In a recent video titled "SaaS Pricing FAILURE, And The Solution," a pricing expert shares the Narvar case study, examining how inappropriate pricing packages can severely disrupt sales performance in a growing SaaS company. The presenter details their experience joining Narvar (a $30-35 million ARR e-commerce SaaS company) after a CRO's departure, and the challenging task of fixing a broken pricing strategy that had led to declining average selling prices and sales team revolt.
When Good Intentions Lead to Bad Results
Narvar provides e-commerce notification services - the tracking updates you receive when ordering from retailers like Nike, Kohl's, or Macy's. These notifications inform customers about various stages of their order: when it's being built, shipped, on its way, or delivered.
Before the pricing crisis, Narvar's sales team operated without standardized packaging, employing a flexible approach that worked well for their stage of growth. However, everything changed when a new Chief Revenue Officer arrived following a funding round.
The presenter explains: "They had hired a CRO after a round of funding and the CRO came and uh the history was the sales team did not follow any packaging. They were like we'll do whatever uh which is fine till they got to that point. But then the CRO came and said we are going to have these cookie cutter SMB packages but the sales team never sold like that."
The Costly Shift to Standardized Packaging
The implementation of rigid, standardized packages quickly created significant problems. Within months of the change:
- Average selling prices dropped 15-20%
- The sales team openly revolted against the new structure
- Excessive discounting became commonplace
- The CRO ultimately left the company
The fundamental issue was a mismatch between the new packaging structure and customer needs. The presenter provided a specific example: "If you look at the mid-market package here you'll see two emails, two domains. If you see the enterprise package, you'll see four domains can buy more enterprise plus other stuff."
This created an absurd situation for customers: "So the people in SMB and mid-market, let's say you're a merchant or a retailer, you need to send five emails to the customer that their package has arrived and on its way. And you're saying, 'No, here is only two emails. If you want to send more notifications, it's two or three the price.'"
Identifying the Root Causes
The presenter joined Narvar during this critical period, inheriting the challenge of fixing this "mess" - despite not initially being hired for pricing expertise. Through extensive conversations with stakeholders, several underlying issues emerged:
- Disconnect between sales reality and executive perception
- Misalignment between customer needs and package offerings
- Tension between standardization and flexibility
As the presenter noted: "I spoke with all of the reps the mid-market reps the enterprise rep. How did they sell? What the pressure was that the CEO was facing because the CEO was getting some other news thing from the VCs and the head of sales sold differently but the CEO was not the seller. Let's be clear the head of sales knew how to sell."
The Path to Reconciliation
The solution required a delicate balance between structure and flexibility. The presenter needed to:
- Honor the CEO's need for standardization and consistent pricing
- Respect the sales team's understanding of customer purchasing patterns
- Create packages that actually matched how customers wanted to buy
"That convergence in what do we have to do to simplify, standardize and have consistent pricing had to happen because we still had to get the sales team to have consistent pricing but have the packaging such that it was flexible enough to work with our motion," the presenter explained.
Key Lessons for SaaS Executives
This case study offers valuable insights for any SaaS company considering pricing and packaging changes:
- Listen to your sales team: They often understand customer buying patterns better than anyone else
- Balance standardization with flexibility: Rigid packages rarely work across all customer segments
- Avoid arbitrary limitations: Packaging should reflect customer needs, not artificially constrain them
- Consider the implementation timeline: Rapid changes can disrupt established sales motions
- Monitor early warning signs: Declining ASPs and increased discounting indicate package-market misalignment
The Narvar case demonstrates how even well-intentioned pricing strategies can backfire when they don't align with customer needs and existing sales processes. By finding the middle ground between standardization and flexibility, SaaS companies can create pricing structures that satisfy both internal stakeholders and customers.