Pricing Strategies
Pay-Per-Feature
Pay-per-feature pricing is a model where businesses are charged based on the specific features or functionalities they choose to use within a software product. This allows customers to tailor their software package to their exact needs, paying only for what they use rather than a full suite of capabilities.
TYPES OF SOFTWARE
Modular software platforms where individual features can be distinctly segmented, such as digital marketing tools or project management software.
Software that offers a wide range of functionalities that may not be necessary for all users, such as advanced analytics platforms or comprehensive business management systems.
SaaS products that cater to diverse industries with varied needs.
BENEFITS
Job Type
CHALLENGES
Complexity in Billing: Managing billing can become complex as it must account for multiple combinations of features and usage levels.
Feature Valuation: Determining how to price each feature fairly while ensuring profitability can be challenging.
Customer Decision Fatigue: Too many options can overwhelm customers, potentially leading to decision paralysis or dissatisfaction.
PSYCHOLOGICAL TACTICS
Incremental Commitment: Encouraging customers to start small and add features as they see the value, building commitment gradually.
Highlighting Must-Have Features: Strategically marketing essential features as must-haves can drive adoption of additional, complementary features.
TESTING & FEEDBACK
Feature Usage Tracking: Monitor which features are most and least popular to adjust pricing and development focus.
Customer Feedback Surveys: Regularly survey users to assess which features provide the most value and which may need adjustment.
A/B Pricing Tests: Test different pricing for features in different markets or segments to find the most effective strategy.
IMPLEMENTATION
Transparent Pricing: Clearly communicate the cost of each feature and how each contributes to the overall functionality of the software.
Flexible Packages: Offer bundled packages of popular features at a discount to simplify purchasing decisions.
User-Friendly Interface: Ensure the interface for selecting and changing features is user-friendly, making it easy for customers to modify their feature set.
BEST FOR
B2B
FLEXIBILITY
High
The pay-per-feature model offers high flexibility, allowing businesses to adjust their software usage to changing needs over time. Scalability is also high, as customers can easily add features as they grow or as their requirements change.
REAL-WORLD EXAMPLE
Zendesk offers a pay-per-feature approach in its customer service and engagement software. Customers can choose from basic ticketing functionalities to more advanced features like AI-powered automation, access to multiple communication channels, and detailed analytics. This model allows Zendesk to cater to both small businesses that might need only basic features and large enterprises looking for a comprehensive solution, adapting the pricing accordingly to fit the size and scope of the business.
View the collection of Pricing Workshops.