David Cummings on Startups

Benefits of Price Transparency

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David Cummings

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Earlier this week I was asked about my thoughts on publishing product prices and general price transparency. Whenever I visit a website, especially for a Software-as-a-Service (SaaS) product, one of the first things I do is go to the pricing page and try and understand how the company positions themselves in the market. Overall, I’m a big fan of price transparency on a SaaS site for a number of reasons:

  • Provides potential customers more information in an effort to empower them as much as possible
  • Creates an anchor for sales people to work with, and is especially great when combined with a no/limited discount policy
  • Makes it clear how customers are segmented by way of product functionality
  • Sets expectations around freemium products, if applicable (e.g. if the product is free, then the provider makes money off the users)
  • Allows for custom pricing options so as to capture more value and provide a different level of service to high-end customers

Personally, I’m a practical personal that wants to empower buyers, and I think price transparency is a critical component of that.

What else? What are some other thoughts on price transparency?

Comments

6 responses to “Benefits of Price Transparency”

  1. Simon Avatar
    Simon

    I don’t understand why you wouldn’t be transparent about your price. Surely that’s just going to scare customers away?

    Reply
    1. Chad R. Avatar
      Chad R.

      I looked at a company the other day with “stealth” pricing. I immediately looked up one of their competitors. I bought from the competitor. The ultimate worst case scenario for the stealth price company.

      Reply
      1. Simon Avatar
        Simon

        Pretty sure I would do the same. Every time.

  2. lance (@lance) Avatar
    lance (@lance)

    Not listing your price does four things from my perspective. It indicates that your price is high. It leaves the impression that your product is complex or perhaps not a product at all. It forces the customer to take some action that they might not want to take to find out the price. Indicates that you are not truly a SaaS company.

    Reply
  3. endeavordave Avatar
    endeavordave

    I agree! Love your points on enabling the sales force and customer segmenting. Spot on!

    Reply
  4. Mimiran (@Mimiran) Avatar
    Mimiran (@Mimiran)

    The only good reason to not list prices is because the solution and buying process will be so complex that the price will be custom. Want to build a house? You can get some guidelines, but the ultimate price will depend on the details. Agree that in the SaaS world, it almost always makes sense to publish prices. You can always add an “Enterprise Plan– call us for pricing” at the end of your pricing matrix.

    Reply

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