You’ve seen it a million times. It might already be a staple on your website. I’m talking about a website’s price page with the standard three or four boxes of tiered offerings. That ubiquitous price menu might just be undercutting your entire enterprise business.
Multi-tier pricing is a popular model, and that price menu page design is used by everyone from Slack to Zoom to just about any software-as-a-service company trying to grab both business-to-consumer and business-to-business market share.
- The leftmost box or boxes offer a free or low-priced tier, acting like a Trojan Horse to get individual customers to try the product with little risk.
- The middle box is always either the “Most Popular!” option or offers the “Best Value!” But it’s really just a tier of bulk sales designed to get maximum penetration into teams without triggering a scrutinized corporate purchase. It’s just enough money to slap on a credit card each month without raising eyebrows.
- The right-most box is always the brass-ring enterprise sale, and in most cases, you’ll need to call a sales rep to get pricing and terms.
Don’t get me wrong. The tiered pricing model is extremely handy for grabbing market share from every possible angle. But in cases where a B2C or small-business-focused product is trying to break into the enterprise arena, this kind of pricing menu can lead to your website selling the wrong product to the wrong market, and you may wind up with slow sales or no sales at all.
Here’s how to correct it.
1. Ask yourself if you’re selling B2C, B2B, or B2X.
Not long ago, I wrote a post about the emerging B2X (business-to-anyone) sales approach, one that takes a bit of B2B and a bit of B2C but is actually agnostic to both. The requirement for a B2X product is that it can conform to all consumer and business requirements and use cases at the same time, and thus, the benefits to both consumers and businesses can be highlighted with the same pitch.
Selling into B2X is a difficult goal to reach, and Zoom is one of the few decent examples of a true B2X company. While Zoom’s video-as-a-service software is mostly known as a corporate video-conference competitor, during the pandemic Zoom made big gains in the consumer, leisure, and entertainment spaces as those spaces boomed during the lockdowns.
Slack looks like a B2X company, but I’m not sure even Slack knows what Slack is yet. Slack has roots in B2B, but at its heart, it’s a chat app, which is traditionally a B2C product. This allowed Slack to do the “Trojan Horse” free-tier sales method very well–giving the product to individuals and teams for free so that it could expand virally within the entire organization.
While Zoom and Slack both use the four-tier approach to pricing, Zoom, the more B2X-style product, actually lists their enterprise pricing on their website. Slack, on the other hand, like most B2B pricing paradigms, makes the customer call a sales rep for enterprise pricing and terms.
2. Understand why tiered pricing doesn’t always work for B2B and B2X.
Here’s where the mistake gets made.
Most as-a-service products can easily make the theoretical leap from individual sales to enterprise sales because the expense in delivering the product is front-loaded. In other words, because the product uses the same infrastructure, materials, and labor for the first sale, additional customers can be added to a sale for a very low incremental cost.
But just because you can build and deliver a product for many people at the same time doesn’t mean that your enterprise customer wants the same thing your individual customer wants.
Zoom’s enterprise pitch is easy to understand, because it’s a very B2X sell. In Zoom’s B2C use case, the customer wants to be able to communicate via video to one or multiple people. In its B2B use case, the organization wants its individual members to do the same thing. There might be some extra bells and whistles in the B2B case, but those extra features are universal across B2C and B2B, just more in-demand at the B2B level.
Most as-a-service products do not fit this B2X paradigm.
Take training-as-a-service, for example. Individuals purchase training because they want to save time getting better at something and they also want the satisfaction and reward that comes with the improvement.
At the enterprise level, while those benefits are important, the enterprise customer’s use case is quite different. A business customer needs to be able to offer training-as-a-service at any time, to any of its members, to achieve a goal of a level of competency across their entire organization.
The B2B sale must emphasize throughput–speed and accessibility–over consumer priorities like quality and time. It’s an entirely different sale to an entirely different customer type.
This is why you need to call a sales rep for B2B enterprise sales–not because the price is a “secret,” but because the sale needs to be re-pitched as something entirely different.
3. Figure out what you’re selling and to whom.
If your sales model is not true B2X, and your sales case sounds more like the B2B model at the enterprise level, you’re actually selling two different products, as far as the customer is concerned. Yes, you may be using the same infrastructure, materials, and labor to build both, but the customer expectations are wildly different for each.
Instead of the tiered pricing model, think about splitting the pitch early on in the sales funnel. This will allow you to bypass waiting for customers to self-identify at the price page on your website.
Think of all those enterprise customers you’re losing as they travel down the consumer funnel, only to be dissuaded by a B2C pitch or by the poor customer experience of having to pick up the phone and talk to a sales rep to learn more.