The Pricing Decision Process in Software-as-a-Service Companies

Abstract: This study examines various approaches used by companies providingsoftware-as-a-service (SaaS) in a business-to-business (B2B) environment to find a pricing strategy. To be able to meet competition in a global market, a good pricing strategy is vital. Pricing is an important part of marketing, which must be congruent with the company's overall objectives. Strategic pricing is made up of different factors represented in the strategic pricing pyramid, which is based on a value-based approach. It is paramount to know your customers and their preferences when designing a pricing strategy and selecting pricing models, price metrics, market segmentation, bundling, and price levels. After having estimated how much value a product or service creates for a customer, this must be communicated to potential customers in order to convince them to purchase your offering. Choosing the right pricing strategy is not a onetime occurrence, but an on-going process. In this qualitative study, three case studies are performed to tie theory to real world practise.