-date with the latest pricing technologies and best practices. Businesses must be able to adjust to the constantly evolving pricing landscape.
Thanks to the rapid advancements in the tech landscape, new pricing tools and technologies are constantly evolving. A tech-savvy consultant can help you identify and leverage the best pricing technology for your business.
Moreover, pricing decisions involve some serious analysis of your business data. A pricing consultant with some tech background would be able to collect, analyze, and interpret all this data and help you gain valuable insights about your customer behavior, market trends, competitor’s pricing strategies, and more.
In short, having a consultant with tech expertise will ensure you stay ahead of the competition.
4. Consumer awareness
A consultant familiar with your business model and product should know your target audience to set the best price point. This decision is based on:
- The consumers’ perception of your products
- What they consider to be valuable
- Their specific requirements
Because consumers make decisions based on psychology, their emotions must be prioritized when making decisions. Consultants are likelier to set the best price when they understand how customers think.
5. Market research ability
Is your consultant ready to make a comprehensive market study before recommending a pricing plan? Market research is not a one-day task. So, ensure your candidate is prepared to deploy multiple approaches, like:
- Data analysis
- Surveys
- Interviews
- Discussions with focus groups
- Experimentation
Their market analysis should cover various aspects like production, distribution, and operational costs. Another important aspect is your competitors’ strategies, price points, and offers. Market research also includes price sensitivity analysis. Your consultant should be able to measure this parameter by using price elasticity testing. All these market research efforts make it easy to:
- Understand the impact of price changes on customer demand.
- Validate new products or services.
- Zero in on identifying customer value drivers.
- Categorize customers based on their purchasing power.
- Compare prices with other competitors.
6. Manage price threats
Are you aware of the “price war?” It is a tool companies use to thwart any competition in pricing and is both an external and internal threat. Companies often make erratic changes to their pricing to thwart this risk. However, such steps could sometimes destabilize the market. This is where a pricing consultant can help.
Pricing consultants play a critical role in navigating the complexities of the pricing landscape and help mitigate an imminent threat from these price wars. By leveraging their extensive experience in market research, they help you with data-driven strategies to handle the competition rather than arbitrarily assigning inappropriate discounts.
This way, they ensure that your consumers are neither confused nor dissatisfied with the changes in the price points. Thus, by engaging with a pricing consultant, you can take control of the pricing situation and prevent any adverse impact on your business.
7. Agility and adaptability
A consultant’s agility to keep up with the pricing advancements and to help you navigate through uncertainties is a key prerequisite. Their technical adaptability lets you capitalize on opportunities to gain a competitive edge. Additionally, their keenness on the latest tech developments will be handy when picking the best tools to solve unexpected pricing hurdles.
Also Read: API Pricing Models: Monetization and Pricing Strategies Explained
Summing It Up
There are no tailored pricing solutions for SaaS companies. What works for you may not work for your competitor, and vice versa. That’s why you need a professional hand to guide you through these complexities. Hiring a SaaS pricing consultant could be one of the best decisions for your organization. So go ahead and do it.
If you need any guidance with implementing your SaaS pricing, our Togai team is here to help. Send us an email or make a call, and we’ll gladly lend our expertise.
