Services as a Product

Pricing examples at confreaks.com

One marketing idea that I’ve been excited about recently is “Services as a Product” [SaaP]. This phrase stems from the concept of “Software as a Service” -  companies like Salesforce.com charge reoccurring fees for access to their software. It’s called a “Service” because the software is updated more frequently, there is support included, etc.

So what is “Services as a Product”?

Selling services as a product just means clear pricing for your services. Your customers will appreciate the clarity and transparency in pricing. [SaaP] means that you can add a table on your website and enable your customers to calculate how much your [SaaP] will cost.

Confreaks.com offers a service “High-speed wireless networking”. They price this service based on number of simultaneous users accessing the connection. Classic IT consulting pricing strategies for a project like this would be based on a per-hour fee for setup and maintenance. Additionally, a markup would be added to the ISP costs, and passed onto the client. Confreaks decided instead to have a very flat pricing structure, and price their service based upon number of users who will be accessing the connection in order to reduce pricing ambiguities.

People generally don’t argue about prices nearly as much when prices are so transparent. I would guess that only .000005 percent of customers at Bestbuy have tried to haggle in order to receive better product pricing.

Pragmatic Marketing also has a good article about this topic.