How Should SaaS Companies Deliver And Price Professional Services

As mentioned earlier, professional services are expensive to offer and retain. This is especially true for freelancers working for other companies and full-time employees at large companies with extra marketing, leadership, and business development costs. The topic: deliver and price professional services.

Professional service packages are one of the most lucrative strategies for software vendors that want to make money off their products. However, some pitfalls can cost you profit if you need help understanding them!

B2B SaaS companies, professional service pricing strategy. How to use each of these crucial tools to optimize your pricing, improve revenue, and boost profitability.

Professional services revenue is fantastic, but it has little bearing on the success of your primary SaaS firm. Never include professional services revenue or expenditures in ARR, ARPU, CAC Payback, SaaS COGS, LTV: CAC, or other SaaS metric computations.

The biggest misconception is price. Many small-scale software vendors believe that offering professional service packages is impossible because they assume their competitors must do it more efficiently than them. They may also need to pay more attention to how much their competition charges in professional services fees.

By considering pricing yourself outside of your industry’s norms, you risk losing sales or being labeled too low-quality. This could scare away potential customers who think you need to be more reputable or help them achieve their goals.

What will you utilize to position your product and influence price decisions?

Make pricing consistent

As mentioned before, depending on what professional services you offer and how much time it takes to provide them, your prices can vary greatly. This is normal!

Businesses in any field will have different price points they want to hit for their product or service. We’ve discussed why this is important to do as well as possible when offering your professional services.

Now that you’re an expert in delivering professional services, let’s talk about how to give them efficiently without overcharging or underpaying.

We’ll also discuss why pricing per hour vs. per project makes a difference.

Disclaimer: The following article will be very technical. You may skip some of these concepts if you are already familiar with invoicing and charging.

Provide thorough scope clarification

As mentioned earlier, one of the biggest reasons some professional service providers leave their next client is that they are still determining what services they will be offering or how much time it will take to offer them. This can easily be avoided by having an open conversation about the professionals you want to hire and their positions.

By being clear about these things at the beginning, your potential employee can form pricing estimates and timelines for the job that are more accurate. They may also have insights into better ways to fulfill your goals if this is the case.

It is essential to discuss whether or not there are any requirements before agreeing to work with someone else, as well as if there are limitations on external resources such as vendors. By clearly defining these things upfront, people can save lots of wasted energy and money!

Just make sure to keep conversations professional and level-headed at all times. If anything seems off-topic or vague, try again later when it is more appropriate.

Test your assumptions with them

As mentioned before, professional services are expensive, so most small businesses need help to hire an attorney or other professionals like accountants and consultants. This is also one of the key reasons for this industry’s plethora of inferior businesses. There need to be more customers to pay for their services!

Business owners who want quality legal help or accounting advice must understand what vendors offer for prices, how they handle cases, and whether or not those costs are within budget.

By asking hard questions about the terms of the agreements and the overall cost of each service, you will be able to find good bargains. You may even get someone offering a discount if you become a regular customer!

There is no reason to pay more significantly than necessary for professional services since you’re investing in your business’s future.

Provide regular updates

As mentioned earlier, one of the biggest mistakes saas professionals make is offering expensive or premium professional services without providing any updated schedule. This can be done via email, SMS messages, Slack, etc. Still, it should have an automatic check-in feature where you agree to chat with your client once per week (or every two weeks, whatever they choose).

This way, they will know when to expect some action from you, and you’ll get paid for it!

And remember, even if you are waiting on them to do something, send out an update anyway – this gives your reputation as a pro worth paying for.

It also helps prevent people from dropping off communication altogether, which could cost you money in lost revenue.

In fact, according to a survey conducted by YouMail, over half of all respondents said that delayed payments were their top reason for abandoning a service.

Be consistent

As mentioned earlier, one of the biggest mistakes SaaS companies make is offering different levels of professional services for their product. This needs to be more professional and can turn off potential customers.

