Opportunities and obstacles of different pricing models for early-stage SaaS companies in retail and e-commerce

Abstract

Pricing is one of the most crucial but complex and difficult tools a business or company has in a free market. The aim of this research was to evaluate the opportunities and obstacles of different pricing models for early-stage SaaS companies in retail and e-commerce. The first research question asked what the main opportunities and obstacles that the buyers and sellers face with different pricing models for SaaS solutions are, and the second research question asked if value-based pricing models are attractive for sellers and buyers alike. The chosen research method was a qualitative study focused on in-depth semi-structured interviews with the main source being six industry experts and decision-makers from either the e-commerce, retail or SaaS industry. The literature review covers pricing research, value-based pricing, Software-as-Service, risk aversion and incentives. The research results indicated customer participation and accessibility being the broad theme regarding opportunities, and barriers to successful implementation being the broad theme regarding obstacles. Transparency, predictability and flexibility were key opportunities, while risk management, complicated pricing models and lack of trust and commitment were the biggest obstacles. Obstacles prevailed when looking at value-based pricing, as it was considered complicated, risky and resource-heavy, and the identified opportunities included managed services and partial implementations. The complexity of the subject led to some limitations, which in turn can encourage future research on the subject.