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MenuHow do I calculate discounts for pricing plans for bigger volumes of a product?
We have three pricing plans in b2b SAAS. We charge our customers price = cost (cloud provider) + overhead (our service). let's say our overhead is 20% for cheapest plan. We want customers to buy or upgrade to more expensive plans by making our overhead lower (e.g. 15% overhead). Is there a good financial / optimisation approach which would allow us to find best overheads based on volume of things customer buy? So we could optimise simultaneously price for customer (lowering price per unit) and our profit? Sorry if it's super naive question, but I'm not even sure where to start googling
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I'm concerned that I don't see a back end to your funnel here. Looks like you only have small, medium, and large of one service.
Rather than concentrating on discounts and discounting methodology, why don't you look at Cost of Customer Acquisition?
If you knew that number, you'd know what you have to make to break even.
I also think you're hamstringing your lifetime customer value by limiting yourself to one service. There's nowhere 'up' for your customer to go.
If you knew the CAC and LTV of your buyers, then you would know exactly what you had to charge. You'd understand even taking a loss on the front end because it lead to a big profit on the back end would be a possible strategy. But right now, you don't have a clear picture; that's why it's so hard to decide.
Hi there, yes there is! I can guide you and build for you a customized model.
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How much do I charge my subscribers?
In my experience, and based on the way I coach my clients, creating a pricing model without first creating a business model is an indication of a poor strategy. That said, here are my thoughts based on the information you've provided: 1. You are incorrect about your assumption of "the less the fee, the greater the potential # of clients". What you will very likely discover in practice is that there is a "sweet spot" in pricing such that any price above or below you'll see a drop off in members. In other words - any price LESS THAN or GREATER THAN your "sweet spot" price will result in FEWER members. This is one of those "non-intuitive" components you'll run into as an entrepreneur. 2. If you choose to price based on "competition" you are all but announcing that you are a commodity. Once again I'd suggest that this is a poor strategy. Instead consider your USP (or if you haven't yet done so...create one). Once you are properly differentiated YOU control and set pricing based on the VALUE you provide to the marketplace that they can't get anywhere else (i.e. Ferrari and Harley Davidson and Starbucks, etc). 3. Even with a solid strategy, a strong USP, a great product and a well-thought-out business model - you will likely still need to do some market testing (i.e. A/B testing) to find that "sweet spot" price I mentioned earlier. (I have yet to personally see anyone hit the mark right out of the gate.) 4. The last piece of info you provided - regarding monthly vs discounted annual membership pricing - would be a part of your OFFER. This is NOT the same as a pricing strategy - which should ideally be developed FIRST (at least conceptually). This is not to say you couldn't launch with the offer, but I'd suggest you figure out pricing FIRST and then develop offers based upon your deep understanding of your market. For assistance with any / all of the components I mentioned - give me a call. And be prepared that (in my opinion) whomever you decide to enlist this is going to take several calls to work out unless you have much of the groundwork already figured out. I apologize for this assumption - but I'm basing it on the information you provided and with hopes that this response will be helpful to others. I wish you great success!DB
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Happy to sign a reasonable NDA and take a call.JS
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