Evaluating Pricing Strategy

The Problem

In early 2014, local marketing software provider Signpost was in a challenging position — with their product rapidly evolving, they suddenly found themselves competing head-to-head with an entirely new set of companies. Signpost needed to quickly get up to speed on several market dynamics including how their newfound competitors were pricing, positioning and discounting their own solutions.

“Our pricing plan was too complex, there were 16 to 24 permutations. It was just too confusing for the sales team, customers and everyone involved.”
– Rod Feuer, Signpost COO

The Solution

To gain a better understanding of the competitive landscape and to reassess their pricing model, Feuer reached out to OpenView Market Insights Manager Brandon Hickie. The team set out to conduct market research that would ultimately provide Signpost with recommendations on how to simplify its pricing structure while capturing more value.

Signpost asked for OpenView’s help answering three key questions:

  1. How do Signpost’s competitors price and structure contracts for their products?
  2. How do competitors demonstrate value and position their products?
  3. How is this similar and different from the way Signpost prices and positions its products today?

To get started, OpenView conducted primary and secondary research to learn about the pricing and discounting models of six competitors. They looked at each of the models across 16 different variables, including price level, setup costs, billing and contract terms to better understand competitors’ pricing tiers and discounting practices.

The Market Insights team built six competitor product and pricing profiles highlighting key differences in pricing and discounting models in order to best identify how Signpost could optimize its own model.

The Results

Based on OpenView’s findings, Signpost successfully rolled out a pricing change, which resulted in a 40% increase in average revenue per user (ARPU) in less than a year.

Evaluating their pricing strategy enabled Signpost to simplify its pricing and discounting options, making it easier for customers to navigate and select the best options. Signpost’s sales team also benefited greatly — a simpler pricing structure enabled sales professionals to better position themselves in competitive deals.

Today, Signpost is strategically positioned to compete and win against key competitors, and its ARPU continues to increase as the company builds out its platform and product functionality.