How to Change Your Software Prices Successfully?
Ensuring the target users will accept the changes in the prices for your software solutions can be tricky. However, not changing your software solutions prices for more than a year can prove financially disadvantageous for your business. It can make things difficult to find a strategy that can guarantee the former while preventing the former.
Your pricing models are one of the primary deciding elements that can draw or turn away target users. Therefore, creating and modifying them requires a strategic approach that seems fair yet highly advantageous to target. And hopefully, the tips you learn here should simplify the process of software pricing changes a bit more.
6 Steps to Change Your Software Prices Successfully
Your business may need a different or unique approach to software price-changing. However, the mentioned steps should get you started or simplify the entire process.
Step 1: Conduct Market Research
Research the market, check the pricing models of all your competitors, and evaluate the buying behavior of your target users. The primary purpose of this research is to find answers to questions such as:
Is the market of your business sector thriving in terms of revenue and growth?
For example, if you have FinTech software, learn about the current and estimated global revenue of the fintech industry. The higher the business revenue, the more demand the solutions have, making it easier to change and increase the software solution prices.
Are your competitors providing software solutions at lower, matching, or higher prices?
If your competitors provide similar solutions at higher prices than yours, you can choose a pricing model strategy with increased pricing but slightly lower than your competitors.
If your competitors have the same pricing model as you, you will reevaluate the quality of your solutions to see where you can improve and use the improvement to justify the changed pricing.
If your competitors have a lower pricing model, focus on the USPs that make your solutions better than the competitors and include more to change the pricing more effectively.
Will your target customers be open to changes in the software pricing?
You can research the user buying behavior to see how likely they are to accept the change in the pricing model of your software. It should also provide insights into how many users regularly use and rely on your software with trust. Such data can tell you what percentage of users will turn to your competitors for better pricing options and how many will stick around after software pricing changes.
Step 2: Analyze the Risks
If the changes in the software pricing pose too many risks for your business and directly impact revenue negatively, you may have to reevaluate the decision.
Do not change the prices if:
- Your business risks losing the revenue streams essential for sustaining the software/business operations.
- Your targets can quickly turn to competitors with better pricing options.
- Your software does not have added value to provide to customers besides the primary one.
- Your software does not yet have a large enough customer base.
Taking such risks with software price changes can strike an unrecoverable financial blow to your business. Ensure that your changed/increased software pricing model does not disrupt the operations of software/business and revenue before you change it.
Step 3: Align Product Value with Pricing
If your software product provides no additional value after changing/increasing the pricing, most customers will not be open to such changes. Although the ones that highly rely on your app will stick around, you risk losing a good portion of your target users.
Fix bugs, add some new/unique features, update the app, and redesign its UI/UX. Such elements assure users that your software will always keep trying to increase the value of the solutions, making it easy for them to accept the changed software pricing model.
Step 4: Prepare Different Pricing Models
Creating different pricing models depending on the duration customers use your software product is a strategic approach. For example, you can increase the pricing appropriately for customers of 6 to 8 months and make minor changes that have been using the software for more than a year.
Low and high software pricing models will reward loyal customers and motivate newly joined ones to continue using the software as the prices would drop from them in time, providing a beneficial experience for both parties involved.
Step 5: Test the Pricing Models
When building software, you conduct user acceptance testing to ensure that your product can meet or exceed user expectations and is ready for successful deployment. Similarly, you can execute this testing to see how target users would respond to the changed/increased pricing model.
You can move forward with the plan if a large portion of your target audience accepts the new pricing model. And reevaluate and plan the pricing again if most are unhappy with it. It will help you review your pricing model directly from the perspective of end users, ensuring the final pricing models can benefit your software/business as intended.
Step 6: Justify the Pricing Model to Consumers
Remember to communicate with your customers about the upcoming changes in the pricing model and provide valid reasons for them in great detail. It will ensure that your customers do not experience an unpleasant surprise when you change the pricing model.
To make the strategy work, mentioned some additional elements, such as features or access to better tools included with the new pricing model.
It will assure customers that they have a choice in the matter, and if they want, they can still keep using the software with the old pricing model without the new solutions.
If your software does not have new solutions, include a one-week free trial with the latest pricing model. It will help your users reevaluate the software value and decide if they want to continue with the new pricing model. Ensure all this information is in the price change communication message you send to customers through various mediums.
Conclusion
The most effective way to change software pricing is by reevaluating and improving the value your software provides to target users. To do this without providing more value would require a customer base attached to your software due to a familiarity with its functionalities and usage. If you have such a customer base, change/increase the software pricing, and your user base will be more open to it due to their satisfactory experience with your software.
Providing more value is still the best way, and you can make it happen at highly affordable prices by hiring an offshore software development company from India or Ukraine. It would be the most financially feasible way to improve software value for target customers and create acceptable pricing models.
