How Tiered Pricing Strategy Can Help You Retain B2B Customers

For every SaaS business, retaining clients or customers is one of the challenging tasks that merchants or companies face. The needs of B2B or SaaS customers fluctuate heavily and therefore it is essential for the B2B merchants to have a set of strategies that can help in retaining customers and increase customer retention rate.

It is important to understand that in SaaS and B2B customers, one size does not fit all which is why there are different pricing models made specifically for them. The pricing models and pricing strategies help merchants and customers define their paths more efficiently and strategically.

This article will illustrate on tiered pricing strategy and the way it helps customers to get incentivized that further leading to a higher retention rate. without any further ado, let’s get into it.

What is Tiered Pricing Strategy?

The tiered pricing model is a bit different from volume-based pricing however both are overlapped. Tiered pricing is a method in which sellers segment their product or service pricing to suit their various target markets. By optimizing and changing up you’re offering between segments, you can appeal to a larger (and more diverse) customer base by catering to different demand rates and price points.

Tiered pricing is a pricing strategy that scales a product’s price based on a specific metric. A B2B SaaS Company, for example, may have an entry-level tier that allows one employee to use the system and a higher-end tier that allows unlimited employees to use it.

Businesses can find the best plan for their needs and get the most bang for their buck by tiering the price based on the number of users. The goal is to acquire more customers by offering better value. To illustrate it more, here is an example of a tiered pricing strategy that will help you in understanding it clearly.

Unit 1: $200

Units 2-4: $170 per unit

Units 5-9: $160 per unit

Units 10-19: $140 per unit

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Units 20+: $120 per unit

Here you can see that with rising units, more discount is applied at the tiers. This endorses that if a customer buys more units or tiers, it will open the gateway for more discounts, hence reduced pricing. It is a fact that everyone likes to have discounts or pricing strategies that suit their interests best.

Read more: Opt SubscriptionFlow to get best-in-class subscription management and recurring billing

Types of Tiered Pricing Strategy

Tiered pricing strategy is an umbrella term and there are further strategies that come under it. It entirely depends upon merchants and businesses to devise the pricing strategies that suit their interests. The main three types of tiered pricing strategies are listed and explained below.

Feature Tiers

Feature tiers are created using the segmentation of features that vary from client to client. Not everyone needs high-end features and similarly, not every client needs basic features. Considering this, the tiers are created on the basis of features, and pricing is set accordingly. It makes it easier for the consumers to make decisions based on which features are required for their business.

Usage-based tiers

The usage-based tier is common amongst cloud computing or mailing list providers. As the name suggests, these tiers are charged according to the consumption of the user. The cost of such a tier is directly proportional to consumption. Therefore, if a user has high consumption, then the usage-based tier is most recommended with the relevant discounts.

User-count tiers

In SaaS and B2B, the need for an account is usually more than one user. There could be more than one user and in such tiers the number of users who can access the product and account is limited. You can cater to both small businesses and large enterprises by segmenting the tiers based on the number of users granted access.

Four Benefits of Tiered Pricing for Your Subscription Business

The tiered pricing models is one of the most used strategies in SaaS and B2B marketing. With that being said, the benefits of this pricing strategy are irrefutably important as it improves business health and generates potential revenue. However, to be more precise, we have listed four main benefits of tiered pricing for your subscription business. Let’s look into them.

Increase Customer Base

This is the main goal of every business that they have to widen its customer base with different marketing strategies. It becomes a challenge when the strategies are not implemented and chosen according to the nature of the business. Moreover, it is important to understand the buyer’s intent. A tiered pricing strategy widens the opportunities for customers and gives them a number of options. This is why it is one of the major reasons that merchants and businesses should start adopting pricing strategies. It will not only improve the customer base but will also increase customer retention rate as consumers will have the option to either downgrade or upgrade according to their needs.

Improves Upselling and Generates Potential Revenue

Who does not want to earn more revenue and drive customers toward tiers that can improve the upselling rate? Imagine if you have only one tier to offer to your customers, would every customer want the same tier? The answer is No.

To make your business optimized according to the needs and demands of prospects it is important to have a number of tiers in pricing models so that the prospects are not jumped to another business, losing you a customer.

Also, with multiple tiers, consumers can upgrade to the advanced features anytime they want to. This improves the upselling rate and increases revenue and cash flow. Therefore, with pricing tiers, you have all the opportunities to grow your businesses and take them to the heights of scalability, seamlessly.

Maximized Revenue Potential

No one wants a prospect or a marketing qualified lead to leave their website and move onto competitors’ websites. For this reason, the strategy of multiple tiers has proven to be extremely helpful where customers can simply get to choose the one, they want. They are not limited and it does not cause any potential bounce rate to your website. Including multiple pricing tiers in your pricing strategy can optimize you according to the business and generate the maximum revenue with increased customer lifetime value.

So, let customers sign up for your product or service, and urge them to take the action with a tiered pricing strategy and make them become your customer.

Increase the demand and value of features

Let’s say your customer has bought the tier with basic features. But with time, the demand of the client increases. If the customer wants to have advanced features, then the user will have to buy the tier with advanced features and increased pricing.

However, for merchants and businesses, it is important to map out which features should be in a tier so that pricing is optimized properly and you can sell your products successfully.

Read more: Lessons to Learn from Churned Customers for Improved Customer Retention

Implementing a tiered pricing strategy to Retain Subscription customers

Now you have read in great detail about the tiered pricing strategy, its types, and benefits. It’s time to implement it in your business. But, how?

The answer to this query is very simple and it is – the Subscription Management Platform. SubscriptionFlow is a subscription management platform that handles recurring billing abased businesses and equips customers with optimized features and solutions that assist customers in reaching their objectives and goals.

If you are planning to do it on your own then it would be a tiring and lengthy process. T save yourself from this hassle, using a subscription management platform for the implementation of pricing models specifically the tiered pricing model would be the right way to go on.

The subscription management platform provides you with a full-fledge platform along with a checkout page where your customers can choose the tiered pricing plan that suits them leading to the growth of your business.

With SubscriptionFlow, you can get it easily managed without getting into any labor. We provide our customers with the RententionFlow app as well where you can keep an eye out on your customers and retention rate. This is one of the most implemented pricing strategies among our customers and we provide it with full zeal and proper optimization.

Final Thoughts

A Tiered pricing strategy can be a game changer for you if it’s done right. Using the subscription management platform – SubscriptionFlow you can avail it all seamlessly and improve the retention rate. Schedule a demo with SubscriptionFlow and flourish your business without any halt!