Popular Pricing Strategies for SaaS model & Services.

Popular Pricing Strategies

Building a product is just the half of it as SaaS businesses have grown exponentially over the years. The deciding factor of a product’s success is often the Pricing factor. With numerous pricing models available, choosing a pricing plan compatible with your SaaS service requires efficiency. This article discusses the popular pricing strategies employed in finalizing these prices.

Things to consider
Before deciding on the pricing, you must take into consideration your target customers, number of customers your platform serves, are there different levels of services, lifespan of your SaaS, whether you are handling individual customers or businesses. These factors make it easier to revisit and finalize over time.
1. Freemium
A popular approach particularly favored amongst users. A freemium service can provide restricted free access and the restricted parts can include time or features. Freemium fits right for SaaS products with an extensive market. If set to products with extensive features that businesses can get away without having to pay for them then this might not be the best option for such niche products.

2. Usage based Pricing
In other words, “Pay as you go” is a model that charges customer based on the time spent using the resources. These methods are usually charged by the number of actions a user performs and can be used in storage measures too. These methods might include transaction charges in addition. This model may benefit the users as they only pay for what they use, however it is difficult for enterprises to rely on the revenue as it includes various fluctuations.

3. Tier based Pricing
Tier based pricing targets multiple communities and offers different versions of the same product at different price points. Tiers can also be classified based on the user pool. Multiple tiers allow the possibility for increasing potential revenue and allows expansion. However, tier model marketing has to be precise to eliminate all possible exceptions otherwise might not provide the required outcome.

4. Flat rate pricing 
One of the simplest ways to allocate prices is the flat rate model. Flat rate pricing uses a one size fits all approach without regards for the number of users or the usage time. The pricing is same when charged monthly or annually. In this pricing system, the user has access to all the features a SaaS product or services has to offer. Most flat rate models favor a freemium trial. Flat rate pricing is a more straightforward approach as it is easier to target and market.

5. Competitive Pricing
Competitive Pricing is a pricing model used to test new ideas and services or products similar to your rivals. Competitive Pricing a product is usually set on products to acquire a customer base to understand your customer base. This strategy is best if you are testing new waters. Once you find out your product how it fits in the market, you can change the pricing to improve the revenue. A competitor pricing is a low risk and easy to implement model as it requires a research and insight into your model. However, SaaS products might not benefit from Competitive pricing alone it can be used in junction with other pricing methods.

6. User based pricing
User based pricing charges for the number of individuals using the service or the product. Each account is charged for the number of users who use the service. The User based model is a popular choice among SaaS products and services for its ability to adapt and easily expand. Allows easy revenue prediction. User pricing model is also a straightforward approach as there is no medium to upsell.

7. Feature based Pricing
Often confused with tier pricing feature based pricing is a different approach that charges users by features used or for certain features. Feature based pricing model can help with expansion and contribute to revenue growth. It is better than opting for the tier model as customers may revoke unannounced.

8. Credit-based Pricing
Credit-based pricing is one of the popular pricing strategies. It does not require continuous use and can be purchased one-time or redeemed as an incentive. The difference between this and usage-based pricing is that the user is charged beforehand.

Once you decide on the pricing model for your product reanalyze the strategies of questioning your target customers, product popularity. If suppose a plan doesn’t seem to work out, try out different plans for a short while before zeroing on a strategy model. Your product should resonate with your targeted user base by a great deal and should operate on a plan that supports expansion if you choose to add more to your SaaS product or plan.


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