For G2.com -- formerly known as G2 Crowd -- bringing transparency to B2B software is not a new concept.
In fact, it’s been G2's core mission since 2012 after its five founders asked themselves why it was easier to get unbiased information about a $100 hotel room than a $100,000 piece of software.
Nearly a decade later -- G2 has raised $100MM, grown to 400 employees, and collected its 1 millionth review last year. Having now brought transparency to how users really feel about the software they use -- the company has set its sights on an even more ambitious goal: making transparent SaaS vendor pricing available to the businesses who are paying for it.
The state of software
If you’ve ever bought software -- you get it. At its best, SaaS vendor pricing can be confusing and unclear. At its worst, software pricing models can be downright secretive -- making it almost impossible for buyers to understand if they’re getting a good deal.
But make no mistake, there are a lot of deals happening -- even in this economy. Global IT and software spend will reach $3.6 trillion in 2020, and grow 4% to $3.8 trillion in 2021. Gartner predicts enterprise software to have the strongest rebound in 2021 due to the COVID-19 pandemic accelerating digital transformation, which left companies scrambling to support remote workforces and conduct business digitally.
A recent Fortune Magazine and Deloitte study found that 77% of CEOs reported the COVID-19 crisis accelerated their digital transformation plans, with one chief digital officer sharing that their company has implemented three years of digital transformation planning in a span of a few months.
The state of software pricing
So why -- in an industry that’s seeing more buyers than ever -- is it still so difficult for buyers to understand the cost of what they’re buying? There are several reasons.
Variable pricing models: Software vendors with opaque pricing are often charging customers variable amounts that are influenced by factors other than the actual tool they’ve bought -- such as company size.
Lack of competition: Especially in newer, emerging categories where a vendor is confident they won’t be undercut by its competitors.
Value-based selling: Vendors who believe in their product’s value and fear underselling it, will charge what they can -- despite not knowing what a customer would be willing to pay.
These factors are only compounded when we consider SaaS "stickiness." Which leaves buyers who secured good deals in difficult negotiating positions when vendors raise prices.
At this point, the vendor's services and data are so deeply integrated into their systems that switching providers — even for a better deal — would be too costly and disruptive. This leaves businesses "locked in" to more expensive renewals.
Software buyers overwhelmingly want transparent pricing These challenges have not stopped the market from buying more SaaS. They have however, rallied buyers to demand transparent pricing from their software vendors and it’s not hard to see why.
A G2 study found pricing information to be the number one feature B2B buyers find most helpful when evaluating software -- even more than reviews.
The message from buyers is loud and clear: they want to know how much software costs. And if they can’t find it quickly -- either on a vendor’s site or a public marketplace like G2 -- they’ll go elsewhere.
This lack of transparent pricing, coupled with the sheer volume of information buyers now have at their fingertips has led to several notable shifts in B2B buyer behavior.
Consider that more than half of buyers will make up their minds on a specific solution before ever reaching out, and are less willing than ever to pay for “differentiated” features.
In 2012, the average SaaS company had ~2 competitors. Today they have ~9. We’ve seen this trend firsthand on G2.com, which has grown 120% YoY to now boast 90,000+ software product listings on the site.
These shifts are a warning sign to SaaS companies. Today’s buyers have options -- and they know it.
More transparency means more trust for software vendors
It’s not just another worn-out business cliche: trust matters. And when faced with savvier buyers, a new buyer journey, and a new remote-only selling environment -- being the “most trustworthy” will make-of-break a software vendor’s ability to grow.
Accenture refers to trust as the invisible asset, defining it as a “consistent experience of competence, integrity, honesty, transparency, commitment, purpose and familiarity.”
That’s why nearly a decade after starting G2, B2B reviews continue to be the top information source buyers use to make purchase decisions on software.
Those early vendors who adopted G2 and began collecting reviews were ahead of their time. Fast forward to 2020, and so to are the software companies making their pricing transparent and easily discoverable to buyers. That’s why more than 1 in 3 vendors show pricing on their G2 profiles today, a trend we expect to continue into the new year.
This move to demystify SaaS pricing by software vendors doesn’t come without its benefits and advantages to sellers:
More inbound leads: With buyers who are more likely to trust and reach out to vendors who do not hide pricing.
Higher quality opportunities: With buyers who are now able to “self-qualify” based on price and reach out to the vendors and solutions they can afford.
Faster sales cycles: With buyers and sellers wasting less time and energy negotiating on price, allowing each to focus more on closing the deal and getting implemented.
G2's commitment to SaaS transparency
We remain deeply committed to bringing transparency to B2B software as whole, from reviews to pricing. That’s why our G2 Track tool is free for businesses to instantly know what software they use and how much it costs.
In the spirit of transparency, companies who connect to G2 Track will also receive a free benchmarking report on a software of their choice -- so they can understand how their spend on a particular SaaS tool compares to their peers.
Join us in shedding light on B2B SaaS pricing by simply and securely using our free G2 Track tool and submitting your software spend to this cause. Help ensure businesses everywhere -- including yours -- get the most value for their software spend.