SaaS Pricing Models

SaaS founders find it challenging to choose the most appropriate pricing model. It's not only because balancing value and revenue is hard, but also because pricing is part of the product. It influences everything: from your target audience to your budget projections.

Who is your target audience? Do they see the benefits versus price the same way you do? Your pricing model will influence your marketing strategy. It will also affect your customer journey map. You will need to think when it's time to offer your users an upgrade and when it's a good time to upsell. Here is the list of 7 types of SaaS pricing models, if you want to read more about examples, or gains and loses of every strategy, go here: https://www.eleken.co/blog-posts/saas-pricing-models-to-help-you-make-an-informed-decision.

7 Types of SaaS Pricing Models

1. Freemium

One of the most common models to price a SaaS product is Freemium. You let your customers use your software for free offering them a basic set of features. In other words, you let your users see what your service is capable of without making them pay for it.  

2. Flat Rate 

It is a simple pricing model. You have one price for one product with the same features offered to all of your customers. The only choice you give is to charge monthly or annually to use your SaaS product. 

3. Usage-Based

Usage-based Pricing Model is pretty clear and fair for your customers. They pay only for the volume they use. An alternative name is “pay as you go”. It is like a regular utility bill with a counter but for SaaS companies. You can charge for the number of transactions, requests, data used, scheduled posts, issued invoices, calls, messages. It works well with Tiered and Freemium pricing models.  

4. User-Based 

One type of “pay as you go” pricing strategy is based on the number of users actively or passively operating your SaaS platform. There are two types of this pricing model: user-based and active-user based. 

5. Feature-based 

If you offer a wide range of features, then your best option would be to stick to the Feature-based pricing model. You can combine this model with Tiered pricing and create multiple plans with a set of features for different customers. 

6. Tiered

Tiered Pricing model combines all the possible features of your SaaS in predefined packages and allows your customer to choose what better suits his or her needs. You create from two to five plans at a specific price with a set of functions for each. 

7. Blended 

The better you know your product the optimal pricing model you will be able to choose. For some market players, it is difficult to fit all functionality into one pricing model. Therefore, they mix a few models to sell their products to different people. With a blended pricing model, gains are pretty clear, but losses are great as well.