As a growing SaaS business, it’s essential to give your pricing strategy serious thought. Without the right model, you could be leaving significant revenue on the table. Choosing the most appropriate SaaS pricing model can be challenging because it not only affects your revenue but also shapes your customer journey and marketing efforts.
Your pricing structure can directly influence your product's growth. Selecting the wrong model may hinder your success, while the right one will help you scale. This guide outlines five popular pricing models to help you make a more informed decision.
5 Most Popular SaaS Pricing Models (with examples)
There are many ways to price your SaaS product, but most companies use a few tried-and-tested models. Let’s explore five popular pricing models to see which is best suited for your business.
1. The usage-based pricing model
In a usage-based pricing model, customers pay based on how much they use the service. The more they use, the more they pay. This pricing structure is popular in platforms that charge based on API requests, data storage, or bandwidth usage.
An example is Twilio, a platform that charges $0.0075 per text message sent.
Image source: Twilio, SMS pricing for text messages
While this model allows flexibility, it can make predicting revenue difficult, as usage fluctuates. It’s also challenging to align the cost with the value perceived by the customer.
2. Per-user pricing model
Per-user pricing (or per-seat pricing) is one of the most popular SaaS pricing models. It’s simple—each user pays a fixed amount. As the number of users increases, the total cost increases proportionally. This model is easy for startups to predict revenue and scale efficiently.
For instance, ProductPlan uses this model, charging based on the number of users on the platform.
Image Source: Product Plan
3. Flat rate pricing model
Flat rate pricing is straightforward: one price, one product, one set of features. Every customer gets the same plan for the same fee. Although easy to communicate, this model is rare among SaaS companies because it lacks flexibility.
BaseCamp is one of the few that uses flat pricing, offering unlimited access to all features for $99 per month.
Image source: BaseCamp
4. Per feature pricing model
In the per-feature pricing model, customers pay based on the features they choose. This approach allows companies to charge more for premium features, offering flexibility for different customer needs.
Evernote is an excellent example, offering different feature sets at various price points, making it easy for customers to upgrade based on their needs.
Image source: Evernote
5. Tiered pricing model
Tiered pricing offers multiple levels of service, each with its own price and set of features. This model is common for businesses that serve a broad range of customers with varying needs.
HubSpot uses tiered pricing effectively, offering different levels designed for specific customer segments, making it easy for businesses to find a plan that suits their requirements.
Image Source: HubSpot
The Bottom Line
Whether you're a large or small SaaS business, it’s vital to periodically review your pricing strategy. Finding the right SaaS pricing model can help you remain competitive in today’s market. From usage-based pricing to tiered pricing, these models provide different ways to balance value and revenue.
If you’re struggling to find the right fit, feel free to reach out for expert guidance. We can help you optimize your pricing structure for maximum growth.
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