How To Develop Your SaaS Pricing Model The Right Way


There are so many startups that are so preoccupied with getting their product idea to market that they don’t invest enough time in developing their SaaS pricing model. How can you expect sales to take off if your prices are too high? Your customers would not pay a price that is too expensive for them!

Pricing models are a tricky subject, but it’s one that is extremely important. That’s why it’s important to develop SaaS pricing models and strategies. This article gives some key principles to help you develop your SaaS pricing model effectively and the right way.

Why Should You Develop Your SaaS Pricing Model

Developing your SaaS pricing model or strategy will help you to get more clients. People want to buy from companies that offer reasonable prices and good quality services at a reasonable price.

Your pricing model will determine the price that you charge for your SaaS offering. Since the model will be a key factor in determining how much revenue you are able to generate, it is important to get it right. Your pricing model is also key in attracting and retaining paying customers. If you want to know more about growing software revenues on the ground of market fairness pricing, check the link here.

Main Principles To Develop Your SaaS Pricing Strategy

You have to ensure that your SaaS pricing model is good. You should have a well-costed approach to design a SaaS pricing strategy. Think of how many different ways you can think of to develop your SaaS pricing model and strategy, don’t just give up! Here are some of the main principles that will help you develop your SaaS pricing model effectively and the right way:

Make It Easy

You will get more revenue if people find your product or service easy to use. If it’s difficult for users to figure out how to buy, start, and maintain your product, they will probably spend less money on it. If you want to make it easy, aim for a simple and clear structure. Avoid complex pricing models if you’re going to enjoy your entire customer base.

Price For Volume

The easiest way to bring in higher revenues is by increasing your volume of sold units and a lower payment per unit of applications or services that are sold regularly. The more customers will receive good quality service for a lower price, the more they tell other people about your products; thus, you get more customers. This is the easiest way to improve your revenues, and it should be the main focus of your SaaS pricing model.

You can decrease the price per application by offering more value or enhancing its features over time. Ensure that your charge doesn’t become too high before you start working on additional enhancements after initially selling a good number of applications.

Be Consistent

Most people do not like to be surprised by changes in how prices are expressed. If you want your customers to remain loyal, ensure that your pricing model and strategies are consistent. Doing so will keep your customers attracted to you and increase your customer base.

Give Everyone The Best Price

Despite the thing that you should give everyone the best price that they would want to pay for your product or services, it is usually unreal to implement. Try to set a price according to what your business can afford, and make sure you don’t offer free products or services as a loss-making alternative to getting new customers and increasing revenues.

Another key factor is not to provide individual discounts and other off-pricing negotiations to some customers. Once you provide such a discount, you will lose your customer base.

Make Entry Inexpensive

The entry price is low, initially making the application or service cheaper over time. You should never raise the price of your basic services unless they have a few added features or more value to your customers.

Beware Of Price Increases

You have to try not to raise prices too often for fear that it might drive away some customers, reducing its revenues. Another reason for not raising prices is that people are not likely to pay higher costs for better products or services when they may enjoy similar ones at lower prices with slight differences.

Don’t Cheat The Customer

It is also very important to avoid cheating the customer by providing a low price or a special deal only available under certain conditions. A good way to avoid doing this is to put all your terms and conditions in writing so there can be no confusion. If it is impossible for you not to do anything that might confuse your customers, then we would recommend you should consult with a company such as Software Pricing Partners first before proceeding.

The Bottom Line

Developing your SaaS pricing model or strategy will help you to get more clients. People want to buy from companies that offer reasonable prices and good quality services at affordable prices. Your pricing model is also key in attracting and retaining paying customers. Like any other business, you have to make sure that you get the price of anything that you are selling right!

Hopefully, this article has helped you understand the process of developing your SaaS pricing model or strategy and set it effectively and the right way. If you have any questions related to this article, please let me know by commenting below.