Navigating International Expansion: Positioning, Pricing, and Differentiation for SaaS Companies

Expanding internationally has become a strategic imperative for many B2B SaaS companies seeking growth beyond their domestic markets in today's interconnected global landscape. However, this journey is fraught with complexities that extend far beyond translating product interfaces. Successful international expansion requires a nuanced understanding of local markets, strategic positioning, and tailored pricing approaches.

This article explores the essential strategies for B2B SaaS companies venturing into international markets, drawing on expert insights from Ayon Bhattacharyya, founder and CEO of Biz Growth Spurt, a boutique global consulting and advisory firm that helps disruptive B2B businesses gain competitive advantage and unlock profitable growth by delivering tailored pricing strategies. Ayton brings unmatched expertise on pricing best practices, with two decades of experience working with companies like Westpac, Trade Me, and Equifax.

The Foundation: Value Discovery Before Expansion

Before a SaaS company sets its sights on international shores, it is paramount that it establishes a solid foundation through value discovery. As Ayon explains, "The first place to start is value discovery, which is essential to identify the unique problems, the unmet needs, and to map the value chain."

This involves:

• Mapping the value chain: Understanding how your offering fits into the broader ecosystem of your target market

• Problem identification: Identifying specific pain points that exist in different regions

• Solution efficiency: Evaluating how effectively your product solves these problems compared to existing alternatives

The concept of value discovery is strictly connected to that of product-market fit. We covered this topic extensively in a recent blog post, where Clément Dumont, co-founder of The Growth Syndicate, stressed the importance of establishing a strong product-market fit before launching a full-scale expansion into new markets. Ayon goes one step further, stressing the importance of this element in pricing scenarios: A product that perfectly fits a certain market needs, and addresses specific pain points is perceived as a high-value solution, and can be priced accordingly.

Segmentation: The Backbone of Any Expansion Strategy

Once you've established your value proposition, the next step is product and customer segmentation.

This segmentation work enables companies to tailor their approach to specific market needs rather than applying a one-size-fits-all strategy that rarely succeeds in diverse international contexts. As we discussed with Ashley Herbert Popa, Head of Product Marketing at Sendcloud, segmentation is also instrumental to market positioning. Based on factors such as market maturity, competitive landscapes and local preference, it might make sense to target different segments in different markets, according to where there’s more potential to show your product’s value.  

Crafting Your International Packaging Strategy

With a clear understanding of value and segmentation, the next step is developing a packaging strategy that resonates with your target markets. "Packaging is the way you bundle specific features together and tailor it to specific segments based on their use cases," explains Ayon.

If you're unsure where to start, Ayon recommends a simple "Good-Better-Best" approach:

• Good: A basic offering that addresses core needs

• Better: An enhanced package with additional features

• Best: A premium offering with the full suite of capabilities

This allows B2B SaaS companies to cater to different types of customers, according to both their actual budget and/or their willingness to commit to a new solution. Some clients might be more comfortable starting a collaboration on a “Good” basis, which allows you to get your foot in the door, where you’re in a position to show your worth and upsell them.

Pricing Strategies for International Markets

One of the most challenging aspects of international expansion is developing appropriate pricing strategies that reflect both the value delivered and market realities.

"Pricing itself comes after packaging, which involves quantifying value and measuring willingness to pay," explains Ayon. "You need to understand in the first instance who's actually paying for the product or service, which doesn’t always match who's using it. That really helps to determine how you position yourself to that particular stakeholder and how you'll communicate value."

It's crucial to recognize that price expectations and willingness to pay can vary significantly across regions. As Ayon notes, "Southeast Asia is 33% below average in terms of their willingness to pay, while the Nordics are 28% above the baseline." These figures clearly show the importance of accurate pricing, as a mistake here might result in unrealized profits if you price lower than you potentially could, or, even worse, low adoption rates if your product is perceived as too expensive.

Localization: More Than Just Translation

Another key element to consider when planning entry into a foreign market is localization, which extends far beyond translating your website and product interface, taking the form of a deep understanding of cultural nuances, business practices, and the unique needs of your end users in each market. Keeping everything in English might work in some countries, but in most cases, it won’t. As Ayon points out, “It's really important, depending on the vertical, to address your end-user where they are.” This is especially relevant for SaaS products that will be used in the field by a diverse workforce that might not have a consistently high command of the English language. This underscores the importance of understanding the language proficiency and preferences of your end-users, not just the decision-makers, as even if a company's headquarters mandates the use of your software, if the actual users struggle with the language, adoption will suffer.

