The importance of testing and iterating pricing strategies to drive growth

In a world that is continually changing due to rapid technological advancements, global proliferation and shifting customer needs, no longer can Companies survive on one static pricing strategy. It’s imperative to be constantly launching, testing, evaluating and iterating pricing strategies in order to extract as much market value.

According to research conducted by ProfitWell, every 6-9 months is the sweet spot for making changes to pricing strategies. Even a 1% price increase can result in a bottom line improvement of up to 12.70%.

Let’s delve into the importance of how you can test and learn from executing various pricing strategies to drive revenue growth:

1. Mirror your customer’s behavior

Customer usage behavior can be a powerful window into how you can potentially cross-sell or up-sell solutions to them. It can reveal usage patterns such as minimum usage, where thresholds lie and the seasons where usage of a product may particularly increase.

For example, if a customer is on a particular monthly subscription plan to use a SaaS CRM solution, but they are starting to exceed their contact quota in certain months, you could potentially create a new higher pricing plan that enables them to peak to this contact limit without extra charge. The benefit is that your businesses will be reaping a steady flow of increased revenue each month.

2. Combat new market entrants

In a world where global market entry, particularly for SaaS and Technology businesses has less barriers, Companies face the constant threat of new entrants undercutting them on the pricing of their comparative solutions. This can be a divisive tactic to try and steal your existing customer base.

Therefore, in the heat of the moment, it is critical that Companies have the capability to quickly react to this threat and offer promotions, discounts or coupons to ensure they can retain customers and also potentially attract new customers who are considering the competitor’s solution.

The great aspect about effective promotional tactics is that they can be deployed for limited periods of time and customers can be nurtured back to full or new pricing schemes.?

3. Leverage customization for revenue gains

We are living in a paradigm where customers are increasingly demanding more personalization. Therefore through launching and testing a feature-based pricing, companies can levy charges on their products based on the features within a service, based on the actual functionality a customer wants to use.

As a result, this dynamic pricing model enables?customers to choose how they want to pay and ensures that no revenues are slipping through the cracks.

Originally published on OneBill