Offering discounts can seem enticing to grow your SaaS B2B business. After all, who doesn’t appreciate a good discount? Discounting can help you drive sales, stand out from competitors, expand your market share, and make more profits.
But at what cost?
Discounting can do more harm than good without a proper strategy. A study by PriceIntelligently sheds light on a significant concern – discounts can slash your Customer Lifetime Value (CLTV) by more than 30%.
Furthermore, aggressive discounting can degrade your clients’ perceptions of the value of your services. Not to mention that your sales team also gets an easy way out in landing and closing deals.
So, how can you strike the right balance?
That’s what we are here to answer. This post will explore five powerful discounting strategies for B2B SaaS.
Let’s get started.
Contract-length discounts are a great way to incentivize customers to commit to long-term contracts.
With organizations using an average of 130 SaaS apps by 2022, this strategy can provide a steady revenue stream for your company. It can also reduce customer churn rate.
Most recurring billing platforms operate on a subscription model, often offering yearly membership discounts. As the Younium subscription management article describes, you can choose the suitable subscription model for your business.
Recurring billing platforms automate billing cycles, allowing you to align discounts with specific contract durations. This ensures accurate and timely application of discounts for clients who commit to longer-term subscriptions.
Here are a few contract-length discounting tactics you can try.
- Offer an annual subscription discount – Offer a discount to clients who commit to a yearly subscription instead of a monthly one.
- Provide a multi-year discount – Encourage customers to commit even more by offering a higher multi-year discount. For instance, you can submit a 25% discount for a 24-month subscription.
- Offer quarterly payment plan discounts – A quarterly payment plan can still promote long-term customer relationships. You could offer a 10-15% discount for a 3-month billing cycle.
Invesp says about 98% of SaaS companies got positive results from adjusting their pricing strategies.
What does this mean to you?
Introducing limited-time offers might be what your business needs. Offer special discounts for limited durations to create a sense of urgency and promote quick decision-making.
Limited-time offers encourage potential and existing customers to take advantage of the opportunity before it expires. This, in turn, attracts more customers and boosts sales for your company.
Here are some approaches you can consider.
- Offer seasonal discounts – Offer special discounts during specific seasons or holidays, such as a “New Year Kickoff.” You could offer a 15% discount on the first month of a B2B SaaS subscription.
- Run flash sales – Create urgency by running short-term flash-sale discounts. For example, you can offer a 30% discount for 24 hours on annual subscriptions.
According to a recent study, product bundling can lead to significant economic benefits, especially if the customers value the bundled items.
This is why you should create packages with multiple features or services at a discount. This can entice customers to opt for more comprehensive solutions, increasing the value of your products.
Let’s take a look at a few enticing solutions you can offer.
- Feature bundles – Combine complementary features of your SaaS platform and offer them as a bundled package. You can combine a project management tool, collaboration features, and reporting capabilities.
- Tiered bundles based on usage – Create tiered bundles that cater to different levels of user volume. Offer discounts for higher-usage tiers.
For instance, you can offer a 20% discount for clients who choose a bundle with additional users or advanced analytics capabilities.
Targeting startups and small to medium-sized businesses (SMBs) with special discounts can help you penetrate emerging markets. You can attract new customers who may invest more in your services as their businesses grow.
Here are some discount plans you can offer.
- Offer scalable discounts – Increase discounts as the startups reach particular milestones. For instance, you can offer a 5% discount for every additional ten users the company adds to its subscription.
- Introduce bundle discounts – Design cost-effective bundles that cater specifically to the needs of startups and SMBs.
For instance, you can offer a 15% discount on a bundle that includes Customer Relationship Management (CRM) and collaboration tools.
Forming strategic partnerships should be a vital part of any SaaS startup business strategy. You should partner with other SaaS providers and offer joint packages at a discount.
Strategic partnerships can widen your customer base while adding value to your clients. A guide by Attrock can help you learn more about forming a solid strategy.
Meanwhile, here are a few discounting methods you can consider.
- Integration discounts – Partner with SaaS providers who offer services that complement yours.
For example, if you offer project management, you can partner with a communication platform to provide a 10% discount when a client uses both tools.
- Industry association discounts – Collaborate with industry associations and offer exclusive discounts to their members. For instance, you can provide a 10% discount to members of a specific industry association through your partnership.
When implemented thoughtfully, discounting strategies can help you balance attracting new customers and maintaining long-term profitability.
You can create a more sustainable pricing strategy by implementing contract-length discounts, limited-time offers, and product bundling.
Ready to get started? Take control of your discounting approach today and elevate your business to new heights!