A few years ago, a large company gave devices to its employees all around the world. However, these devices only had an English interface, which made it hard for many workers to use them. In Latin America, a group of employees decided to take matters into their own hands. They created their own version of the device's software in Spanish, even though it was not officially allowed. This "contraband" version helped their teams work better because they could understand everything in their own language.

While this is an extreme case, it highlights the risks of neglecting localization. If your product isn't accessible to users in their preferred language, they may find workarounds—or simply not use it at all. But localization goes beyond language. It also means adapting to local business practices, cultural expectations, and user preferences. Slack is the perfect example of a SaaS company that has successfully tailored its offerings to resonate with local markets. In their case, the Japanese market is the most interesting to look at. Slack not only translated its UI, but adapted it to Japan’s workplace culture and partnered with local providers for integration.

From the point of view of pricing, they remained consistent with their global approach, supported by a robust freemium model, which encouraged organic adoption. As a result, they gained significant traction among Japanese businesses.

As Ayon notes, the constant improvements of AI capabilities is extremely helpful when it comes to localization, as it decreases the effort people need to dedicate to the execution of repetitive low-value tasks, allowing them to focus on strategy and high-value operations. The best example of this is how helpful AI can be when it comes to gathering and analyzing data that can inform strategic decisions. We discussed this very topic in a recent podcast episode, where our guest Henri Malkki, CEO and co-founder of Exolyt, talked about how AI-powered insights are transforming social media analytics.

When it comes to content, it goes without saying that raw AI cannot replace humans, especially for strategic and brand-sensitive content, but it’s undeniable that SaaS companies can leverage AI tools to efficiently localize at scale, helping them reduce workload and bottlenecks by shifting the role of hired resources from content creation in its purest form towards oversight of content strategy and editing of AI-generated content. An efficient way to think about this is visualizing your content as a pyramid and divide the assets in different categories which are placed at different heights of the pyramid, according to their strategic purpose, and, as a result, follow different workflows. So, for example, you will have a lot of Help Center content, which can be localized with a lower level of human involvement, thus freeing up resources, so they can dedicate more attention to strategic assets such as marketing or branding content, which need to be handled with much more care. We have expanded on the importance of prioritizing content for localization in our Strategic Guide for B2B SaaS Global Growth, where Nicola Calabrese and Marco Airoldi provided a structured overview of the most important localization considerations for B2B SaaS companies expanding internationally.

By taking a comprehensive approach to localization—one that considers language, cultural nuances, business practices, and end-user needs—SaaS companies can create products that truly resonate in international markets. And by leveraging AI strategically, they can do so efficiently and at scale, while still maintaining the human touch where it matters most.

Overcoming Growth Barriers in New Markets

Expanding internationally inevitably presents obstacles that must be navigated strategically. 

Some common missteps include:

• Not getting the cultural fit right

• Using a one-size-fits-all approach

• Adopting misaligned pricing that alienates price-sensitive markets

• Failing to understand local purchasing power and preferences

Uber's initial struggles in India provide a cautionary tale. "When they launched in India, their pricing was similar to Western markets. Assuming that the global brand would justify a premium, the strategy failed as local competitors like Ola offered significantly lower rates and culturally adapted services," explains Ayon. "Uber really struggled initially. They lost a ton of market share, but they later adjusted by introducing economy rides and cash payment options to align with local expectations."

Key Metrics for Measuring International Success

Tracking the right metrics is crucial to evaluate the effectiveness of your international expansion strategy. Two key metrics Ayon recommends:

• Customer Lifetime Value to Customer Acquisition Cost Ratio (LTV/CAC): "This really helps with the segmentation process and it’s also an efficiency metric, as it allows you to assess how much you spend to acquire a customer compared to their lifetime value."

• Churn Rate: "This will help you understand the quality of customers that you are attracting. If you're going after the wrong customers, then you will see your churn rate go up."

  
  

Conclusion: A Strategic Approach to International Expansion

International expansion for B2B SaaS companies requires a thoughtful, strategic approach that encompasses value discovery, segmentation, packaging, pricing, and localization. By investing in understanding local needs, adapting strategies accordingly, and measuring results with appropriate metrics, SaaS companies can navigate the complexities of international expansion more effectively, positioning themselves for sustainable growth across diverse global markets.

If you want to find out more about the importance of building trust in the customer base, and about how vital your localization strategy is in establishing that trust, check out our conversation with Graziella Moschella, Senior Content Marketing Manager at deskbird.

Thinking about going global but not sure where to start from? At Undertow, we are committed to helping B2B SaaS businesses achieve their full international growth potential by providing carefully tailored localization strategy and execution services. Contact us to find out more about how your business can thrive by opening itself up to new markets.