Scale Your SaaS Business Growth With Service-Based Revenue
The flexibility of the subscription business model has enabled businesses from varying domains to enter the market and explore opportunities. It is no more a realm of SaaS subscription services only. However, knowing exactly what you are selling and what is it that you can sell is the first step to increasing or diversifying the revenue.
When it comes to service-based revenue, you can opt for:
- Productizing the services
- Servitizing the product
- Combining the product and services both
You must not confuse productizing the services with the servitization of the SaaS product. If you have some SaaS services to offer, then you would need to divide it into units, then decide the price for each unit. Thereafter, you and your sales executives will mull over what would you charge for these units when offered for a certain defined time. This process is the productization of the services.
Nonetheless, the servitization of SaaS products is different. It is the trend that has been speeded up by the spread of the pandemic Covid-19 that companies which do not offer any SaaS product or services, find recurring needs of their customers and opt for the subscription billing model just like SaaS companies and offer the same material products that they manufacture serving the recurrent need of their customer base.
But what is the reason that businesses that could happily sell their product are moving towards offering services? In this article, you will find all details that have diverted the focus of many companies to service-based revenue and how this revenue is the cause of boosting business growth.
Also Read: The Challenges Of The Recurring Revenue And The SaaS Business’ Growth
How to Servitize Your SaaS Product to Soar the Profits?
When you are targeting to earn service-based revenue, it is very important to rightly turn your product into services. Following are some of the effective ways to do that:
1. Sell the Light, Not the Lamp
The best thing about the one-time sale is the security and predictability because of which many enterprises still stick to this model. However, manufacturing businesses that thought out of the box first convinced themselves that they have to sell the light, not the lamp. This thinking is a trigger that ultimately makes you identify the recurring need of the customer base that can bring the same customers to you again and again. Also, it is not a one-sided benefit deal. The customer is equally convinced to turn back to you because he gets maximum satisfaction.
So, rather than going for one-time sales, subscriptions or a cycle of recurrent sales and purchase is a better way to improve service-based revenue.
2. Product Segmentation
Another very important factor that plays role in achieving the target of the service-based revenue target is to segment the product. Especially SaaS companies segment their product to scale their business and improve their recurring revenue. It is not just for the sake of soaring profits, but they also need to cope with the changing trends in the market.
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The frequently changing technology is a challenge as well as an opportunity for SaaS businesses. If they cope with changing technology, they have a better chance to satisfy customers. And customer satisfaction is the key to stabilizing the flow of recurring revenue.
Also Read: Optimize the Customer Engagement of your SaaS with Product Segmentation
3. Price improvisation
One of the crucial things regarding the SaaS business market is that you cannot achieve revenue targets if you do not improvise price with time. The process of SaaS pricing works in a way that you first devise subscription plans that’s you need to charge with respect to the usage of the product within a certain specified time period. Then you price these subscription plans by involving your sales and marketing executives and market these plans to the targeted customers.
The next phase is to monitor if your pricing strategy for your SaaS product can help you hit the revenue targets or not. If things do not go as they were planned, you have a fair chance to improvise the pricing.
4. Value-Based Pricing for SaaS
When it comes to value-based pricing, you must have done with the customer segmentation because value-based pricing is the way to set the price of your SaaS product based on the value perception of your product in a certain segment of customers. Customer segmentation is considered the prerequisite of deciding the value-based pricing because the value of your SaaS product would probably be different for different segments of customers.
There is no universal formula to calculate the value-based pricing for SaaS products. However, you can improvise the formulas that other businesses use in the market as per your business needs and requirements. When you know the value-based pricing for your SaaS, you can earn more revenue. It will be clear for you which segment of customers can generate how much revenue for your business.
Also Read: Why Value-Based Pricing Approach Is Important For Your SaaS Business
5. Service Marketing
Marketing the SaaS product is another challenge because the strategy differs from that of marketing tangible goods. You would need to rely on the demos of your SaaS product since there is no material shape of what you are offering. You cannot offer your targeted customer base with testers rather go for freemium and trials. Still, offering freemium and trials would remain part of your marketing strategy. Poor marketing can fail your planned strategy to offer a freemium and free trial.
Other than these factors, you will also need to consider the budget for the marketing of your SaaS product. Let your marketing team decide whether they prefer to go for PPC, YouTube Ads, social media platforms or any other way. However, return on investment (ROI) will be your point of focus. Entrepreneurs need to be more cautious because they have a limited budget and they cannot blindly invest in digital marketing. Your service marketing is important in helping you achieve revenue targets.
Also Read: How To Turn Your Subscription Business Into A Brand Through Email Marketing
Mentioned above are some valid ways to monetise your SaaS product. If you want an effective strategy to sell your SaaS product that can help you maximise your recurring revenue, then call SubscriptionFlow team experts. Onboard this SaaS subscription management software to manage your subscribers and consult with professionals who will provide you with the right consultancy.
