(This was written by me as a response to the above question posted on r/SaaS. People there seemed to really enjoy it.) Original thread here:
Glad you asked! Answer: Too often it creates confusion and costs us money.
Let me try to explain. At our company, we have tried it both ways. You're correct that value perception is the first problem.
Value is subjective, relative, different for each buyer; pricing is objective, everyone sees the same price you posted.
If the value isn't understood, any price is going to be seem high. This leads to a desire to simplify the offering, and show the lowest possible price, but that then leads to inflated expectations. It also makes it very difficult to deliver a package in excess of this price because the buyer is now anchored to that lower level, and they feel duped. It is impossible for us to predict how valuable our products will be to you until we understand your needs and pain. How do you put a value on risk-avoidance, for example?
One of our competitors, PowerBI, advertises their product at $10 per month, or free, which is obviously a negative profit level for them. However, the next step up in features is $5,000 per month. Is a model like that really satisfying to you as a buyer?
I understand why you find it frustrating, I do as well. We have a whole section in our sales training around how to handle pricing questions. We determined that there are two kinds of price questions, an early one and a later one. The early one is almost always "This solution seems good, but can I afford this?" So we answer that one directly, with a range, or examples of what other people have paid and what value they got, showing a positive return. We do that on our website as well because people often are seeking to verify their budget is enough, but we don't want to mislead them. The second price question is the real one, it's when people really need to know the price because they're ready to buy. It's one we'll invest time in answering, once we understand your needs.