The influence of pricing strategies on corporate valuation

Abstract

This paper seeks to find a correlation between the valuation of software as a service (SaaS) companies and the price-setting practices and pricing strategies utilised. The focus is to assess the pricing techniques employed by the leading SaaS companies, and to identify a correlation with their corporate valuations. Financial data from 18 publicly traded companies was used to apply 14 different valuation methods. The purpose of this paper is to identify those pricing techniques that most influenced corporate valuations. This study discovered that there were identifiable correlations between the price-setting practices, the pricing strategies, and the pricing models. The insights uncovered as a result of this paper are important contributions to the valuation of SaaS companies as a whole, as well as to the pricing techniques utilised in the leading companies. Implications of the price-setting practices and pricing strategies are better understood in terms of their impact on company success.