Salesforce is the world’s largest and most profitable sales software company, hitting an annual revenue of $17.1 billion last year. Though there might be a number of differences separating the average startup from Salesforce and its billions in revenue, there is one key aspect to its success that doesn’t involve years of growth, millions in marketing, or the most brilliant staff. In fact, it’s so small and fundamental to user experience, that it can easily go undetected: transparent pricing.
Startups, particularly SaaS startups, are notorious for skirting pricing information, and with that, are unknowingly shrinking revenue.
Pricing is the first–and often, biggest–qualifying factor when it comes to the decision-making process. As much as features, quality, and capabilities are at the forefront of a business’s mind, the reality is that potential customers want to first qualify their interest in a particular product by confirming whether it’s within their budget. After all, consumers have plenty of options, and odds are, your business isn’t the sole provider of what they’re seeking.
Put Consumers First, Not Competitors
Despite the fact that consumers seek pricing information–even if they’re not literally asking for it, many businesses continue to justify their decision against transparent pricing. The most common reason not to display pricing is the idea that competitors could use price intelligence against them.
But that line of thought places the focus on the competitors, and not giving them what they want, rather than focus on consumers and giving them what they want. In other words, to get more customers, focus on customers–not competitors. Startups need to ditch the stress of competitors using pricing against them. The reality is that if competitors want to know your pricing, they will find it, wasting your sales team’s time–a.k.a. your money–in the process
If you are concerned about competition, the answer isn’t to hide pricing but to improve your offering. It’s very unlikely that pricing alone will lead consumers to opt for your business over alternatives. That is unless your selling point and key differentiator is low-cost, in which case you would promote your prices. Either way, it sends a message to the minds of consumers.
A Lack of Pricing Doesn’t Say High-End, It Says Low-Value
We’ve come to associate a lack of transparent pricing with a high price tag. In the case of fine dining, it can be to the benefit, rather than detriment of the establishment. After all, a dessert can only cost so much, and it lends to the experience not to be distracted or influenced by cost, but rather desire. However, this isn’t the case across most industries, and it’s not actually the case amongst most Michelin-star restaurants either.
In reality, a lack of pricing isn’t generally advised or practiced amongst top brands in the luxury space, whether that’s in the high-end sports car industry or contemporary art sales at major auction houses such as Christie’s or Sotheby’s. Consumers who see the value of a product as equal to its price won’t be deterred by its price tag. In fact, in the world of the most expensive luxury goods, the higher the price, the more desirable a product often becomes, turning a high price into a selling point.
Not only does a lack of pricing transparency create a poor user experience for potential customers, but it sends some strong psychological (and largely subconscious) signals that your product or service is either too expensive or worse–that its value doesn’t justify its price. And if you aren’t confident enough in your pricing to make it public, it feels as though you also agree: it’s not worth it. And if you aren’t confident in what you offer, a customer isn’t going to be confident in your business.
Startups that become million–even billion-dollar companies–aren’t afraid of the competition price gouging as their product or service is superior and with that, their customs are loyal. And they don’t hide their pricing because they know their worth and that their audience does too. While in the early stages of a new venture, it will be difficult to achieve these things, however, the difficulty will be compounded without transparent pricing, and for many, the answer is to improve upon your offering or improve upon effectively communicating your offering–not hiding your pricing.