Can I raise the price of my SaaS product? How to do a low-cost survey to find out
Posted: Sun Jan 19, 2025 8:33 am
Those of us who work in marketing know that choosing an appropriate price for our product is not just based on putting a fixed percentage on the production costs of the product. We work to build a solid brand that adds value to our product so that our customers do not pay only for what we sell or for everything that our brand represents. Branding helps us achieve more elastic prices since our buyers are willing to pay a few euros more for us. But, is it time to raise the price of my SaaS product? In this article we will discover how four questions can help us define the price sensitivity of our clients or potential clients. Without an adequate sample, they will canada email list not give us reliable data with which to define our business strategy, but they are a starting point that will help us orient ourselves.
Asis Gónzalez de Castejón, Client Development Director at Nielsen , explains that the Van Westerndop method is “a reliable methodology for setting price barriers” and it is also very simple! This model helps us define the maximum amount that a customer is willing to pay for our product and the minimum price at which they would doubt its quality.
The model is based on asking four simple questions in which the respondent defines what price he or she would consider very expensive, expensive, cheap or very cheap for our product. The answers to these questions will help us see how our customers or potential customers respond to our prices and to know how sensitive they are to them.
The four secret questions and what they tell us
Four questions are enough to find out how sensitive our customers are to the price of our product.
What price do you consider cheap for X product?
What price would be so cheap for X product that you would doubt its quality?
What price would you consider expensive for product X but would you be willing to pay?
What price is so expensive for product X that you would not buy it?
Once the data has been collected, a Cartesian graph is constructed with the price on the x-axis and the percentage of respondents on the y-axis. Don't worry! If this sounds complicated, there are free tools where you just have to enter your questions and answers and they will calculate it for you. The data will help us discover four very important data or points about our prices:
1. Point of undervaluation:
Is something ever too cheap? The “too good too be true” also exists when we talk about the price of our products. Lowering the price does not mean that we will generate more sales. There is a point at which, if the price is too low, our client will doubt the quality of our product. This point is called the undervaluation point. “Some companies think they will gain market share by lowering the price and the opposite happens,” explains González de Castejón. If the price is too low we can devalue our product and the client will not buy it due to lack of confidence. A very risky technique in which we can lose money and something much more important: brand value.
2. Overvaluation point:
What is “ too expensive ” for our customers? This point helps us define what is a price so high that our customers would not pay it. It helps us to keep our feet on the ground and understand the real value of our brand or product. The overpricing point helps us identify when something is so excessively expensive that we would lose customers.
3. Optimal price point:
This is the point where the percentage of people who think your product is too expensive is the same as those who think the product is too cheap . This is the price that helps us find the middle ground.
4. Point of indifference:
The indifference point is where the percentage of customers who think the price is expensive is the same as those who think the product is cheap . “This is the point where most consumers are indifferent to price,” says González de Castejón.
Asis Gónzalez de Castejón, Client Development Director at Nielsen , explains that the Van Westerndop method is “a reliable methodology for setting price barriers” and it is also very simple! This model helps us define the maximum amount that a customer is willing to pay for our product and the minimum price at which they would doubt its quality.
The model is based on asking four simple questions in which the respondent defines what price he or she would consider very expensive, expensive, cheap or very cheap for our product. The answers to these questions will help us see how our customers or potential customers respond to our prices and to know how sensitive they are to them.
The four secret questions and what they tell us
Four questions are enough to find out how sensitive our customers are to the price of our product.
What price do you consider cheap for X product?
What price would be so cheap for X product that you would doubt its quality?
What price would you consider expensive for product X but would you be willing to pay?
What price is so expensive for product X that you would not buy it?
Once the data has been collected, a Cartesian graph is constructed with the price on the x-axis and the percentage of respondents on the y-axis. Don't worry! If this sounds complicated, there are free tools where you just have to enter your questions and answers and they will calculate it for you. The data will help us discover four very important data or points about our prices:
1. Point of undervaluation:
Is something ever too cheap? The “too good too be true” also exists when we talk about the price of our products. Lowering the price does not mean that we will generate more sales. There is a point at which, if the price is too low, our client will doubt the quality of our product. This point is called the undervaluation point. “Some companies think they will gain market share by lowering the price and the opposite happens,” explains González de Castejón. If the price is too low we can devalue our product and the client will not buy it due to lack of confidence. A very risky technique in which we can lose money and something much more important: brand value.
2. Overvaluation point:
What is “ too expensive ” for our customers? This point helps us define what is a price so high that our customers would not pay it. It helps us to keep our feet on the ground and understand the real value of our brand or product. The overpricing point helps us identify when something is so excessively expensive that we would lose customers.
3. Optimal price point:
This is the point where the percentage of people who think your product is too expensive is the same as those who think the product is too cheap . This is the price that helps us find the middle ground.
4. Point of indifference:
The indifference point is where the percentage of customers who think the price is expensive is the same as those who think the product is cheap . “This is the point where most consumers are indifferent to price,” says González de Castejón.