The Pricing Strategy Guideline Framework for SaaS Vendors

Software as a Service has become a dominant IT news topic over the last few years. Especially in these current recession times, adopting SaaS solutions is increasingly becoming the more favourable alternative for customers rather than investing on brand new on-premise software or outsourcing. This fact has inevitably stimulated the birth of numerous SaaS vendors. Unfortunately, many small-to-medium vendors have emerged only to disappear again from the market. A lack of maturity in their pricing strategy often becomes part of the reason. This paper presents the ‘Pricing Strategy Guideline Framework(PSGF)’ that assists SaaS vendors with a guideline to ensure that all the fundamental pricing elements are included in their pricing strategy. The PSGF describes five different layers that need to be taken to price software: value creation, price structure, price and value communication, price policy, and price level. The PSGF can be of particularly great use for the start-up vendors that tend to have less experience in pricing their SaaS solutions. There have been no SaaS pricing frameworks available in the SaaS research area, such as the PSGF developed in this research. The PSGF is evaluated in a case study at a Dutch SaaS vendor in the Finance sector.