IT and Business Insights for SMB Solution Providers

5 Ways to Build a Better Pricing Model

Today, more IT pros are adopting a subscription-based pricing model or using a hybrid approach that takes a wider view of products, services, and support. But what works for you? By Samuel Greengard

It's no secret that pricing models have become far more complex in recent years. The Internet and instantaneous access to pricing data has created a more dynamic environment and forced vendors-including channel pros-to use new methods and strategies. Today, slapping a price tag on a product or project isn't necessarily a viable or profitable way to run a business. It's essential to rely on new and different models to optimize pricing and generate value for clients.

As a result, a growing number of channel pros are steering away from unit pricing, an approach that can erode margins and transform them into a commodity provider. Many are adopting subscription-based pricing-the same general approach that Dropbox, Salesforce, Evernote, and a slew of other cloud-based providers now use. Some are also turning to a hybrid approach that takes a more holistic view of products, services, and support. In some cases, bundling products and services makes it possible to deliver greater value to clients.

Regardless of the approach a channel firm takes, one thing is certain: It's essential to use the right metrics and analysis to determine optimal pricing and package products and services in a dollars-and-sense way. Whether an organization turns to a spreadsheet or relies on software to view pricing models and understand how they might play out in the real world, the desired result is a pricing strategy that works in today's environment. Here are five ways to maximize your success...and profits:

About the Author

Samuel Greengard is a freelance contributor who specializes in business and technology writing.