By having various service packages, you are sending out mixed messages to your clients. You may feel that these services are unnecessary since you already paid for the basic plan, but what if there was no basic plan? Or what if there were two costly plans next to each other?

Consistency is critical when it comes to delivering value to your users. Make sure every feature in your app has been thought through and is marked as an essential part of the service.

There should be nothing superfluous like “Customize page titles” or “Add testimonials” because that helps boost engagement. Still, they are not strictly necessary for business success.

Held back this vital element of your service is also costing you money. By avoiding these additional fees, you will save some serious cash which you can reinvest into growing your company.

Only upsell someone on something they have used before! It is incredibly annoying and uncomfortable for them, costing you money in lost sales. People get furious about being tricked, so don’t do it.

Offering limited-scope projects can be beneficial.

As we mentioned, offering low-scope projects is not only okay. It’s good business practice for your company. By creating small services focusing on one area of your product or service, you create an opportunity to generate new revenue streams.

Pricing these products lower than full-service offerings incentivizes people to use your software to add depth to their organization.

This is especially true if you compare the price of a basic plan versus a premium package deal. A free trial usually includes all of the features in the more expensive packages, so users will continue to invest in paid accounts because they are getting some value out of the app!

When you offer lite plans, ensure you include enough functionality to satisfy your customers. You don’t want them to feel cheated since they discovered they couldn’t accomplish X because the light plan didn’t have feature Y.

Set your prices based on the time and resources you’ll put into the project

The second major factor in setting your professional service pricing is how long it will take to complete the job. If it takes one hour to do something, its price should be proportionally lower than if it took twice as much to accomplish the same thing.

Professional services are not priced according to how expensive they are. Still, instead how much time it takes to produce quality work. As a result, experts must discover methods to cut the amount of time it takes to make their highest-quality work to keep their fees steady.

You can increase your efficiency and reduce the cost per outcome by delivering high-quality results more quickly.

Recognize that they may not have the resources to take on a project fully

As mentioned before, professional services are expensive, which is another reason some people need help to afford them. Even though it may seem like there are no low-cost ways to market your business, you can always go to work for less than what others do!

By being more strategic with how you spend money, you will save lots of money in marketing. This includes hiring freelancers instead of full-time employees or buying cheap products that last only a short time.

There are many ways to deliver professional services while still keeping costs down. By providing some of these services yourself, you can lower the cost barrier to entry for other professionals.

For example, if you are good at writing content, you can outsource this task and reduce the price per page. If you are skilled in designing websites, you can find freelance designers who might offer their services on contract.

Running a sauna is intimate, so most companies only need one person to run it. Therefore, you could offer your services as a proprietor and cut the cost per session by serving as a part-time employee.

Suppose you are great at social media management. In that case, you can hire someone to handle this service much cheaper than owning your account. And if you are savvy about fitness, you can start your gym and provide similar services at a fraction of the cost.

Deliver And Price Professional Services Tips:

Cost-to-service is much more important than customer acquisition cost (CAC), especially when a freemium plan is available. Try-and-buy is also effective if your client acquisition cost is relatively high.

Services revenue should be complementary to the product you are ultimately building but require humans to deliver vs. a software sign-up that can be used immediately without any human intervention.

Second, keep your pool of resources for professional services separate from your product, engineering, and support resources, and commit to spending at least 30% of your Annual Recurring Revenue on product development.

The metrics that are used to monitor success. GET WEEKLY INSIGHTS + TRENDS ON SAAS METRICS

The result is a more robust offering and minimal development time wasted building things people don’t need or want. These observations can fuel your product roadmap and ensure ongoing product-market fit with your customer base.

Churn is sometimes caused by your product not being truly valuable and sometimes by customers needing to understand, adopt, and engage with your software. Time commitment plays a role in pricing incentives and pricing plans, too. That’s the balance between choice, cash, and churn.