SaaS pricing – when is it OK to charge EU customers more?

SaaS pricing – Suntico strategy part 1

This is the first in a short series to outline the Suntico SaaS pricing strategy.

Why Suntico is (currently) only priced and sold in US Dollars

Firstly, not many companies publish their pricing strategy – not even software companies and their SaaS pricing strategy – but why not?  Especially if you have nothing to hide.  It was a recent article in Business Insider that prompted the idea.

The article highlighted the difference in prices for iPads in different countries – from $473.77 in Malaysia to $1,094.11 in Argentina for the same model at the same time.  To a certain extent you can see how price variations happen for hardware – but what about software?  Well just try typing into Google “software prices in Australia” and see what you get.  For many years it was an industry joke that to sell a US software product in the UK, all you did was replace every “z” with “s” and every “$” with a “£” sign.  Surely you could not do that now for cloud-based products?

SaaS pricing

Should SaaS companies charge different prices for the same service in different regions?

Should SaaS companies charge different prices for the same service in different regions?

Well yes, despite the transparency that the web brings, it only took me ten minutes today to find one very interesting example of SaaS pricing.  The service I found (a business to business service) costs 45% MORE in Ireland than it does in the US for the same thing.  Bought, paid for and delivered over the web.  Yes, the nominal € price figure was actually higher than the nominal $ figure for the same product!  Euro price €135 per month, US Dollar price $125 per month.  This is not a criticism – merely an observation.  There may be a perfectly valid reason for the difference.

But at Suntico we are not going to do this for our SaaS pricing.  At least not for the moment and not without good reason – and I can only think of one good reason: value!  In other words, if it is clear that customers in one region attribute a higher value to Suntico than customers in another region because of where they make their purchase from.  This may be due to skewed exchange rates or that our service is genuinely more useful (or used in a deeper way) in one region versus another.  If the latter were the case though, it would make more sense to segment by how and why the software is used than by where it is purchased.

You might raise the classic argument about higher sales & marketing or localization costs for a particular region (aka “the cost of doing business”).  This does not make sense though if you are pursuing a value-based pricing strategy.  If the product is worth $X to your customer that is what it is – and it is immaterial (to your customer) what your sales, marketing or localization costs are – unless they are too high, in which case you have no product/market fit.

At the moment, I have no basis to believe that a UK or Australian customer derives more value from Suntico than does a US or Canadian customer.  So for the time being, we will have one SaaS price list in one currency for one global region.  This I believe, provides the highest level of transparency and sense of fairness for our customers.  Now to the choice of currency.  I was tempted for about 30 seconds with something neutral and modern – maybe Bitcoin – but I nether wanted to confuse my customers or have to revise my prices every day.  We have selected the US Dollar as our sales currency.  This is against the Euro which is our cost currency and would therefore be the preferred choice of accountants, but remember that if we are pursuing a value-based strategy we should adopt the most acceptable currency in the eyes of our customers.  From a global perspective this is at least for now, the green back.

To answer the question in the title of this blog – it is OK in my opinion to charge UK customers more than US customers if the UK customers are deriving greater value from the product because of their location.  Otherwise, I would look for a different way to charge for this value.

To see Suntico in action, access a demo account for as long as you want without restriction before opting for a more engaging free trial.

Get access to a demo account straight to your inbox – just let us know where we can send it!

This site uses cookies, by using this site you agree to our use of cookies. Learn more

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this. For more information you can check our Privacy Policy.

Close