Software Discount Deals: How Can They Benefit SaaS Startups

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That word is like magic to your customers’ ears. It’s a great way to generate interest in your software. If you market it right then, you can see an increase in the number of your customers. But that’s a big if.

Offering software deals can be a smart marketing and sales move. This article will discuss how you can provide software discount deals and get the most out of them. We will also discuss how discount deals compare with other promotional offers that are out there today.


What Are Software Discount Deals?


Software has become an important commodity, just like computer hardware today. After all, it is the software that makes computers and other devices useful. If you’re running a SaaS startup, it’s not easy to find people who will be willing to give your software or apps a chance. You need to offer them interesting and enticing offers.

Discount deals are ideal offers for catching the attention of potential clients. They usually come in coupon codes or discount code vouchers. But you can’t just offer discounts without planning for it extensively. You need to have a clear idea of what you are offering.

With a discount deal, you are offering your product at a subscription rate that’s lower than what you will normally charge. If your software has a normal subscription rate of $50 per month and you offer a discount of 20%, then customers can get your subscription for a discounted rate of only $40 per month.

It’s up to you to make the discount last for the duration of their subscription. The alternative is to put a limit to it. For example, the discount promo code can be for 1-year subscription, and then after that, the customers will have to pay for it in full.


Why Discounts?


Why should you offer discounts?

You can answer this one for yourself. For sure, you have bought something before just because of the discount being offered. You might have seen some clothes being offered at discounted prices and you decided to purchase them, even though you never thought about buying clothes when you left your house.

Everyone has that sort of experience, and it’s understandable. People love discounts. According to a study conducted in 2012, consumers who got a $10 voucher experienced a 38% increase in oxytocin levels. Oxytocin is the hormone that promotes the feeling of well-being, among others. The same study found that the same people who got the voucher were 11% happier than those who didn’t get the $10 discount coupon.

That just shows how powerful software coupons can be when attracting customers.


Are Discounts Effective?


Now, the question is, are discounts effective?

The answer, of course, depends on your end goal. Are you offering discounts on your software because you want more sales? Is the goal to promote your software?

You need a good strategy for your discount offer to work. You need to determine the right discount amount to offer. Give out a discount that’s too high, and you will lose money. Come up with something too low, and it might not attract enough people.


Pros and Cons About Discount Deals


To see whether discount deals will be beneficial to your business or not, you need to know more about the pros and cons of discount deals.


Pros of Discount Deals


As mentioned earlier, discount deals make your customers feel good, and people will associate that positive feeling with your brand.

Another major advantage of offering a discount for your Saas product is that people will be less likely to compare it with other software or app. They will focus more on the latest deals being offered.

It’s great for promoting your brand. When people hear that you offer a discount, they listen more. They want to find out if they can take advantage of a really good deal.

A discount can boost the number of sales for your SaaS startup. Discounts can effectively draw in more customers if you have struggled with sales.


Cons of Discount Deals


Like everything else, offering SaaS discount deals has its disadvantages too. Here are some of those:

While discounts can make your customers feel good, they can also harm your branding. It can lower the perceived value of your SaaS branding. People might think that because you lowered the price of your SaaS product, it is of lower quality.

Based on a study that was conducted before, consumers who paid full price for a product were more satisfied with their purchase. That’s not always the case, but it is worth noting that. While discounts can generate more subscriptions, it doesn’t necessarily translate to higher profit margins. That’s because the lowered prices could mean lesser money coming in. You could lose money.

Offering a discount is not a sure way to reach your goals.

Whether you want more sales or you want to promote your product. It still depends on how effective your strategy is.

Those are the pros and cons of offering a discount deal for your SaaS product. Now, it’s up to you to decide whether it can be useful for your brand or not.


Creating a Software Discount Deals Strategy


If you feel that a discount deal will benefit your SaaS business, you need to create a strategy. Here are some ideas that you can use when building your plan.


Set Your Goals


Before you start slashing the prices of your SaaS products, you have to be aware of what your goals are. We have discussed this briefly earlier, but it’s time to look into the details of the possible goals.

Get New Subscribers. Your first goal is to get new subscribers for your SaaS product. You are willing to earn less money in exchange for their subscription because you just want new customers to get things rolling.

Boost Your Sales. We have mentioned this goal earlier. It is one of the most common reasons why businesses offer discounts. That usually means they are going for volume sales. What does that mean?

Encourage Brand Loyalty. Encouraging brand loyalty means you encourage the existing customers to stay.

