I recently joined Christian Klepp on the B2B Marketers on a Mission podcast to discuss a passionate topic: leveraging customer segmentation for effective B2B SaaS pricing.
Below are links to audio and video, followed by a recap of our conversation.
The Differentiation Cop Out
“It constantly boggles my mind how common it is for companies not to understand the value they provide to their customers,” I told Christian during our conversation.
One of the most frustrating things I hear from B2B SaaS executives is, “We have no differentiation.” This is nothing but a cop-out. If the brand manager of Avión can charge a 3x premium over Dasani (which itself charges a 10,000x premium over perfectly suitable tap water), no B2B software company can claim they lack differentiation.
The truth? They haven’t thought deeply enough about why customers choose them.
Customer Segmentation: Beyond Firmographics
Most B2B marketers inherit the B2C approach of using demographics (or firmographics in B2B) as primary segmentation criteria. This leads to broad categories like “SMB,” “mid-market,” and “enterprise” that don’t drive decision-making.
Effective segmentation requires knowing both who customers are and what they want. Many organizations fail to do this, stopping at who customers are without diving deeper into their needs and context.
As I explained to Christian, “You may have an enterprise customer that acts very much like an SMB because of their particular use case or organizational structure.” Firmographics alone can’t capture these nuances.
Understanding Value Through Jobs to be Done
The Jobs to be Done framework offers a powerful lens for understanding customer value beyond features. It recognizes that value has multiple dimensions:
- Functional jobs: Making money, saving time, decreasing risk
- Personal emotional jobs: Increasing status, building confidence
- Social emotional jobs: Improving access to education, healthcare, voting rights
I illustrated this with a simple comparison: “A Rolex and a Timex have the same functional equivalent – they tell exactly what time it is. Why do people pay $20,000 for a Rolex and $20 for a Timex? Because they’re paying for status and emotional value.”
This multidimensional view of value helps explain why the same product can be priced differently across segments.
The Three Growth Levers Most Companies Ignore
Perhaps most importantly, I emphasized that “there are only three ways to grow a SaaS business: acquisition, monetization, and retention.” Yet most companies obsess over acquisition while neglecting pricing (monetization) as a growth lever.
The solution? Establish clear ownership of pricing in your organization and implement a regular process for revisiting it. Your product constantly evolves, your competitors aren’t standing still, and your pricing strategy must evolve accordingly.
Moving Beyond Price Points
Most executives think WHAT you charge determines success. In reality, WHO and HOW you charge matter more. This requires a deeper understanding of your customer segments, their context, and the various dimensions of value they perceive.
The next time you’re tempted to say “we have no differentiation” or focus exclusively on customer acquisition, remember: you’re leaving significant growth opportunities on the table. Pricing isn’t just about setting a number. It’s a strategic system that requires the same attention and governance as any other critical business function.
Want to learn more about strategic B2B SaaS pricing? Connect with me on LinkedIn or visit producttranquility.com.