
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.
In today's competitive SaaS landscape, establishing the right pricing strategy is arguably one of the most critical business decisions executives face. Too often, pricing decisions are guided by gut feeling, competitor benchmarking, or simplistic cost-plus formulas. However, the complexity of modern subscription pricing demands a more sophisticated approach. Enter Multi-Criteria Decision Analysis (MCDA) – a structured methodology that can transform how SaaS companies develop, evaluate, and optimize their pricing strategies.
SaaS pricing is inherently multidimensional. Unlike traditional product pricing, subscription models must balance immediate revenue needs against long-term customer lifetime value, while accounting for diverse customer segments, varying willingness-to-pay thresholds, and competitive positioning.
According to OpenView's 2022 SaaS Benchmarks Report, companies that regularly revisit and optimize their pricing strategies see 30% higher growth rates than those that don't. Yet the same report indicates that 56% of SaaS companies rely primarily on competitor analysis rather than systematic decision frameworks when setting prices.
Multi-criteria analysis provides a systematic framework for making complex decisions where multiple, often competing objectives must be balanced. In the context of SaaS pricing, MCDA helps executives:
Rather than relying on a single metric (like revenue maximization), MCDA acknowledges that optimal pricing decisions must satisfy multiple criteria simultaneously.
Implementing MCDA for pricing optimization requires first identifying the relevant decision criteria. For SaaS businesses, these typically include:
According to research published in the Journal of Revenue and Pricing Management, companies that evaluate at least 10 distinct criteria in their pricing decisions achieve 15-20% better price optimization outcomes than those considering fewer factors.
The first step is defining what success looks like for your pricing strategy. Beyond revenue maximization, consider criteria such as:
Each criterion should be clearly defined with specific metrics for measurement.
Not all criteria carry equal importance. A growth-stage SaaS company might weight market penetration more heavily than immediate margin, while a mature SaaS business might prioritize retention and expansion revenue.
Methods for weighting include:
According to Profitwell's pricing strategy research, companies that explicitly weight decision criteria are 27% more likely to achieve their pricing objectives than those using ad-hoc approaches.
Develop multiple pricing models for evaluation. These might include:
Research from Price Intelligently suggests that testing at least 3-5 distinct pricing alternatives yields 35% better outcomes than testing only one or two options.
Create a decision matrix that scores each pricing alternative against each weighted criterion. Scoring can use:
Test how results change when weights or scores are adjusted. This helps identify which assumptions have the greatest impact on the final decision.
Consider how Atlassian applied decision science to their pricing optimization. When shifting from their traditional licensing model to cloud subscription pricing, they faced a complex decision environment with competing priorities:
Using a structured decision analysis approach, they identified 14 distinct criteria across financial, strategic, and customer impact categories. Each criterion was weighted according to Atlassian's strategic priorities, with customer retention receiving particularly high weighting.
The team developed five distinct pricing models and evaluated each against their weighted criteria. The winning model—a usage-based tier structure with granular scaling—scored highest overall despite not being the top performer on revenue maximization alone. This approach has contributed to Atlassian's successful cloud transition, with cloud revenue growing at 50% annually.
SaaS companies implementing multi-criteria decision analysis for pricing decisions report several advantages:
Implementing MCDA for pricing decisions doesn't require sophisticated tools. Many SaaS companies start with simple spreadsheet models, though specialized decision analysis software can provide additional capabilities for complex scenarios.
The most critical success factors include:
As subscription pricing continues to grow more sophisticated, intuition-based approaches become increasingly inadequate. Multi-criteria decision analysis provides SaaS executives with a powerful framework for navigating the complexity of modern pricing decisions.
By systematically identifying, weighting, and evaluating pricing criteria, companies can develop strategies that balance immediate revenue needs against long-term value creation. Rather than optimizing for a single variable, MCDA enables a holistic approach to pricing optimization that aligns with the multifaceted nature of SaaS business models.
For SaaS executives looking to elevate their pricing decisions from art to science, multi-criteria analysis offers a proven methodology that combines analytical rigor with strategic flexibility.
Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.