IMPORTED FROM SKOOL
Original Post was posted by Jose Veloz on Sep '24
I work in a CaaS (Communication-as-a-Service) firm offering communication APIs for SMS, Video, Voice, etc. For some of these APIs we offer usage-based pricing. We are mainly a sales-led organization with AMs in each region targeting and acquiring local and international customers.
Problem and impact: one the APIs is in a highly competitive, mature stage. We offer Sales several tiers of pre-approved prices per volume thresholds to increase deal velocity. Impact:
- Sales quoting highest volume thresho… See more
Jose Veloz • Sep '24 (edited) Thank you so much for your thought-provoking questions. 1. Incremental tiered pricing and pre-pay are great ideas to mitigate the risk of overestimating customer usage from sales. The challenge comes precisely from the usage-based model in place, namely: it’s pay-as-you-go, i.e., post-paid. Nevertheless, your pre-paid idea it’s good for a couple of reasons: 1. Better-fit customers who see the value and are willing to stay for a while to justify the upfront payment; 2. It would genera… See more
Ulrik Lehrskov-Schmidt • Sep '24 Here my 2-cents: 1) If X is a commodity, then be price competitive for X. But also offer a ‘Y’ (added offering: E.g. Services, SLAs, other functionality etc) to monetize better. 2) procurement will focus on the price of X (with known benchmarks) less on why = shift price load from X to Y. 3) Y can be a mandatory purchase (e.g. platform fee / service fee etc). 4) Offer ultra competitive prices for X… but force them to pay a large entry fee to offset (thus taking all profits up front, but delivering a… See more
Jose Veloz • Sep '24 Thank you Ulrik. Magnificient points. 1-3.) The current price architecture should be reviewed. Focusing less on the core metric, and looking for pockets of revenue found in MRR fees, and start, exit fees, and managed services 4) This would make the demand and revenue per customer smoother, as you mention in your book. Higher cost for small customers, less (and distributed ) cost the bigger the customers. 5) Good point as shared by 6) What do you mean with this… See more
Carsten Kunkel • Sep '24 re#6: I guess this means removing discounting option for sales entirely re #7: Ulrik’s key point is to only give one-off discounts. Either for actual one-off items like onboarding PS or as time-limited discount on recurring payments (e.g. Only discount the first 3 period while keeping the list price for any subsequent period.). This helps safe-guarding your recurring revenue.