You may have multiple goals. You may want new subscribers while encouraging the existing ones you have.


Types of Software Discount Deals Strategies


You need to decide on the type of software discount deal strategy. Here are some of the more common ones.


Bundled Deals


For this type of offer, you don’t just lower the cost of your software. What you do is bundle several products together and offer them together at a lower price if someone subscribed to them individually. The obvious downside of this offer is that you need several products. If you only have one software, this can’t be an option.

But if you have more than one related software, a bundle deal is a good option. Let’s say you have software for video and another for audio; offering those two in a bundle deal can attract customers.

A common tactic for retailers using bundled deals is to bundle the less popular products with the bestsellers. Offering bundles can work with a SaaS set up too. If you have a bestselling SaaS product and one that isn’t getting subscribers, bundle them together in one offer.

When planning a bundled discount, the main thing to consider is which products should be bundled together.


Prepayment Discount


Another type of deal that you can offer is the prepayment discount. The idea here is to discount anyone who gets a subscription even before the software is available. It is an excellent way of generating cash flow even before the product is out there. A prepayment offer should be on the table if your startup is short of cash.

But there is another model for prepayment discounts, and it is very common for SaaS. For example, offering an annual payment plan for your SaaS product can get new subscribers.

Instead of the customers paying each month, the yearly deal will pay a one-time amount. The total annual fee is lower than the total cost of the 12-month subscription for a monthly plan.

You need to consider whether your customers can pay a larger amount than you charge monthly.


Volume Discount


It’s not easy to implement a volume discount for a SaaS product, but it is possible. You can offer a discount if people customers get multiple subscriptions. A volume discount will work if companies and businesses use your software.


Seasonal Discount


You need to have a seasonal discount as part of building your branding. It helps raise awareness regarding your brand among your potential customers. Any important event celebrated by your target audience should be reason enough to hold a seasonal discount. For example, you can offer a discount on Black Friday or maybe on Christmas for your software.

Remember that many people are on the buying mindset during the holiday season, so you must take advantage of that.


Buy One Get One


The buy one gets one offer is a very common deal offered by many retailers, but it can also work with SaaS products. The buy-one-get-one agreement is very similar to the bundled deal, but instead of all products having some value, one of the products here is just a giveaway.


Ensuring Profitability


The difficult part about offering a discount is ensuring that you make profits. How do you know that the discount isn’t too much? What is the right percentage to offer?

Here are some of the ideas that you can use to make sure you will be making a profit:

Keep your marketing costs as low as possible. You need to promote your discount deal, but it has to be as low as possible. Overspending on your marketing efforts will eat up your profits. Ideally, you should market your discount offers to the existing leads you have.

Make sure that you segment your leads properly. For example, don’t offer your discounts to all of your contacts. Offer it to just the qualified leads and not existing customers.

Don’t forget to upsell your services. When someone agrees to the discounted offer, you should offer to upgrade or buy some other product you have.

When you get a new customer, try to convert them into repeat customers. Making more repeat customers can increase the lifetime value of each customer that you have.

Make sure that you set the right sales volume for your product. Your targets should be ambitious but realistic at the same time. Don’t set a sales goal that will be impossible for you to reach no matter what.

You need to understand how to set your discount prices strategically. We have listed some of the factors you must consider when determining the pricing.


Discount Deals Vs. Lifetime Deals


Some business owners tend to confuse lifetime deals and discount deals.

We have gone through the details of discount deals now it’s time to look into what lifetime deals are. As the name suggests, lifetime deals mean that customers will pay for a lifetime subscription to the software.

In some ways, a lifetime deal is a kind of a discounted offer because the customer will be paying for a lower price than paying for it monthly for the same period. If a discount can result in a loss of profit, then a lifetime deal almost guarantees that. Even when the cost of the lifetime deal is carefully computed, it can still result in loss of profit for a company.

Lifetime deal campaigns are usually offered when a company wants to generate interest among new users. Another common reason is when a company wants an injection of cash to continue operating. But lifetime deals are not very profitable.

So, overall, if you are just looking for ways to promote your brand, and you need to choose between discounts and lifetime deals, the former is usually the better option.

These are just some basic things that you should know about discount deals. It can be a useful tool to sell your SaaS product, but you have to be very careful in determining the discounts that you will be offering; otherwise, you could incur losses.

Visit our blog for more tips about lifetime deals, special offers, and Saas startups.


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Ken Moo