Pricing is a complex issue in business. Pricing can be unilaterally adjusted and an increase or decrease in price will usually cause an inverse decrease or increase in demand, but not always. Sometimes pricing can give people more of a sense of a quality product, be they goods or services. The more readily a product can be compared with other products of a similar nature, the more likely customers and clients are to end up being price sensitive (Iocabucci p. 144). Some products have a learning curve simply to utilize the product and results vary so widely when it comes to simple intuitive and organic fit between a customer or client and a product that it cannot always be determined whether one individual utilizing the product will end up in the category of seeing value in the product at the price where they encounter it or not. Different people are different, but it is the job of marketers to work on trends and generalities so that the products they market can be marketed in a way that results in a predictable percentage and/or probability of satisfaction with product at price point can be reached.
There are different types of business deciders inside of the same types of businesses, but there are still trends that can be detected along a lot of basic dividing lines in pricing. The industries where I know the most about pricing are Legal Document Assistance and then also Software as a Service, so I will use a few examples from these two arenas. They both have people who want the bare bones service done by a professional and for the cheapest price and within this category there are people who will want all the attention in the world and then people who just want the service and no attention. When many businesses are starting and they do not feel like they have a long enough track record and/or they do not have a robust enough business offering, they will go for solid and low cost. What businesses are not thinking about is that they may just end up with clients who do not quite express any appreciation for the solidness of their product, definitely go for the low cost, but are very high maintenance customers who tend to talk down about the business if their every whim of perceived requirement is not met. This is a pitfall of the low-cost pricing structure of covering business costs as a business setting pricing and then adding some margin.
A big part of the reality of pricing with services is that there needs to be a sale to the customer along several points having to do with elements of the quality of the service, extra activities that make the service more full, like research or hours of the day where customer/client assistance can be obtained, more satisfying and simple to navigate customer/client information/education pages of a website. Simply put, service businesses really need to focus on selling the benefits of using them over a competitor and it has to be some of the more intangibles that actually do add to the happiness and satisfaction of the customer. This usually leads businesses to set pricing at maybe a mid-range for the industry in general, but then draw out a really excellent element of the stack of benefits that they offer which will then appeal to the people within their overall target demographic who want that element of benefit the most. Focusing the scope of marketing in this way is how a business can change the equations of the marketing they are doing, making themselves just expensive enough with a low to mid-range quality set of benefits that are secondary and/or tertiary to the main high-quality benefit that they offer so that there functionally becomes a higher demand from the target demographic who wants this element of quality (Iocabucci p. 155). They can then scale their business in order to be able to supply as much of this demand as possible.
For most businesses starting out, it doesn’t become the goal to have the highest price in a market. The demand goes down for higher priced services, and it requires more resources to produce the all-around quality of product that is required to have the highest price. It is less cookie cutter usually of a way of doing business and requires oftentimes more customization. My software as a service business is called DocupletionForms.com and we have a pricing model that covers our costs plus a small margin ( Iocabucci p. 148), but are moving towards being in a range where we will replace Hot Docs for some users of JotForms.com who want Document Selection and Completion and at that point we will be changing the price 2.4x upwards from $10/monthly to $24/monthly. We have a specialty purpose that combines conditional logic contact forms with document selection and completion based on answers to the conditional logic questions in the contact form.
DocupletionForms.com is currently not HIPAA Compliant, so we are keeping our price low and selling it in the Law Industry to Law Students and Paralegal Students as a “Learning Tool” with the promise to keep the initial user subscriptions down at $10/monthly once we attaint to HIPAA Compliance and raise the subscription price for all new user subscriptions to $24/monthly. We are also doing market research to determine which business niches already exist that are not comprised of businesses that have to comply with HIPAA. Our aim at $24/monthly is because it is just slightly less than the $35/monthly of JotForms.com and then the addition of Hot Docs at $35/monthly. Our goal is to finish building out our Zapier integration so that we can integrate in line with other programs inside of JotForms.com and actually be a step in one of their document flows which replaces Hot Docs. DocupletionForms.com has an initial FREE Student Subscription Level where the subscriber has access to one form they build and it has the use of the Data-Merge which is used to automatically select and complete PDF Documents the way Hot Docs is used inside of JotForm.com, but there are only 20-submissions possible per month with the FREE Student Subscription Level.
Some businesses only need the basics of what we provide with conditional logic and then document selection and completion, like Legal Document Assistance (where I have my experience from running my last business SmallClaims.LA), but LDA businesses need HIPAA Compliance. This Freemium Subscription Model roughly coincides with the relationship described between pricing in conjunction with supply and demand in an article by Toptal (Toptal, Online Article). Toptal describes the freemium SAAS subscription model as effective because it enables a SAAS business to offer free use of basic features (Topal, Online Article). In so doing, the SAAS business lowers entry barriers, which allows potential long-term adopters to test program features without commitment (Topal, Online Article). This drives initial demand and is a strategy that can increase the percentage of users who upgrade to paid tiers because they have at that point become more invested in implementing the SAAS and utilizing the value that the software produces (Topal, Online Article). The Freemium model leverages supply-side efficiency to pull in more users, who can later be convinced to upgrade (Topal, Online Article).
My Contract Paralegal Business Trust is called Apex Law Service, and I began a DBA called Praxis Professional which has helped me move away from the more price sensitive LDA industry into a more highly meaningful set of activities arranged around Crime Victims Advocacy for the Victims of Sex-Trafficking. We are currently building contacts who want to do Volunteer Paralegal Work for our Pro Bono Attorney Clients for Pro Bono Cases that they have taken from among the Crime Victims who we bring them who we have come into contact with via different Private Investigation NGO Businesses. This is an offshoot of a higher price model with much customization because it is a business where we have a set of paid work case types we can work on for Attorney Clients in addition to our Pro Bono Work, which maybe still only is average range of high quality paralegal services as compared with the whole industry, but the meaning that is attained to knowing that the business profits support and sustain the Pro Bono Work is a benefit that we sell people in an interwoven fashion. It works. We have been getting off the ground more thoroughly than the average LDA business. There is demand inside of humanity for meaning. We supply meaning to people by helping people who have undergone horrible trauma. This has also become a part of our marketing for DocupletionForms.com because profits from the software also go to supporting the infrastructure of email addresses we pay for and website communication channels we keep together for the Pro Bono Work done by Praxis Professional.
As you can see, pricing is very important, and it connects automatically with supply and demand. Effective pricing strategies require a careful balance of issues surrounding supply and demand. These issues always relate with and are connected to customer perception. Pricing not only can influence demand but also shapes how customers perceive not only the value of the results produced by a service, but also the quality (SaaS Pricing Strategies, YouTube). By harmonizing pricing with strategic and specifically enumerated business goals and emphasizing unique benefits for clients, companies can attract the right buyers, convert them into repeat customers and build a loyal base of clientele. Whether leveraging freemium models, or using any number of other pricing models, thoughtful pricing strategy will produce happier and more satisfied customers and can become the foundation for companies in their progress towards and ability ultimately to scale sustainably, ensuring value for both the business and its customers.
BIBLIOGRAPHIC INFORMATION
Iacobucci (2022). Marketing Management (6th ed., pp. 138-169). Cengage.
Uslu, Y. (2023, October 10). SaaS: The pricing-friendly business model. Toptal. https://www.toptal.com/finance/pricing-consultants/saas-the-pricing-friendly-business-model
SaaS Pricing Strategies. (December, 2022). SaaS Pricing Metrics Explained: Value & Demand [Video] YouTube. https://youtu.be/iShTRHoEtY8?si=KWkh-6QCJWQRS1EN