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Written by Catherine Pearson Content Writer
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19 Sep 2019  |  Moving upmarket

Selling to Teams for the First Time: Is the Price Right?

4 minute read

You’ve been selling your SaaS product to professional individuals for a while now and have seen the potential that your product has within teams. Great news - you’re making your move upmarket by selling into businesses! The big question before you launch a team plan, however, is how best to price your product. We take a look at pricing for teams, from the way your pricing impacts customer perception of your business to the best team pricing plans.

There are three important considerations before you begin selling to businesses. These are:

  • Make sure your product is optimized for selling to teams. You can do this by checking out the lessons we’ve learned from SaaS companies who built their product for teams.
  • You may want to consider a Sales and Success function in preparation for selling to businesses, especially if you’re planning on offering an array of team plans that include a sales-assisted option for big teams. You needn’t assemble a big Sales team if you plan to offer only self-serve billing options, but a Sales and Success function can bring a lot of value, from assisting in the onboarding of your new customers, to retaining them and upselling to them. Take a look at our blog on putting together a sales team for growth for the dos and don’ts of setting up a sales team from scratch.
  • Ensure your billing is optimized for your product and how your customers want to buy. This is the area we’ll be delving into during the course of this blog, looking at how to price your product right - for you and your customers.

Company perception is important

Price optimization doesn’t just affect your revenue - your decision will impact how your customers see you.

Price your team plans too high and you run the risk of damaging the trust that your individual professional consumers placed in your product and your brand (or the impression other companies had of you from positive feedback from individual consumers). Price too low, however, and you’ll lower the perceived quality of your product. Ever seen a cheap iPhone? Us neither. 

You want to avoid any negative repercussions from pricing your product too low, for example establishing an unsustainable model where your customers expect to pay very little to get updates or additional features that you could have received more value from.

It’s important to look at the price you’re charging for a single license and make sure that you’re pricing up a team plan fairly in light of this figure. Unfairness, or perceived unfairness, where customers know or think that others are getting a better price can hurt your business.

Price perception matters, too

The figure on the page can make a big impact.

Reducing the left digit of your price by one, often referred to as ‘charm pricing’, is the simple but surprisingly effective method of knocking one cent off your price to give the illusion of a product’s total being far lower.

According to psychologists, a product marketed at $49.99 is registered by the brain as belonging to a lower cost threshold. Essentially, the customer reads $40.00 instead of $50.00. The latter would appear at a glance to be a steep price hike.

Choose the right billing model

Before calculating prices for team packages, it’s crucial to first determine your value metric. Put simply, this is what you should be charging your customers for.

What value does your product bring to a team? What’s more valuable to a team - access to certain features, unlimited usage or the number of people who can use or access your product? Ensure you’re aligning the value your product is delivering with how the business is paying. Once you have a clear idea of what you should be billing for, it’s time to choose a billing model that’s right for you.

Let’s take a look at the most popular billing models in SaaS and how they work for selling to teams:

1. Usage-Based Billing / Pay As You Go

Customers only pay for what they use through a service.

Customer engagement platform Twilio offers a contract-free plan where customers pay for what they use. This gives teams greater flexibility with the product as they don’t have to worry about how many users they should sign up (or removing users who stop using the product).

2. Tiered Billing

Billing options are offered in different tiers, with each tier employing a usage cap.

DropBox Business always charges a team per user, with the cost per user increasing the more storage and features the team requires for their members.

3. Per-Seat Billing

The price-per-head option when your customers value the number of people with access to your product.

This is a very popular model for teams as very often a product is more valuable the more users within the company have access to it. See the DropBox Business example above.

4. Freemium

Offering a free, basic version of your product or service with the incentive to upgrade.

A freemium product can be a great way to encourage professional individuals to get familiar with what you have to offer. When their team needs something similar, your product will be top of mind - and likely downloaded already!

5. Per Seat Tailored Billing

You only charge a team for the number of users with a particular access level.

Digital design platform Sketch enables teams to have unlimited viewers and only charge for ‘contributors’ who have editing and upload access.

Want to focus your attention on the three things you need to consider when moving upmarket? Paddle helps you scale, taking the hassle out of your billing, sales tax, compliance and more so you can focus on selling to teams. Try our demo today.