Price Localization Strategy: What Global SaaS Startups Need to Know

price localization strategy SaaS startups

Business is an increasingly global game — as consumers, we know we can purchase products from anywhere in the world, and as business owners we increasingly have customers abroad as well. SaaS startups, with products that usually live in the Cloud, are particularly well-positioned to sell around the world.

If you’re selling in other locales, it’s a smart move to localize your SaaS pricing strategies. Price localization can boost growth, sometimes to a level 30% higher than competitors in localized markets, according to Patrick Campbell, co-founder and CEO of ProfitWell.

What is Price Localization?

Price localization is the practice of setting your prices appropriately for a particular geographic context. This can be done on a cosmetic level by listing prices in the correct currency for the local market. On a more advanced level, price localization can also involve establishing separate SaaS pricing models in each locale to be as responsive as possible to each local market.

Everything You Need to Know About Price Localization

Price Localization

There are two methods of localizing pricing: cosmetic and market.

Cosmetic localization is just as it sounds: surface changes to fit in better with a local market. Key elements of this include stating your prices in local currency and translating your website to the local language. Start by targeting your largest local market and keep adding more markets as you expand.

Market localization is a deeper dive, which involves changing not just the currency but the price itself to fit local conditions better. Research on your local markets can tell you where you face relatively high and low competition, which will affect how you price your product in each place. A good method is to use price sensitivity studies to determine what local buyers are willing to pay in each market.

Insights on Your Localized Buyer Personas

Another aspect of market localization goes beyond price and currency. You can also learn more about the customs, traditions, and perspectives common in each market, so you can create proper localization messaging and content, packaging, and other brand elements to better fit a typical buyer persona for each market.

This trend toward customizing products and marketing for specific markets has been ramping up for more than a decade. In 2006, Harvard Business Review called it, “A quiet revolution in consumer markets.” As the world reached peak standardization with the growth of global retail chains, businesses expanding into new markets finally began thinking more about the particularities of each. The Harvard Business Review wrote:

“When it comes to consumer markets, one size no longer fits all. In response, smart retailers and consumer goods companies are starting to customize their offerings to local markets, rolling out different types of stores, product lines, and alternative approaches to pricing, marketing, staffing, and customer service.”

Price Localization Strategy

Pricing is, of course, a very essential part of this picture. It’s of little use designing a killer marketing strategy that’s perfect for a local market when you’re charging locals an outrageous price for your product. There’s money to be made, but only if you charge the right amounts.

“You need to have a price localization strategy, because the SaaS world is becoming increasingly global and the revenue gains are too large to shirk from,” writes Campbell.

His team analyzed 50 SaaS companies and found that those most focused on localization were experiencing much faster growth than those that weren’t localizing pricing. He emphasizes that this is a correlation and not necessarily a one-to-one causation; such that, those who are on top of localized pricing are also likely on top of other aspects of management that lead to accelerated growth. As Campbell puts it, “Someone who has a localized pricing strategy also has quantified buyer personas and a tight SaaS pricing strategy.”

When to Localize Your SaaS Pricing

When to Localize Your SaaS Pricing

When should you localize your pricing? According to Chargebee, the early stage is when cosmetic localization will be most appropriate. Tackle full market localization during the growth phase, between $5 million and $100 million ARR. If you reach late stage and haven’t dealt with price localization, you have a lot of catching up to do. You’ll do best at this stage to hire a consummate professional who can whip your SaaS pricing strategy into shape.

However you approach price localization, the key for SaaS startups selling in global markets is to address it. Ignoring this increasingly essential piece of business strategy is a sure way to get left behind.

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