.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.
Choosing between user-based pricing and company-based pricing is one of the most consequential decisions you'll make as a SaaS founder. The wrong model can repel your ideal customers, compress margins, and create friction that kills deals before they start. The right model aligns your revenue with the value you deliver—making growth feel natural rather than forced.
Quick Answer: Choose user-based pricing when your value scales with team size and you target mid-market/enterprise buyers; select company-based (flat-rate) pricing when targeting small businesses, offering predictable costs, or when tracking individual users creates friction that blocks adoption.
This guide breaks down exactly how to make this decision for your product, complete with real numbers, common pitfalls, and a systematic framework you can apply today.
Understanding User-Based vs. Company-Based Pricing Models
Before diving into strategy, let's establish clear definitions for these SaaS pricing models.
What Is User-Based (Per-Seat) Pricing?
User-based pricing charges customers based on the number of individuals accessing your product. Slack, Salesforce, and Asana all use variations of this model. A typical structure might look like $15/user/month—so a 10-person team pays $150 monthly while a 50-person team pays $750.
The appeal is straightforward: revenue scales automatically as customers grow their teams.
What Is Company-Based (Flat-Rate) Pricing?
Company-based pricing charges a single fee regardless of how many people use the product. Basecamp famously charges $299/month for unlimited users. Your entry level pricing tiers might offer $49/month for small teams or $149/month for growing companies—but the price stays fixed within each tier regardless of headcount.
This model prioritizes simplicity and predictability over granular monetization.
When User-Based Pricing Makes Sense for Your SaaS
Your Product Value Grows With Team Size
If each additional user genuinely extracts more value from your product, per-user pricing creates natural alignment. Consider a CRM where each salesperson manages their own pipeline—the tenth rep gets the same value as the first.
Example calculation: A sales team of 5 at $50/user generates $250/month. When they grow to 20 reps, you're earning $1,000/month without renegotiating contracts.
You're Targeting Mid-Market and Enterprise Customers
Larger companies expect user-based pricing and have procurement processes built around it. They're budgeting for tools at scale and often prefer predictable per-seat costs they can tie to headcount planning.
These buyers also have higher willingness to pay per user—enterprise seats often command 2-3x the price of SMB seats for the same core product.
Usage Metrics Align With Individual Users
When your product naturally tracks individual activity—think project management, design tools, or communication platforms—charging per user feels intuitive to customers. The pricing mechanism matches their mental model of how the product works.
When Company-Based Pricing Wins More Customers
Serving Small Businesses That Want Predictable Costs
Small business SaaS models often succeed with flat-rate pricing because budget predictability matters enormously to resource-constrained buyers. A freelancer choosing between your $79/month flat rate and a competitor's $15/user model will likely choose you—even if they're currently a team of one—because they can plan for growth without fearing ballooning costs.
The math that wins deals: Your $120/month flat rate beats a competitor's $15/user pricing once a team hits 8+ people. For growing small businesses, that ceiling provides peace of mind.
User Tracking Creates Adoption Friction
Some products lose value when users hesitate to add teammates. If your collaboration tool charges per seat, the finance team might limit access to "essential" staff only—undermining the network effects that make your product sticky.
Flat-rate pricing removes this psychological barrier entirely.
Encouraging Team-Wide Collaboration
When landing first customers, you want maximum adoption within each account. Company-based pricing encourages customers to invite their entire team, creating more engagement, better retention, and stronger word-of-mouth.
Hybrid Approaches: Combining Both Models
Tiered Pricing With User Caps
Many successful SaaS companies blend both approaches. Structure might include:
- Starter: $49/month for up to 5 users
- Growth: $149/month for up to 20 users
- Scale: $399/month for up to 50 users
This creates predictable costs within tiers while still expanding revenue as customers grow.
Feature-Based Differentiation
Alternatively, charge flat rates but differentiate tiers by features rather than users. Entry level pricing tiers include core functionality; premium tiers unlock advanced capabilities. Users remain unlimited, but customers self-select into higher tiers as their needs mature.
5 Decision Factors to Choose Your Pricing Model
| Factor | Favors User-Based | Favors Company-Based |
|--------|-------------------|----------------------|
| Customer segment | Mid-market/Enterprise | SMB/Startups |
| Value scaling | Linear with users | Network effects/collaboration |
| Sales cycle | High-touch, longer | Self-serve, shorter |
| Competitive landscape | Industry standard is per-seat | Differentiation opportunity |
| Expansion revenue | Seat growth likely | Feature/usage upgrades likely |
Customer Segment and Budget Expectations
Map your ideal customer's purchasing behavior. Enterprise buyers expect—and budget for—per-seat pricing. Small businesses often resist it.
Product Usage Patterns and Value Metrics
Audit how customers actually use your product. If value concentrates in a few power users, per-seat pricing penalizes the wrong buyers. If every user contributes equally, it works well.
Sales Cycle Complexity and Deal Size
Per-user pricing requires calculating seat counts, forecasting growth, and negotiating volume discounts. This adds friction to self-serve funnels but creates natural expansion revenue in sales-led motions.
Competitive Landscape Analysis
Sometimes the market decides for you. If every competitor charges per user, flat-rate pricing becomes a powerful differentiator. If everyone offers flat rates, per-user pricing might signal premium positioning.
Revenue Predictability and Expansion Potential
User-based models typically produce higher net revenue retention (customers expand automatically). Flat-rate models produce more predictable monthly recurring revenue with less volatility.
Common Mistakes When Implementing Each Model
User-based pricing pitfalls:
- Setting per-seat prices so high that customers limit adoption
- Not offering annual discounts that lock in larger seat counts
- Failing to build seat-management tools that reduce friction
Company-based pricing pitfalls:
- Underpricing flat rates and leaving money on the table with large teams
- Not creating natural upgrade triggers within tiers
- Allowing "unlimited users" to attract enterprise customers who should pay more
Both models suffer when: You don't communicate value clearly enough to justify either price structure. Pricing confusion kills more deals than pricing levels.
Testing and Iterating Your Pricing Model
A/B Testing Approaches for Early-Stage SaaS
When landing first customers, you're gathering data—not optimizing a proven model. Test pragmatically:
Segment testing: Offer user-based pricing to mid-market leads and flat-rate pricing to SMB leads. Compare conversion rates, deal velocity, and 90-day retention.
Price page experiments: Show different pricing structures to different traffic cohorts. Track which generates more trial signups and qualified demo requests.
Customer interviews: After closing (or losing) deals, ask directly: "What did you think of our pricing?" The qualitative feedback often reveals more than conversion metrics.
Don't over-rotate on early data. Sample sizes matter. A pricing model that converts 10% of 100 visitors isn't statistically different from one converting 12% of the same traffic.
Ready to choose your pricing model with confidence?
Download our SaaS Pricing Model Decision Framework — a step-by-step worksheet to evaluate which pricing structure will accelerate your customer acquisition.