How To Shape Pricing Strategy of a SaaS Product

Startups can fund growth either by spending VC money or by the money they earn from their customers. A business can use a variety of pricing strategies when selling a product or service—and, according to Price Intelligently’s SaaS Pricing Strategy ebook, a good pricing strategy is twice as efficient than improving retention and four times as efficient as acquisition. Even though, out of every 10 blog posts on growth, 70% are focused on acquisition, 20% are centered on retention, and only 10% is about pricing.

With this article, you will become familiar with the basic unit economics of SaaS products and how those metrics shape a pricing strategy. You will also learn how to create quantifiable buyer personas based on the metrics—and how buyers can influence the positioning and packaging of your product.

Learning the unit economics of pricing

Every price is a number—and it can be derived from other numbers. First of all, we need to understand what the basic unit economics of good pricing are. Doing so will help us understand whether we can calculate a proper price or we should follow a gut feeling.

While some companies prefer not to stress over pricing too much in the beginning—like Google when they decided to offer one price of $50 per employee per year in half an hour—I’m going to advocate a data-based approach.

Measuring Customer Acquisition Cost

Customer Acquisition Cost (CAC) is the cost associated in convincing a customer to buy a product or a service.

CAC = total cost of marketing and sales / ## of customers acquired

In some cases, calculating CAC may not be straightforward as it depends on your definition of the “total cost” of marketing and sales. For example, measuring advertising spend is relatively simple—but should you also include the cost of the engineering team building the latest batch of new viral features? How do you track that on regular basis?

It’s always better to look at product and marketing as a whole and include that cost. Calculating the real cost of marketing-oriented engineering may be difficult, but I had some success with training engineering teams to estimate projects in terms of budgets instead of hours or story points.

If your estimate is that a project will take $10,000 instead of 10 story points, it’s much easier to include engineering projects in your CAC. (As a sidenote: budgeting estimates are also easier to prioritize. Making a choice is easy if you know that project A will cost $5,000 in order to bring a projected value of $6,000—and that project B will cost $7,000 but bring $10,000 in value.)

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How To Shape Pricing Strategy of a SaaS Product

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The Main Thing That Has To Be Taken Seriously With Saas Apps Is Security

As Cloud software is getting popular, the danger of them getting attacked is increasing too. Companies who were previously using traditional on-premise software solutions are shifting to SaaS.

This makes it important for companies that develop SaaS products for enterprises to focus on security.

SaaS apps need to be safe because they contain a lot of sensitive and confidential data and if it is leaked it can create big problems.

This is not just a problem for the client enterprise but also for the SaaS development company as their image will be tarnished.

In this article, there are all the main things that developers can focus on to develop secure SaaS apps.

This is not an option but a necessity for all the development companies. There are so many hackers and even if companies use different methods to block un-authorized activities, they find some way.

SaaS is one of the best choices for enterprise software development needs to be the safest.Now, as the technology is developing, the methods of securing the apps are improving as well.

Earlier there were basic methods like securing the firewall and all but now the measures have increased as well.

What Are The Threats To The SaaS Apps

Before fixing all the security issues, Saas developers need to know what are the threats that they have to deal with. Having clarity of the things that need to be done makes the work easy.

More than half of the work is done when developers or testers are able to find out all the potential threats to the SaaS apps.

Below are some threats that are faced by most of the cloud-based applications and it is important to find and fix them.

Breach To Capture Data
Change In Controls And Configurations
Weak Architecture In Cloud Application Development
Loopholes in authorization policies
Insider Threats
Hijacking Accounts
Weak Control Panel
Limited Visibility Of Cloud And Its Usage
Cloud Services Abuse And Misuse
Insecure API’s And Interfaces

All the aspects mentioned above are there in the top tier of the threat list. These are common and dangerous.

There can be many other threats that developers need to find by doing proper research. Risks and threats differentiate with the nature of the application.

The category of the application also changes how the application can be vulnerable.

What Are The Best Practices That Can Protect Your SaaS Application

There are some practices that development companies can apply to increase the security of the developed applications.

After knowing the risks the team of SaaS developers can figure out the activities that they need to do to tackle them.

The applications that are hosted on the cloud are vulnerable to a lot of threats and those threats need to be tackled with care and precision.

Below are the practices that they can follow to ensure that the apps are safe and the enterprises or the owners stay satisfied:

Keep A Checklist To Review Security
Educate And Train The Employees
Educate The Customers About The Risks
Created Policies For Storing And Deleting Data
Protecting The Data That Is Sensitive

1.Keep A Checklist To Review Security

Make a checklist that ensures that all departments and parts of the apps are safe. There are many vertices in an organization that might be using this application and it is important to keep all of them in check.

All of this ensures that everything that is done is done according to the security measures.

There should be a record that says who is authorized and at what level. Any changes to these should also be recorded to find inconsistencies in the network if some problem occurs.

The list of the review can change according to the organizations, the application in use, and other factors.

2.Educate And Train The Employees

Provide training to the employees so they know the basics and some important concepts of security. This is important so they can know what are the problems and how to handle them.

It is not only the job of a SaaS development employee or security personnel to make sure if everything in the network is fine.

The security of the applications also depends on the people who use it. Teach the employees how they need to use the app, what they should share, how much they can get inside.

All this will keep them aware of how their data and authority can be misused if they reveal it to anyone. There should be workshops to let them know about the risks that are there.

3.Educate The Customers About The Risks

The customers who will use the application should also be told about all the risks. They must be told about how they should access their accounts, what they should believe, what they should report.

These might look small but these things have a great impact on people. There are companies who have started special workshops just so their customers are aware of security threats and they can keep themselves safe.

This should be done by all the companies that are using mobile application development services.

4.Created Policies For Storing And Deleting Data

There should be properly made policies that state how the data will be stored on the application and in what situations it will be deleted.

This is something that should be done for both, companies and customers. This keeps clarity between the customers and the organization and also keeps the data managed in the servers.

5.Protecting The Data That Is Sensitive

Companies have data that is confidential and sensitive on their applications and if that gets leaked or damaged they might have to face great losses.

They need to protect the data from the attacks that hackers do. There are various methods to do that.

SaaS development needs to be secure so that the data stays safe from all possible threats.

Conclusion

Custom software development is not as easy and as smooth as people think. There are many issues related to security and the architecture that have to be managed.

The world is full of risks and they increase more when an organization is on the internet.

Cloud computing is one of the fastest-growing technologies and SaaS software is taking place of traditional software in many sectors. This can be only maintained when the apps are secure and reliable.

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