B2BVault's summary of:

The art of software pricing: Unleashing growth with data-driven insights

Published by:
McKinsey
Author:

Introduction

Pricing can grow or break a software business. This guide shows how smart pricing helps companies make more money and keep customers.

What's the Problem It Solves?

Many software companies don’t think about pricing until it’s too late. They guess numbers, follow trends, or offer too many options0-leading to low profits, confused buyers, and slow growth. This article explains how to stop guessing and start using data to set the right prices, in the right way.

Quick Summary

As the software world slows down after years of fast growth, smart pricing is becoming a top priority. Companies can’t just grow fast anymore-they need to grow smart. That means getting more money from the right customers while keeping costs in check. The article explains that most companies want to fix their prices but don’t have the teams, tools, or training to do it well.

Five big moves help the best companies grow through pricing. First, they build a strong team focused only on pricing decisions. Second, they train sales reps to talk about price with confidence and give them real-time tools and data. Third, they use analytics and AI to figure out what prices work best, and they change them when needed. Fourth, they choose price models based on what customers actually value-like how much they use the product, not just how many people use it. Last, they keep pricing simple, with clear bundles and fewer surprise charges. Bonus tip: good companies reward sales teams for sticking to smart pricing instead of just offering discounts to close deals fast.

Doing all this isn’t easy. It takes time, teamwork, and better systems. But companies that take pricing seriously and treat it as a key strategy-not an afterthought-are the ones that win.

Key Takeaways from the Article

  • Pricing is now a top-level issue for software companies, not just a side task.
  • Guesswork or copycat pricing doesn’t work anymore.
  • A strong pricing team, clear rules, and good tools are must-haves.
  • Training sales teams and giving them simple price guides helps close better deals.
  • AI and analytics help track which prices work and find better ones.
  • Moving away from “per seat” pricing to value-based or usage-based models makes more sense.
  • Too many pricing choices confuse customers and slow down sales.
  • Simple packages with clear value make people trust and buy more.
  • Companies should reward reps for smart pricing, not just fast deals.
  • The faster companies fix their pricing systems, the better they’ll perform.

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