A Guide to Geographical Pricing for SaaS Companies - SmartKarrot Blog

A Guide to Geographical Pricing for SaaS Companies

What is meant by Geographical Pricing for SaaS Companies? How to implement it in the right way? Unlock your answers in this blog and stay tuned till the end.

Geographical Pricing for SaaS Companies

One needs to consider a plethora of factors before finalizing a certain pricing strategy. For a SaaS company, a successful pricing strategy is one that focuses on the customer’s perceived value of the offerings. Often, they put up tiers of pricing equations to target different buyer personas, product features, availability and so on. One such strategy that often loses the cut is the geographical location of the user. This blog will walk you through the concept of geographical pricing in detail and will spill some beans on how to implement it for your SaaS products and services. Let’s get started.

Table of Contents

  • What is Geographical Pricing?
  • How to Implement Geographical Pricing?
  • What factors should you consider for a perfect Geographical Pricing Strategy? 

What is Geographical Pricing?

Simply put, geographical pricing is the practice of adjusting the price of a product or a service according to the location of the customer. The market dynamics of different geographical locations vary greatly and depend on a multitude of factors. Also, geographical pricing strategies have been put up recently to stay in close proximity to the supply and demand curves. With that, a lot of businesses have been able to account for the cost of living in several geographies and address the vying competitions as well.

How to Implement Geographical Pricing?

  1. Matching the Local Currency and Demand: The first step here in implementing geographical pricing is matching the local currency and demand to the international ones. Once you do that, try and adjust the pricing for varied geographies based on your product’s demands coming from these locations. Know where to lower your prices and where you can consider going a bit overboard. There will also be some geographies that might have lesser options or alternatives to your offerings, thereby increasing your target audience base. Further, this will give you more room for higher price ranges as well.
  2. Cosmetic Localization: Even though the term looks pretty heavy and more on the jargon side of words, its meaning is pretty simple. Sometimes the SaaS businesses put up their price list only in their local or native currency. It is not really the job of a customer to lookup for a currency converter and do the math. This not only adds up additional friction but is also a leading reason for the bulging churn rates as well. Thus, displaying the prices of your products and offerings in the currency of your users can boost up sales and rev up your revenue graph too.
  3. Opt for a Price Sensitivity Study: When you delve into a proper price sensitivity study, you get to find out what is the price range that your customers are willing to pay for the product. You will also know what are those features that they would want to pay a little extra for. And once you start adjusting your price bar, there is a good chance to see significant growth in your sales. Altering the structure of your pricing tiers to more closely align with the local buyer personas of a locality will only work in your favor. 

What factors should you consider for a perfect Geographical Pricing Strategy? 

  1. SaaS company’s Age and Maturity: If you have just recently started up, your pricing strategy is still in a nascent stage. Often, some of the SaaS companies commit the biggest mistake by taking to localized pricing here. It is too time-consuming and takes up your resources too. Once you start to build your brand and identity, you can pull up as many growth levers as you wish to. And just in case your losses are cutting in the profits, pricing localization can be your savior here. If you wish to expand to newer markets and want to stay relevant and competitive, you will have to pay heed here.
  2. Market Analysis and Research: We know that every market has a different demand that caters to a different buyer. The same product can be a hot-cake item in one locality whereas it could go invisible in the other. The whole point of marketing and selling turns void if you are not backed up with stringent marketing analysis and study. Culture, market realities in the region, and other factors play a huge role in how a given product is received there.
  3. Pilot Tests and Adaption: One cannot just assume that a certain price will fit into a particular target audience. Pricing is and always has been a repetitive process. Testing your products on a pilot run basis will give you a deeper understanding of the geographical pricing, even before it is launched. The results of these pilot tests will feed in insights on which is the right price range for you and what is it that your customers like and dislike about your products and services. 

Parting Thoughts 

Putting up a uniform delivery can sometimes be suboptimal and not nicely constructive too. That is why the concept of geographical pricing came into the picture. In this blog, we tapped upon a couple of nuances in and around geographical pricing such as the related factors that go behind making it possible and how to implement them as well. At the end of the day, it all depends on the company’s dynamics, structure, age and maturity, product range and offerings to come up with the right price point that fits all. On that note we have all heard about the adage, ‘One size does not fit all’, and this holds true for SaaS companies too.

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