One of the most exciting trends we’ve seen emerge over the past two years is the rise of DIY SaaS, also known as white-labeling and reselling software. In this post, we will explore how to price white-label software when creating your social media marketing pricing. If you’re interested in how to use white-label social media management software to grow your business, click here.
While many pricing strategies are available, we’ve found the most successful agencies offering software as a service using a blend of referral and value-based pricing coupled with pricing tiers. Read through the following list of options to determine what works best for your business.
The most basic pricing strategy, cost-based pricing, focuses on maximizing return by building a profit margin within the sales price. Cost-based pricing is the simplest method and is a great place to start.
However, it’s not without drawbacks. Some costs can’t be predicted. Other times, you don’t know if revenue earned will cover expenses. This method also doesn’t consider competitors and what they charge for similar products.
Competitor Based Pricing
When determining how to price your white-label software, using your competitors as a benchmark can be a helpful gauge on whether your pricing strategy is appropriate but comes with a few caveats.
First, getting accurate pricing might not always be easy, particularly in a market that isn’t heavily saturated or verticalized. Secondly, using a competitor’s pricing strategy means you aren’t using yours, which means it isn’t considering your business’s needs and the value you’re adding, potentially selling yourself short.
Promotional Based Pricing
If you’re looking for short-term demand, promotional pricing can help you generate quick results by offering markdowns or other value-based incentives to acquire new customers.
The downside of this approach is that it isn’t sustainable over the long term. Price-sensitive customers might be quick to jump onto your offer, but they are also just as likely to churn over time. Promotions are best to supplement your pricing strategy instead of your primary strategy.
Referral Based Pricing
One of the key benefits of adopting a reseller strategy is generating additional revenue based on referrals. Referral-based pricing lets you reward your top-performing customers selling your products on your behalf.
Heck, we even use this model ourselves! Any customer that refers another paying customer who stays with us on a Studio or Agency plan for three months gets $500 cash.
And in case you’re wondering, we were tickled pastel-purple to have paid out $26,465 in referrals because it means our customers find value in our software – enough to share it with others.
If you truly want to scale your agency, referral-based pricing alongside software as a service can organically amplify your reach.
If you have a deep understanding of what your customer base wants and how much they’re willing to pay, you can lean into value-based pricing.
Boutique and specialized agencies typically use this model to focus on delivering demonstrable value to their customers who are willing to pay for their expertise or resources.
This is the most attractive model for agencies with this level of customer understanding because they are free from the constraints of their competitors or the cost of doing business, allowing them to charge based on the value they provide.
Adopting this model usually requires developing stronger relationships with your customers, as they’re paying a premium for your services and resources. Use this to keep a finger on the pulse of the value you’re providing while engaging them to discover new opportunities.
How to Price SSMA Services
After you’ve established how to price your service, you’ll need to figure out how to bill your customers. Do you want to charge a flat rate or have different pricing options to suit your needs?
We see 85% of agency owners resell white-labeled software coupled with content creation for between $100 and $700 per month depending on the target customer, niche, and how bespoke the content is. But what you charge and through what method will depend entirely on your business model. Here are a few examples to get you started.
The usage pricing method charges based on activity, like a mobile phone provider. The primary strategy is to advertise pricing lower than the monthly billed total cost to attract customers. It’s important to note that software usage doesn’t equal value, and subscribers might balk if they see extensive charges. Another challenge for this pricing strategy is reconciling use with billing, which requires additional steps. Better models are available when white label social media marketing pricing is concerned.
One of the more popular strategies on how to price white-label software as a service involves charging based on the number of seats your customer uses. With this method, you charge a base rate per month for each account regardless of their usage. You can also create packages or tiers to incentivize growth with price breaks.
Customers like this method because they know what to expect on their invoices every month, but one pitfall of this model is that it can punish businesses that grow and need to add more resources. One way to mitigate this downside is using active-user pricing and charging based on actual usage.
Adopting a price point that allows you to grow with your customers is a sweet spot that will be unique to your business.
Not all users want or need the same products or features. Because of this, another popular method for software services is tiered pricing. You create multiple packages with different pricing and features targeted to your specific customer segments using this strategy. Differentiate your tiers and keep them between three to five – too many options can confuse and overwhelm your potential customers.
Just a quick peek behind the curtain – this is the pricing method we use, along with fair user-based and referral pricing, to allow our company to grow with our customers.
This strategy is also straightforward – you charge a single price that includes the product and features. While it lowers the barrier to attracting new customers, it could mean you’re missing out on up-sell opportunities.
Like tiered pricing, this strategy charges for additional features paired with a flat rate, plus add-ons to unlock certain features like access to analytics, automation, or ad management. Building these packages requires a strong market understanding to create a compelling offer with so many available tools.
Honing Your SaaS Pricing Strategy
Pricing a SaaS product can be extremely difficult due to the vast competition in this space. No two products or services are the same, and therefore no pricing structure will fit them all.
Your SaaS pricing strategy must tell a story about what value you provide customers via your product. It’s essential to thoroughly research your competition and target market before creating your unique price point.
The right pricing strategy will depend on how you position your product. If you aggressively target enterprise-level services and try to offer affordable plans to startups, the chances are that the move will backfire on you. If, however, you target a niche market and design an affordable product that appeals to it, you’ll be able to compete with the top SaaS providers—and win.
Deciding on a pricing strategy for your product is not just a one-time effort. It is an ongoing process. You must re-evaluate your pricing structure and adjust it as needed regularly.
Want to build a DIY SaaS business? We can help!
White label social media marketing pricing can be a tricky business challenge, but it doesn’t have to be! We built Cloud Campaign to help marketing agencies scale, including rolling our white-labeled SMM software into your service and helping you figure out how to price your white-label software.
If you need help with rolling Cloud Campaign into your business or want to see how this DIY SaaS model works in action, click here to schedule a demo with our team.