.png)
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
This article expands on a question originally shared by Realistic_Office7034 on Reddit — enhanced with additional analysis and frameworks.
When launching a credit-based SaaS product, the pricing model you choose can dramatically impact both customer acquisition and revenue predictability. For early-stage founders with a product gaining traction, finding the right balance between flexibility and recurring revenue is critical.
Let's dive into the specific case of a UGC-style video ad generator that's already showing promising conversion rates, and extract actionable frameworks for credit-based SaaS pricing that apply across the board.
The Balancing Act: Credits vs. Subscriptions
For SaaS products that operate on usage-based models, the debate between one-time credit purchases and subscription plans is common. Each approach offers distinct advantages:
Credit top-ups provide:
- Lower barrier to entry
- Customer control over spending
- Flexibility for occasional users
Subscriptions deliver:
- Predictable recurring revenue
- Potentially higher lifetime value
- More stable cash flow forecasting
When a product has achieved a 4-5% conversion rate (7 paying customers from 150 accounts), the pricing structure decisions become particularly critical for scaling effectively.
Why Forcing Subscriptions Can Backfire
Mandating subscriptions to access credit purchases creates unnecessary friction in the sales process. Analysis of B2B SaaS companies shows this approach often leads to:
- Decreased conversion rates from free to paid users
- Higher churn as occasional users feel trapped
- Lost revenue from customers who would have made intermittent purchases
Instead of restricting existing payment paths, successful pricing transitions typically focus on making the preferred payment model (subscription) more attractive through value-based incentives.
Creating Value-Based Incentives for Subscriptions
Rather than forcing users into subscriptions, the most effective approach is creating clear value differentiation that naturally guides users toward the recurring model.
Consider these proven incentive structures:
- Credit discount tiers — Subscribers receive 20-30% more credits per dollar
- Feature differentiation — Reserve premium capabilities for subscribers
- Priority processing — Faster rendering or processing times for subscription members
- Usage analytics — Provide deeper insights for subscribers
For the UGC video generator example, a subscription could include priority rendering during peak times and access to premium video templates that one-time purchasers don't receive.
Implementing a Hybrid Approach with Rolling Credits
For services where usage patterns fluctuate, a rolling credit model can provide the perfect middle ground:
- Users commit to a monthly subscription
- Credits accumulate and don't expire (or have extended expiration)
- Subscription can be paused when credit balance is sufficient
This approach has shown particular success in creative tools markets where 68% of customers prefer this model over strict use-it-or-lose-it subscriptions, according to industry data.
Decision Framework: When to Transition Credit Models
To determine the right credit model for your specific situation, consider:
- Usage patterns: Are customers using your product regularly or sporadically?
- Purchase frequency: How often do existing customers currently top-up credits?
- Customer segments: Do different user groups show different usage patterns?
- Lifetime value gap: What's the LTV difference between subscription vs. one-time purchasers?
The most successful credit-based businesses analyze actual usage data before making model changes. For example, if the data shows customers purchasing credits once every 45 days on average, a monthly subscription might not align with natural usage patterns.
Price Testing Strategies for Credit-Based Models
Before implementing sweeping changes to your pricing model, consider these testing approaches:
- Segment-based offering: Introduce the new model to new users while maintaining the current model for existing users
- Limited promotion: Test subscription incentives as a "special offer" to gauge interest
- Feature-gated testing: Introduce subscription-only features to a subset of users
For the UGC video generator with just 7 paying customers, individual outreach to understand their preferences might yield more valuable insights than automated testing.
Conclusion: Incentivize Don't Mandate
The data consistently shows that successful credit-based SaaS products grow by making subscriptions an obviously better value proposition rather than the only option. By focusing on creating genuine value differences between purchase models, you can guide customers to the option that benefits both them and your business.
Remember that early adopters who are already paying through credit top-ups have demonstrated willingness to pay—the goal should be removing friction for these customers while gently guiding them toward more predictable subscription models when it makes sense for their usage patterns.
For SaaS founders navigating this transition, the key is analyzing actual usage data, creating clear value differentiation, and testing changes with specific customer segments before rolling out pricing changes platform-wide.