Salesforce attained annual revenue of $17.1 billion in 2020. That figure makes Salesforce the world’s biggest and most profitable software company. Of course, there are differences between average startups and Salesforce, with billions in revenue. But there’s one key aspect to its success that doesn’t involve a major investment in marketing, a long period of growth, or having the smartest employees.
As Inc. Magazine says, it’s so small and fundamental to user experience it can easily go unnoticed. It’s transparent pricing.
Startups are known for not openly sharing pricing information. This is especially true of SaaS (software as a service) startups. As a result, they’re unknowingly foreclosing revenue.
Pricing is the first and often primary qualifying factor concerning the decision-making process. Features, quality, and capabilities are critical considerations. But customers want to first vet their interest in a product by ascertaining whether it’s within their budget. Consumers have numerous options, and chances are your business isn’t the only game in town.
Put Your Customers First, Not Your Competitors
Consumers search for pricing information (even if they’re not actually requesting it). But many small businesses and startups justify their decision against transparent pricing. They frequently justify their decision not to share pricing with the argument that competitors could use this information intelligence against them.
However, this puts a business owner’s focus on not giving the competition what it wants, instead of on giving customers what they want. To get more customers, focus on your customers rather than other startups. Jettison the stress of making competitors aware of your pricing, because if competitors want to know your pricing, they’ll find it.
If you’re worried about the competition, don’t conceal your pricing. Instead, improve your offering. It’s very unlikely that pricing alone will lead consumers to choose your business over alternatives unless your selling point and key differentiator is low cost. In that case you would promote your prices.
In any event, this delivers a message to consumers.
Opaque Pricing Doesn’t Say High-End, Just the Reverse
It’s not uncommon for some of us to think of a lack of transparent pricing translates to a high price tag. Consumers who see a product’s value as equal to its price won’t be put off by its price tag. In the world of the most expensive goods, the higher the price, the more consumer want to buy the product. A high price becomes a selling point.
A lack of pricing transparency can create a poor user experience for potential customers of startups. Moreover, it sends strong psychological (and largely subconscious) signals that your product or service is either too expensive… or even worse, that its value doesn’t justify its price.
Plus, if you’re not confident enough with your pricing to disclose it to the public, it feels as though you agree it’s not worth it. If you aren’t confident in what you offer, a customer isn’t going to be confident in your company.
Startups Shouldn’t Fear the Competition
Startups that become million- or billion-dollar companies aren’t afraid of competition price-gouging because their product or service is superior and, with that, their customers are loyal.
Furthermore, they don’t hide their pricing because they know their worth, as does their audience. Although it may be hard to achieve this benchmark in the early stages of a new venture, the difficulty will compound itself without transparent pricing.
For many small businesses and startups, the answer is to improve the company’s offering or improve on effectively communicating the offering, rather than concealing the pricing.