How do you use ramp pricing?
Ramp pricing is a way for businesses to get new customers and get them to subscribe to more services by offering savings or longer contracts. It allows you to negotiate better prices on future orders while giving the seller more oversized orders, longer contracts, and more stable cash flow.
Ramp pricing differs from most subscription-based pricing because it lets customers “step up” or “step down” over time. This helps sellers make deals more fair for their buyers. It works exceptionally well for companies that want to release a new product in stages or have limited funds in the short term, like seasonal businesses or startups that just raised a Series A round of funding.
Changing subscription levels is pretty standard, but a ramp price feature in CPQ, subscription software, or billing makes it easy. Instead of making the customer think about changing their subscription level occasionally, ramp pricing does it for them based on conditions already set.
Synonyms
- Ramp pricing model
- Pricing in a ramp deal
- SaaS ramp deal pricing
How and Why SaaS Companies Use Ramp Pricing
It’s hard to hit a changing target when finding the best SaaS pricing model (or models). A great price point can differ for different businesses and customers because of many factors.
That’s why the ramp price is so great. It provides a free yet organized method that can be very helpful for both SaaS providers and those who buy their services.
Let’s look at it in more detail:
Ramp deals and minor changes to prices
Ramp deals are a clever way to set up SaaS contracts. They start with a smaller or higher price, depending on what the buyer needs now and in the future.
Starting with a lower price, businesses can get new customers who might not be ready to pay the total amount immediately. For a short time, they can try the service for less money, knowing that the price will go up over time.
Software often needs to be installed in stages for big business contracts. Buyers should offer ramp pricing and slowly roll out the platform across the company. This way, buyers can gradually get paid more as more people join.
Businesses can even use ramp pricing to thank customers who stick with them for a long time. One way to make the deal more appealing would be to lower the price by 10% after the first year of a two-year contract.
Sellers could also use a ramp deal to serve customers who would only need a lot of use for a short time, like a seasonal store.
Why ramp pricing is a good idea
The small price changes aren’t the only thing that makes ramp pricing a good plan. Everyone benefits: customers get a better deal and know it, and companies know they’ll make money in the future.
Ramp pricing is an excellent option for many SaaS businesses, even if it’s not their primary plan. Here are some of the main reasons why:
The sales process is faster, and the cost per acquisition is cheaper. Using ramp pricing to get new users is a great way. When buyers agree to pay less upfront, it’s easier to sell the product to a broader range of people, and it costs less to get new users.
Deals that can grow. When sellers use ramp pricing, they can set up contracts more flexibly, considering both usage and commitment levels. This makes it easy to make changes without upsetting customers or the negotiation process.
Less turnover. Giving a deal at the start of the subscription can be a way to say “thank you” for their trust. Customers get used to the service and see how valuable it is to their business as the price slowly increases. Businesses can also turn this approach around so that the price goes down over time as a reward for being loyal. This sense of getting good value for money over time can be a strong reason for keeping customers.
Easy-to-use plans for subscriptions. Prices going up are written into the contract from the start, so there’s no need for awkward talks or discussions later on. The customer journey is smoother when everyone knows what to expect.
There are chances to upsell and cross-sell. As subscribers move up or down in price, sellers can add more features and functions that fit their needs. Initially, they could offer more advanced versions or goods that go well with the main product. This helps them make more money and capitalize on customer growth.
How to Get a New Customer: The Growing Business
Ramp pricing is excellent for growing companies because it can be used in many ways.
It’s possible that these companies don’t have the money to buy pricey software contracts right away. But as they grow and make more money, they will be able to afford (and need) higher payment levels.
By making it cheap for growing businesses to sign up, SaaS companies can keep customers, which will likely be very useful in the long run. Deals made on the ramp can sometimes turn out to be the best customers for a business.
This way, ramp pricing is a great way to build a strong relationship with customers and improve their lifetime value (CLV). Customers will appreciate that they were able to get the service at a low price when they first started.
How to Use Ramp Pricing for Billing Subscriptions
The first step is to understand the benefits of ramp pricing. When using a subscription tool, setting up ramp pricing is straightforward.
Do these things:
First, go to the customer account.
To add a ramp price subscription to a customer account, click on that account. You must provide information about the customer and the payment plan(s) for a new account.
When you log in, you must find where to change or add subscriptions.
Step 2: Pick the Plan with the Highest Price
In CPQ and membership billing, rules have already been set by a company administrator. You can choose the ramp pricing plan you want to use, such as a price that changes after a specific time. For instance, it could be a 10% price for the first year of a three-year deal.
If they aren’t already there, you will need to go to the backend and make the rules, or you can ask an administrator to handle the price rules for you.
Step 3: Set the default ramp prices
The subscription software will use the ramp pricing schedule from your plan and bill the customer properly after you choose a plan. This takes the guesswork out of the process and makes it clear.
Step 4: Change the ramp pricing schedule if you need to.
Not every customer will easily fit into plans that have already been made. To change the ramp pricing plan for a particular customer, all you have to do is click on the link to the pricing page.
If you don’t have permission to change prices independently, you might need to ask for permission first.
Step 5: Make the price list your own.
The edit choices will be on the side when you go to the page to change the price. Here, you can change the prices based on what the customer wants.
Step 6: Make the changes
When you’re done changing the price plan, click “Apply.” After you do this, your changes will appear in the plan.
This visual proof is an excellent way to ensure that the changes align with what you and the customer want.
Step 7: Keep the changes
Last but not least, remember to save the change form. The changes will become permanent as soon as you click “Save.”
After that, the subscription is ready, and the software will bill your customer based on the new ramp pricing plan.
Technology for Ramp Pricing
You can get a ramp price for CPQ, subscription software, and billing automation. Sometimes, like with the DealHub app, all tasks can be done with one tool.
Taking care of subscriptions
Subscription management software takes care of everything a business needs to manage SaaS subscribers. It handles recurring billing, subscription plans, prepaid and postpaid billing, trial periods, and flexible payment methods.
It also takes care of customer alerts, upsells, and cross-sells that happen automatically when a customer leaves.
Ramp pricing is often an easy-to-use tool that comes with subscription management.
Set up, price, and quote (CPQ)
CPQ software handles ramp deals slightly differently because it was made to handle complicated price and product configurations, which are two sales processes. To set the ramp pricing system and pricing rules for customers in CPQ, users make an incremental order commitment (IOC) or a recurring order.
Customers can set up an IOC in several ways. They can either agree to a set number of user licenses for several years through a long-term contract or order a set amount every month.
Companies that make their product or service unique for each customer, need to set up complicated goods, or offer packages of services that require prices and discounts to be calculated automatically will benefit from CPQ software.
Software for billing
Bills software handles bills, sends invoices, processes payments, and sets up automatic subscription payments. With an automated billing tool, businesses can set up a subscription agreement for their clients, keep track of payments and invoices, and ensure all the information is correct.
Connecting it to CPQ and subscription tools can automatically bill based on the contracted ramp price (set in CPQ) and keep track of all subscription orders.
