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Introducing XaaS Pricing — and 10 reasons why you should care

What is XaaS Pricing?

XaaS Pricing was launched in 2021 as the industry’s first and only market research and data platform vendor solely focused on B2B Anything a Service (XaaS) pricing. Founded on over a decade of experience delivering best-in-class, tailored, competitive price benchmarking research, XaaS Pricing arms vendors, including existing TBR clients, with actionable pricing intelligence by providing:

  • Best-in-class, price benchmarking research that arms vendors, including existing TBR clients, with competitive and actionable pricing intelligence, public and nonpublic XaaS pricing, packaging and discounting data covering approximately 50 vendors (soon to scale to 20,000) across 40-plus unique and proprietary metrics
  • Monthly Pulse, a report on key trends and updates in the B2B XaaS pricing space
  • Quarterly deep-dive reports on pervasive themes and recommendations for vendors
  • Weekly newsletter at https://xaaspricing.substack.com/
  • Access to XaaS Pricing’s analysts
  • Availability for custom competitive and market pricing research (additional fees)

All TBR clients now have access to XaaS Pricing for an introductory trial period of 90 days. XaaS Pricing is available via the TBR client portal. To participate in the beta program for the XaaS Pricing SaaS application, please click here to get set up.

How can XaaS Pricing help my business?

All those things are well and good, but they aren’t super useful unless they are actionable. Here are 10 reasons why every B2B technology vendor should care about XaaS pricing:  

You spoke, we listened  

A recent TBR survey of 200 users indicated that pricing and go-to-market strategies are the most useful areas of competitive intelligence research for you. XaaS Pricing was launched to support these needs.

‘As a service’ continues to eat the world

Cliché but true. Subscriptions are transforming consumer experience and disrupting all aspects of B2B. Even in the services sector, for example, professional services are being productized into “as a Service” offerings (Our thoughts on PwC’s actions in that space). Vendors need to understand these models at scale to make the pivots necessary to succeed.

Markets are more competitive than ever, and getting more competitive by the day

Crayon’s 2022 Statement of Competitive Intelligence Report showed that nearly 60% of companies see their markets as “much more competitive in recent years.” Competitive product advantages evaporate quickly, and differentiation materializes through positioning, which often comes down to how value is positioned through pricing and packaging.

B2B tech companies spend way too little time on pricing

According to ProfitWell, companies spend less than 10 hours per year on pricing. This is due to a number of reasons, including time available, ownership within the organization, dearth of appropriate skills, and lack of data. Differentiating companies make pricing a regular process.

Pricing success yields outsized financial performance gains

ProfitWell also reports that a 1% increase in pricing can yield an 11% increase in profitability. Companies that regularly track, manage and update pricing strategy on a monthly or quarterly cadence are best positioned to capitalize on this opportunity.

Pricing is multifunctional

Yes, there are likely pricing-specific roles and functions in place, depending on the company. For example, at growth-stage companies, pricing is a CEO decision. But pricing as a capability touches all elements of the organization — product, finance, marketing, sales and operations — when bringing an offering to market. It’s critical to have consistent, standardized data on the market to facilitate multifunctional organizational decisions.

Pricing insights are a deal accelerator for sales teams

Conversational intelligence provider Gong reports that win rates are highest (42%) when pricing is discussed in the first sales call. Sales is a critical stakeholder for competitive and market intelligence. Arming sales teams with the right pricing intelligence to discuss pricing and address competitive pricing questions early yields deal wins.

Pricing pages are where customers buy

Pricing pages are the most important landing spot for customers and are where offers are positioned to convert web traffic into trial, free or paid users. In B2B SaaS, not having transparent pricing is a red mark on a vendor. This will become  true for telecom, IT services and other sectors too. Customers want to understand pricing during their evaluation, before engaging with sales, and this requires an understanding of how to structure and position pricing publicly.

Pricing is tedious and time-consuming to normalize and compare

There are hundreds of potential pricing models and packaging models. Companies in the same space may price and package completely differently across multiple dynamics. Normalizing pricing and packaging models for comparison is hard to do at scale without a repeatable, consistent framework and taxonomy (like we’ve built for XaaS Pricing).

Pricing changes constantly

We started collecting XaaS Pricing data in October 2021, and since then, nearly 35 companies have already made demonstrable changes to price points, pricing models and/or packaging strategies. XaaS Pricing is the Wayback Machine for the “as a Service” ecosystem, with real-time updates and tracking to ensure companies stay on top of peer pricing changes.  

Will digital transformation be the catalyst for adoption of new outcome-based pricing models?

Every day I find myself reading about the developments happening in business-to-consumer (B2C) pricing.

Here’s a sample of those that jumped out recently:

These developments highlight the growing momentum behind providing dynamic, value-based and outcome-based pricing models, a movement being driven by companies’ desires to provide personalized customer experiences at scale.

While this push has been most publicized and noteworthy in the B2C world, driven by the likes of Uber, Netflix and MoviePass, it also consistently permeates the complex business-to-business (B2B) IT products and services world that we focus on. “How do we shift from a cost-plus to value-based pricing model? Are companies really doing outcome-based pricing? Who is doing it well, and for what types of customers? How?” These are common questions vendors are trying to sort through as they change their businesses.

Often, we’ve heard that IT vendors are serious about making outcome-based pricing models work, but the customers are putting the brakes on these types of arrangements. Customers will ultimately balk at the variability and risk of an outcome-based arrangement at some stage of a deal negotiation and push vendors to offer predictable fixed-price engagements. Customers like the idea of not paying when an outcome is not achieved more than sharing the benefit of an outcome that is met, and somewhere in that trade-off the fallback becomes a traditional contractual arrangement.

What’s interesting is that based on recent research, this customer hesitance seems to be abating. In our 2H17 Digital Transformation Customer Research, we asked 165 global enterprises that are undertaking digital transformation initiatives to identify the pricing structures they’ve experienced, and outcome-based pricing emerged as the most common model globally.

As my colleague Jen Hamel points out in the report, “This indicates vendors have become more flexible and creative with pricing to convince clients to take the DT [digital transformation] leap but may see delayed ROI from DT skill investments as revenue depends on project success.”

As digital transformation continues to take root, the question of how vendors can shift to outcome-based pricing will only be asked more frequently, particularly as changes in the timing of revenue recognition from engagements impact vendors’ flexibility around resource investments. We are eager to watch (and to report) as best practices develop and new models emerge and would love to hear about what others think on this topic.

Drop a comment here or email me at [email protected].