B2B SaaS Pricing Blog | Pricing I/O

BLOG

Friction is a Force (of Pricing)

Updated: Jun 13

Beep, Beep! Who got the keys to my Jeep?

Skrrrt! Red light. Stop sign. Dead end. These are all limitations we may experience in our physical lives as drivers. They tell you this is your stopping point; you may not go any further unless otherwise permitted. But... what does traffic have to do with B2B SaaS pricing strategies? This type of signaling in your SaaS is called friction. When you limit your clients to X MB of data, Y hours of recording, Z number of emails, you are creating friction.


Friction: the resistance that one surface or object encounters when moving over another.

Don't be alarmed! Creating friction isn't inherently negative. Basically, friction is what allows cars on the road to slow their speed. Traction, another momentum monitor, is what prevents cars from spinning out of control. If it weren't for traction and friction, it would be impossible to safely travel on the road.


Traction: the grip of a tire on a road or a wheel on a rail.

In the same way, if it weren't for friction in your SaaS packages, there would be chaos in account management and hundreds of thousands if not millions of dollars left on the table. So, in that case friction is good.


Radio Be Patient

How long can you sit at a red light before you consider running it or changing course? Imagine waiting through an entire song playing on your radio but you're still in the same place because, while everyone else's lights have cycled, yours is still red. What does this look like in SaaS?

  • Unreasonably low usage limits

  • Big jumps from plan to plan

  • Offering only basic features in premium plans

All of these are examples of SaaS red lights where your customers wait and wait and wait. What might happen is a customer will bite the bullet and purchase the upgrade (run the light) and eventually churn because they just can't afford it. Another possibility is that they'll go to a competitor (change course) where there's less friction (more green lights). If customers cannot consistently solve their problem with your product/service, you can almost guarantee they won't remain your customer for long. Remember, friends don't let friends buy bad SaaS!


(Unlimited) Make You Lose Control

Slip, the opposite of friction, removes resistance making movement much easier to achieve. Oil and ice on the road offer quite a bit of slip. A car moving at even a slow rate can hydroplane out of control causing accidents and stopping traffic for other drivers. What does this look like in SaaS?

  • Unlimited services, such as 24/7 customer support

  • All products/services for all customers with no usage limits

  • All new functionality included, always

SaaS hydroplaning is giving your customers too much of a good thing that'll likely result in your inability to truly give your customers what they actually need when they need it. For example, tied up representatives creating long hold times.


But...


Just like friction, slip isn't all bad. Removing red lights, stop signs, etc. from the road reduces friction. In San Diego, we call these freeways. In most areas, the freeway speed limit is set to 65 mph which allows you the opportunity to get where you need to go faster. In SaaS, you'll see:

  • Limited access to unlimited features

  • Plans packaged for specific qualifying use cases

  • Specialized onboarding and training

These are examples of SaaS freeways that add good slip to the customer experience.


We Run This!

I explained how bad friction and no friction can be both tragic and helpful. Now let’s talk about good friction. When you control it, you run the value strategy! So, how do you control the speed of a car? Tire traction and brakes are your better bets to staying in your lane or avoiding a speeding ticket on that downhill highway. The minimum functions of these friction mechanisms are regulated by the government. However, the person maintaining the vehicle can customize the type of brakes and tires they put on their cars to suit their unique needs. In SaaS, you’ll see:

  • Providers setting limits on features

  • Minimums and/or maximums

  • Varied limits based on plan/use case

  • Optional add-on functionality or services in certain plans

SaaS regulation is setting reasonable boundaries for your customers while allowing customization for those who need something a little different.

Know How To Act

After all of the car analogies and Missy Elliot feed-ins, what do you do about your packaging? Score it against my FITT Checklist.

FITT: Fluency, Identity, Taste, and Transition

This blog really only scratches the surface about the last T, Transition. There’s so much more for you to explore to strengthen your pricing page. Use the checklist - it’s my gift to you!



FITT Checklist Fillable v22.2
.pdf
Download PDF • 6.36MB


96 views0 comments

Related Posts

See All